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October 1, 2014

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POLITICAL MEMO:

Governor’s speech will lay out state’s budget problems

Gov. Jim Gibbons

Gov. Jim Gibbons

With the rapid pace of recent developments in Carson City, perhaps it’s time to answer some questions about the state’s troubled finances on the eve of Gov. Jim Gibbons’ rare even-year State of the State address.

Why is Gibbons giving a State of the State address?

Gibbons will deliver the speech to lay out the state’s budget problems and explain why cuts need to be made. Gibbons is expected to call a special session of the Legislature to balance the budget.

How big are these fiscal problems?

Two weeks ago, an outside panel of business leaders met and offered new projections on how much tax revenue state government would receive. The state faces an $881 million general fund deficit between now and June 2011.

It’s a huge number that would require a 20 percent cut in government operations to address if the cuts took effect March 1.

What’s being done about it?

Gibbons met with Democratic and Republican legislators last week to discuss how to balance the budget. On Wednesday, his staff presented to legislators a list of cuts totaling $328 million. With some other fiscal maneuvers, the governor’s staff says the cuts total $418 million.

That is less than half of the total budget hole that must be filled, according to the constitution. Legislative sources say financial maneuvering could bring the size of the remaining hole to $300 million. On Friday’s “Face to Face With Jon Ralston,” the Gibbons’ administration put the budget gap yet to be filled at $250 million.

What are some of the specific cuts being proposed?

The Nevada System of Higher Education and school districts each face at least a 10 percent cut. Clark County School District officials said a cut of that magnitude would mean teacher layoffs and increased class sizes, or pay reductions for teachers and other school district employees.

There would also be 235 layoffs, most of those coming from the Corrections Department with the closure of a prison in Carson City. Also proposed are 10 percent cuts in child protective services and the foster care system in Clark and Washoe counties. State reimbursements to hospitals would be cut. Programs to place mentally ill in housing would be capped.

How will they fill the rest of the budget hole?

That’s the big question, and where any battle between the governor and Legislature will be waged. Some ideas are floating around. They include:

• Taking a portion of $4 billion in funding that local governments have earmarked for public work projects.

• Fee increases.

• Salary cuts for state workers, teachers and university employees.

• Having mining prepay some of its taxes.

Gibbons’ staff have hinted at plans to raise additional revenue but have declined so far to reveal them.

Wait, the governor and lawmakers are meeting without histrionics involved?

They are working together, so far. Lawmakers said they have not signed off on any of the cuts Gibbons’ presented Wednesday, but they also did not dismiss any of them outright.

What about taxes?

No one — no one with a vote, to be more precise — is talking about raising taxes. Democrats and Republicans, who insisted during last year’s session that they cut all they could without harming “essential services,” now say that in this prolonged recession, businesses and people can’t afford to pay more taxes.

Last week you scolded elected leaders for promising transparency and never delivering. Have these budget talks been as secretive as ever?

Robin Reedy, Gibbons’ chief of staff, on Wednesday night shared with reporters a detailed list of the cuts being considered. It was, and still is, early enough in the process for the public to look at the list, review and react.

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