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By J. Patrick Coolican (contact) 
, David McGrath Schwartz
Saturday, May 2, 2009 | 2 a.m.
Reader poll
Sun Archives
- State falls $550 million short in funding governor’s budget (5-1-2009)
- In Henderson, Gibbons reiterates his anti-tax stance (5-1-2009)
- To be clear, Gibbons is against tax increase (5-1-2009)
- Lawmakers eye county dough (4-30-2009)
- Gibbons to propose more salary cuts, says he'll veto tax hikes (4-30-2009)
- Local battles on teacher pay cuts will follow action in Carson City (4-20-2009)
Despite the dull and dry drone, discussions Friday among the state’s official fiscal forecasters, collectively called the Economic Forum, occasionally seemed surreal.
Frank Streshley, for instance, chief of the Gaming Board’s Tax and License Division, offered a bit of hope amid all the doom and gloom: “We have a strong events calendar this month,” he said, pointing to tonight’s boxing match between Ricky Hatton and Manny Pacquiao. He then offered up concerts by Dave Matthews, Jimmy Buffett and Fleetwood Mac.
“All should be nice draws for high-end rollers,” he said.
Fleetwood Mac might help us, not just because its concert will bring in high rollers, but also because Nevadans could use a dose of its anthem, the one about thinking about tomorrow.
The all-day session of the Economic Forum, which was formed during the 1993 legislative session to eliminate the uncertainty of the two-year budgeting process, illustrated two things: First, we’re broke. Second, we’re not even really sure how broke.
First, the broke part. The forum said state government will have $445 million less than what the governor included in his budget in January.
State Budget Director Andrew Clinger delivered more bad news after the forum: The state will have to find hundreds of millions of dollars for school districts because of lower-than-expected sales and property tax revenue.
In total, that amounts to $900 million less than what was included in Gov. Jim Gibbons’ January budget proposal. Clinger said the federal stimulus will offset that number by $350 million.
Still, legislators will have to enact a significant tax increase just to get back to Gibbons’ budget, which included a 6 percent pay cut for teachers and state workers and a 36 percent cut in higher education and was widely derided in the Legislature as “dead on arrival.”
At Friday’s meeting, the five members of the Economic Forum, financial whizzes in the private sector, pored over pages of data showing economic models and projections. They questioned staff from the Taxation Department, the Legislative Counsel Bureau and Administration Department.
Each department had mapped out projections of what will happen to the economy.
No one was optimistic. The economy wouldn’t rebound until fiscal year 2011, they said.
Most of their questions dealt with the appropriate level of pessimism they should express in their forecasts — really pessimistic, or sky-is-falling pessimistic.
In the front of their minds, no doubt, were their December projections, which turned out to be overly optimistic.
They expressed their quandary in the language of numbers-oriented folks. “Econometric model” was a favorite term. “Optionality” was a new word for everyone to learn.
So how broke are we? That was the second thing to be gleaned from the Friday meeting — any attempt to predict the economic future, especially in the current environment, is next to impossible.
Even in good times, it’s hard to predict what the economy will look like in two summers.
“Right now, it’s extremely difficult to make projections over two years,” said Marvin Leavitt, a consultant who has been working on Nevada financial issues since the 1970s. “I might not go so far as to say it’s a guess, but it’s close.”
Economic Forum Vice Chairman John Restrepo, who owns an economics consulting firm, said the five members use economic models and empirical evidence from their day jobs in the Nevada economy to come up with the best numbers they can.
“At the end of the day, these are educated” — Restrepo paused — “estimates of the future.”
“Realistically, the visibility into the future is extremely challenging,” said Cathy Santoro, chairwoman of the Economic Forum and treasurer of MGM Mirage.
Many of the numbers were objective, coming from a private consultant hired by the state or from employment data plugged into models.
“Some of this is art, some of this is science,” said Russell Guindon, a legislative fiscal analyst.
Later, Santoro said, “In some of this volatility with economic models, it’s absolutely become an art.”
Indeed, at certain points, they had to delve into guesswork.
Looking at cigarette sales, Guindon said he expects visitor volume to pick up in fiscal 2011, and he mused about how many of the tourists smoke and how much they would smoke when they arrived.
“Some percentage of visitors have got to be smokers,” he said.
