Buckley: State could be down another $100 million

By David McGrath Schwartz

Monday, March 2, 2009 | 11:51 p.m.

As the economy gets worse and the governor's budget gets scrutinized, the state's budget hole is growing. Speaker Barbara Buckley estimated on Monday that there is another $100 million difference between revenues and expenditures compared to the budget Gov. Jim Gibbons submitted just six weeks ago.

The Gibbons administration estimated in its budget that the 3 percent room tax increase would generate $292 million when it figured out how to close a $2.36 billion budget gap.

But the latest legislative staff analysis said it would raise $232 million. On top of that, Gibbons announced last month he was dropping a plan that would have advanced payment of $31 million, by changing when tax is collected on gaming markers.

“The hits keep on coming,” said Andrew Clinger, the governor’s budget director. “More than likely, we’re going to recommend more budget cuts. I’m not sure from where."

There are millions more that will have to be found due to other budget discrepancies, and money that will have to be found because of investments gone bad.

Even worse, is the continuing bad economic news. Gibbons’ budget was based off numbers prepared Dec. 1 by the Economic Forum, a panel of five business leaders who set revenue projections.

They reconvene on May 1 to set new estimates. Since Dec. 1, sales and gaming tax in particular have been lower than the Economic Forum predicted, meaning the budget hole will grow.

Over the past month, legislators from both parties have criticized the budget and said some cuts have gone too far.

Buckley said she has given Clinger until March 16 to submit amendments to the governor’s budget.

“The numbers given by the governor’s office widely missed the mark,” she said. “There were some mistakes.”

On Monday, for example, the Assembly Ways and Means Committee heard that when combining the state’s Commission on Economic Development and Commission on Tourism, according to the governor’s budget narrative, another deputy director would be hired. But the budget never accounted for the cost of that position.

Not brought up but also in play is $50 million the state is likely to lose because of Lehman Bros.'s bankruptcy. Treasurer Kate Marshall said the general fund could face an $18 million hole from that investment, though others say it could be as high as $22.5 million.