Michael Alastuey, a member of the forum and an analyst with the firm Applied Analysis, worried that people would quit smoking for health reasons.
“People are reassessing smoking habits,” he said. “We are continuing to tax a product of declining demand.”
Restrepo also tried his hand at the unknowable: consumer psychology.
When talking about the gaming tax, he wondered whether the economic crisis had fundamentally altered American attitudes and what effect that could have on spending in Las Vegas: “We still have to face the possibility that people’s spending has changed,” he said. “I’m concerned that the period of unfettered spending, conspicuous consumption is over ... We have to face the possibility that there’s a change in psychology.”
you cant make this stuff up concerts big names etc wont help, you need to reduce staff and go back to basics for a while, it is simply a cycle, if you survive the cycle you will be ok, if you don't then the money helicopter will fly over and drop taxpayers money from the skies...
Budget balancing is an "art", no it's a "science", no it's "guesswork". Not mentioned here was "math".
In trying to answer the question from the "reader poll" on whether we think things will be better or worse -- it depends greatly on whether the Legislature kills off what's left of business by taxes to take care of those who rely on money from government. If legislators keep working at sinking those who are keeping things as afloat as they are now...who is going to be there to pay to fund the government spending that they seem to think is required.
So, why are you all afraid to tax the mining industry? They pay only .2% tax. Of the $5.5 BILLION profit they made last year in Nevada, they paid $100 million. Seems a lot; it's .2%. Casinos pay nearly 7%. Are you telling me the mining companies that are here now are simply going to pull up stakes? Or that they're going to start firing people? Both are absurd. They're too financially invested to simply pull out in a huff; and even if they did, there are many other companies out there who would happily fill the void, even at a higher tax rate. And you need people to physically go in there and get the stuff. If you fire them, you have fewer people to go in and get stuff. That slows production and profit. So it won't happen. So, again, why do NONE of you ever raise this issue? Are you so conditioned to avoid this sacred cow? You want a revenue source? You have a great one right here, right now. Quit avoiding it for once. No one - no person, no company - should get that much of a tax break while everyone else in this state continues to sink.
many tourists feel ripped off and dont come back to vegas, especially when you get MGM charging $30 for a can of red bull yes 1 can... if came to vegas on holiday and presented with a bill like this would you come back and spend money? no way
11% pay cut for state employees (including school teachers and university employees) seems a little steep. However, the reality of the economy dictates organizations cut costs and become more efficient. It would be wrong for the Governor and Legislature not to cut positions or to do the more humane approach of reducing everyone's salaries (again 11% is probably too much).
I've spent nearly 15 years reviewing Nevada State government. While many state employees are dedicated and hard working, there is still much waste going on. It's too bad the Governor and Legislature didn't prepare better by studying in more depth to identify where the waste is occuring and to cut there i.e. there is a lot of non-essential/low impact work being done by high-paid LCB employees. Nevada's current government was built when economic times were great. However, the structure no longer fits the current realities.
I like the idea of taxing the mining operations at the same rate as the casinos. 7% would take care of all the budget short-falls.
Raise taxes. That always helps?
DeerFoot, I don't think that 11% is too much because it only takes away my past 2 raises. I can definitely live off of what my salary was in 2007. If they rephrased is as people would go back to their 2006 or 2007 salaries, would people be up in arms? Probably, but come on, you have to give Nevada credit for always giving me huge raises!!
nevadaappleslices - very good points.
Do not cut across the board. Hurry up and just cut out unnecessary programs. (1) NDI is not necessary. Counties and Cities have law enforcement. (2) The State Ag dept. is not necessary. (3) Department of Parole and Probation can be left to the counties or privitized. (4) Consolidate community colleges. (5) Merge the rural counties to three or four and eliminate unnecessary judicial and county officers. They dont need two district court judges in each rural judicial district. They don't need a county clerk, sheriff, treasurer, DA in every cow county.
Another:
Each LCB Division should be able to justify their existance (at least at current staffing levels). This justification should be documented and demonstrated.
For example, LCB Audit provides very little value for the resources it uses. How much money does it really save the State? How meaningful are the audit recommendations? The work performed by LCB audit is so basic that it could be done by lower-paid new accounting grads from UNR or UNLV. And, don't believe the Legislative Auditor's Biennial Report claiming how much money he's saved Nevada. Anyone can spit out a non-defenisble number that is never questioned.
Also, it would be interesting to hear from current and former employees of LCB Legal and other LCB Divisions about "OT Requirements" during legislative session - force all to partake in the fraud so they keep quiet.
They are projecting revenue to fall to 04-05 levels. Incidentally 04-05 happened to be in the 03-05 biennium in which the last tax increase occurred. I should note that this biennium saw an increase in government spending of 36 percent (they had actually only budgeted about a 1 percent increase in spending, the next biennium they budgeted 42 percent but, yet again, spent even more). This was, by far, the largest increase in government spending in the last 30 years!
There is simply no denying this but we are in this problem because government expanded at unsustainable levels. Check for yourself, I got the numbers from Mr. Clinger himself: http://npri.org/publications/legislature...
It is not about maintaining essential services, its about maintaining spending, regardless of whether or not the services provided do any good.
Here is a $5.1 billion budget that restores funding to mental health clinics and higher education. http://npri.org/publications/nevadas-fre...
The cuts are taken from eliminating certain tax breaks and subsidies and programs created since 2005 (part of that drastic increase in government spending). It uses no additional revenue through tax increases or the federal government.
I wonder if Nevadaappleslices is one of those bloodsuckers making loads of money... 11% cut will still leave him with a huge paycheck. But what about the poor teachers making 20-30K a year??
Teacher salaries should be treated differently than state employee salaries.
State employee salaries have increased at a very high rate. For example, salary increases for state employees (not maxed out at their pay grade) were about 9% in 2008, 7% in 2007, 9% in 2006 etc... This includes the merit + cost of living increase. I know some legislative employees who received a total of 15% pay increases during a given year. This doesn't include all the OT payments.
What we have here is a failure to understand that taxes are necessary if you want to grow your economy.
The Govenor is a moron from the planet retarded. The problem is not NO Taxes but who pays what and how much.
People in Nevada are always screaming about taxes but there are NO taxes of consequence in Nevada.
There is the sales tax, which if you don't buy much except food, you don't have to pay anything.
There is the property tax, which applies only to land owners, not the general population.
There is the wage tax. Probably the stupidest tax of all time, since it charges business for employing people.
And of course there is the nickel and dime service and user fees, but in general they are
avoidable.
The Nevada economy has been run by two trick ponies - gaming and mining. One pay the freight,
the other pays next to nothing - and mining deals in a depreciating resource. They mining companies are profiting from depleting the natural resources of the state, which for all practical purposes is the people.
And what about the rest of the business entities.
They pay next to nothing. Contrary to Governor Moron, the places on the planet with the highest taxes also have the highest standard of living.
This Economic Forum is a bonafide basket case. Maybe we should tax stagecoaches. There probably is at least 10 of them in the state.
The solution is simple:
Every corporation pays 3% of their gross income in what I call a "Corporate Priviledge Tax.
That would lower the gaming tax, since all corporations would be treated equal.
If you are in business and don't want to pay the tax, do not become a corporation or LLC. Of course if you don't your personal assets would be at risk from more than your own stupidity.
It should not be the governments job to insure that business make a profit or a loss. The government should basically supply an equal playing field and then let the player play. If you lose, too bad. If you win, great.
Obviously you need education, healthcare, police, fire and some ancillary services, if you want to be a world class place to live.
On the otherhand, the Ecomomic Forum and Jim Gibbons wants Nevada to be Darfur West.
Fred Conquest
Professor of Anthropology
CSN
nevadaappleslices is either:
1) independently wealthy (or has a spouse who is wealthy)
2) a liar who is does not actually have his salary on the chopping block.
The latter seems a lot more likely.
And, DeerFoot, where do you get the idea that there have been such high pay raises for state employees? We got zero increase this year at UNLV, and our merit-based pay increase were cancelled. As far as I remember: since 2005 there was one 2% increase and one 4% increase and that is it. My rent is increasing at a higher rate than that. An 11% cut brings me back to 2004, not 2007. Problem is, things cost more now.
Plus, increases to the health care premiums amount to another $2300 a year for me (to cover me & my family), which is equivalent to an ADDITIONAL 4% paycut. Somehow I think nevadaappleslices failed to mention this since it doesn't actually effect him.
And nevadaappleslices: if an 11% paycut is really no big deal, then how about taxing everyone in Nevada 3%? That would be asking A LOT less of everyone in the state rather than asking state employees to absorb all the budget gap. Why tax teachers 11% and tax everyone else 0%? If you're worried about state salaries being to high, then how about cutting the salaries of those state employees with salaries over 100K at a higher rater than those with below 60K and those below 40K?
The 11% solution is just lazy. Gibbons just passing the buck to the legislature on this one.
Taxation is theft; those mandating taxation are thieves, thieves are criminals.
A free society is one not shackled by criminals imposing mandates of theft.
Government that governs the least governs the best.
"We cannot solve today's problems with the same level of thinking that created them". -A. Einstein
The gaming companies we're the last to drop on the stock market and will be the last to recover. Sure they look like good buys the way they have been moving up lately. Their talking about cigarette tax helping us out. How stupid are they. If they want to make money off tourist turn this town into Amsterdam with gambling. Tax the marijuana and there will be NO deficit. Simple easy and people do it anyway duh.
manny, you are forgettiing that there are 2 raises each year at unlv. One is cost of living that you mention ( 2 and 4 percent, alternated every othe year) Plus merit raise of $1000 to $4,500 each year. In my opinion, they have been VERY Generous to good employees! It is surprising that people say that I am evil to be willing to take a pay cut so that others save jobs. Of course I would love to keep my current salary, but I am responsible and live within my means and care about others. I am not one of the people that bought a house I can't afford, built up too much credit card debt that I'll need to file bankruptcy, or lives pay to pay. I am a responsible nevadan that cares to help my community by taking a pay cut to help others. The rotten teachers complaining that they can't take a cut and would rather their co- workers laid off --- you shouldfind a career where being selfish results in rewards and stay away from my kids becaause I don't want you as their Role model.
nevadaappleslices:
I also did not buy a house that I could not afford: my UNLV Assistant Professor salary was simply not enough. But I wonder how many more foreclosures there will be from state employees who responsibly budgeted what they could afford in a mortgage only to have salary cut by 11% + effective extra 2-4% cut for increased medical. I AM one of those people to live paycheck to paycheck. But I have a small car, never eat out, go to movies, etc., don't have cable tv, etc.
nevadaappleslices,
Your contention that UNLV merit raises are VERY generous does not make sense. First, at most only 2/3 of faculty receive merit raises each year. Second, only the highest-performing faculty receive the maximum $4,500 merit raise; the typical merit increase is ~ $2,000. For an associate professor earning ~ $80k per year, such a raise amounts to only 2.5% per year. Couple that with an average COLA of 2% per year and you get a less than 5% annual salary increase for an employee that is considered to be among the elite in their profession in the country. I personally work in the private sector where annual raises during boom times are often in double digit percentages, even for run-of-the mill employees in positions that are easily replaceable. Faculty at state-supported universities are not compensated as generously during boom-times as the private sector, so it is unfair to cut their pay as much as the private sector during rough economic times.
Mannyk,
Your assessment of Nevadaappleslices is correct. He is an uneducated idiot and a fake. Look at some of his prior posts. His grammar, spelling, and logic all show that he is lacking a college education. I doubt he even has children. He's just a short-sighted simpleton who does not want to pay taxes. Don't waste too much time trying to make a logical point with this idiot.
State employees including professors receive guaranteed pay increases. Their pay is not based on the quality of their work or their effectiveness on the job and they are virtually guaranteed tenure (or at least, it is very difficult to terminate them).
So yes, they should be paid less than private sector employees, the problem is in many respects, government workers are starting to see more generous salaries, benefits, and employment security than most people in the private sector.
This is a test to determine if there is enough intelligence and political courage within the walls of the legislature to save Nevada from becoming a failed state. The ACLU has already been approved by the federal courts to move ahead with it's CLASS ACTION suit against the Dept. of Prisons on medical care. When they win this one, the federal courts will order the upgrades which will force the state to pay that FIRST before anything else. Then there will be lawsuits over other medical guarantees under the U.S. Constitution. The pattern will repeat until the "dumb cowboys in business suits" get it that statehood is an American requirement with accompanied costs. If not, we'll get the bill and the feds will force a change in our tax structure. Embarrassing.
"State employees including professors receive guaranteed pay increases. Their pay is not based on the quality of their work or their effectiveness on the job and they are virtually guaranteed tenure (or at least, it is very difficult to terminate them)."
Still not sure why NPRI repeats this fallacy. I've pointed this out before: state employees are not guaranteed pay increases. That's an utter lie.
There are two types of annual salary/pay increases for state employees. The first is a merit increase. In order to qualify for such a raise (commonly known as a "step" raise, you MUST rate satisfactory or better on your annual evaluation. If you do not, you do not advance your pay. This is a direct result of the performance of the employee, as it is a performance review. There is no way that could be considered a "guaranteed" pay raise without a giant asterisk next to the word.
GUARANTEED!*
(unless you perform unsatisfactory work)
Secondly, the other type of raise given to state employees is a Cost of Living Adjustment, which seems to be at the whim of the Legislature. Sometimes state employees get it, sometimes they don't. Is that guaranteed? Nope. Only with yet another asterisk.
GUARANTEED!* **
(* unless you perform unsatisfactory work)
(** unless the Legislature says no)
Obviously, NPRI receives funding regardless of the accuracy of their dogma. (Or, is it a reward for inaccurate dogma?)
you guys can judge and criticize me all that you want and name call. I receive COLA and substantial merit raises every year. Come on, 2/3 of faculty get merit raises, what did you do (or not do) that you aren't getting them? I honestly didn't know that there were faculty that didn't receive merit in addition to their COLA raises each year. Maybe those in the bottom 1/3 that don't receive a merit raise each year shouldn't be complaining about the pay cuts that are going to translate to fewer lay offs. Gibbons may be saving your job with the pay cuts and you are criticizing him .... oy vay.
Legalize marijuana and tax it just like cigarettes. I believe there are more people smoking pot than cigarettes. It would generate over a 100 million in taxes a year just in Vegas. Sell it out of government stores like alcohol where you must be twenty one. In CA there's some town that are doing very well off money generated from the sale of marijuana. I have another question why didn't the monrail go to the airport. We have to grow with the times. We don't need 5000 taxi cab's burning fossil fuels. Come on city officails grow with the times. The time is green energy and smoke.
I can tell you that the next 3 yrs 7 months of economic forcast looks bleak.....thats how long we have till Osamabama is done destroying this country
smoke14
DUDE!! GET OVER IT!! HE WON!! Obama has NOTHING to do with the current Nevada woes. Unfortunately, Nevada has relied too heavily on consumer support. Well, now consumers are just wanting the best for their hard earned monies. If you are so unhappy with this country, then MOOOOOOVE!!! Get out!! We won't miss you!! Enjoy yourself in another country that isn't experiencing what we are....of course that might be on another planet but hey!! whatever makes you happy!!! Go away!! Save yourself!!
What???
Obama's $12 a week (will go down to $8 a week in Jan) handout is not generating a boom economy?
Say it ain't so.........
Once again, if you are so unhappy with this country and the way it's being run, then MOOOOOOVE!!! Get out!! Enjoy yourself in another country or whatever makes you happy!!! Go away!! Save yourself!!
no GEENAB65, I have the right to piss and moan about the joke of a president that we have just like you liberals did for the last 8 years...now that one of your hero's is in we all have to sit quietly on our hands and just take it....SORRY...if I had to hear all the unjustified bellyaching about Bush the last 8 years it is coming back at ya about your buddy Osamabama
I am happy to pay whatever taxes necessary to help sustain a better community/country... have better teachers, equipment for police, fireman, etc.
What confuses me mostly about the current tax / economic arguments directed against Obama is that most arguments simply they want him out of the way. Republicans/capatalists claim he's overspending, and government's becoming too big, etc... and he isn't fixing anything but prolonging the situation... yet... no one's able to fix themselves without taking the money. If there is a better solution there's nothing in there way stopping them from proceeding with it. In fact, they have been given more support through our government to make sure they do so, and then they fail.
Who exactly is "you liberals"? And again , if you are so unhappy with this country and the way it's being run, then MOOOOOOVE!!! Get out!! Enjoy yourself in another country or whatever makes you happy!!! Go away!! Save yourself!!