State’s financial outlook takes another hit

By Cy Ryan

Wednesday, April 1, 2009 | 12:16 p.m.

CARSON CITY – The state budget shortfall for the upcoming two-year period has grown by another $400-$500 million, lawmakers said today.

Previous estimates had put the funding shortfall to maintain current service levels at $1.8 billion.

“The outlook isn’t good,” said Assembly Speaker Barbara Buckley, D-Las Vegas. “The general public doesn’t know how bad it is.”

In explaining the growing shortfall, lawmakers cited a continuing decline in tax revenue and holes they have discovered upon reviewing the budget submitted by Gov. Jim Gibbons.

The Economic Forum will meet May 1 to forecast how much money the state will have to spend during the upcoming biennium. Lawmakers can’t exceed those limits unless they raise taxes.

The forum last released tax revenue projections in December. While the lawmakers discussed the bleak outlook, they made moves to tentatively increase the budget proposed by Gibbons.

Gibbons’ proposed spending plan calls for 6 percent pay cuts to state worker, university employee and teacher pay. In addition, the governor is recommending a reduction in the subsidy for public employees’ health insurance, including eliminating subsidies to state workers who retire after July 1.

Assemblywoman Sheila Leslie, D-Reno, said the lawyers “are going to reject the governor cuts” as a violation of employment contracts. Senate Majority Leader Steven Horsford, D-Las Vegas said eliminating the insurance subsidy for government retirees is “morally wrong. It is not an option.”

Changing the subsidies would save $158 million over the next two years. Buckley said the cuts to state workers would total 15 percent, when the salaries and benefit reductions are added up. Cuts will be made, but they will not fall on one group -- state workers, school teachers and the university system, she said.

The committees did not take any action on the salaries or insurance benefits.

Gibbons has recommended a reduction of 32 employees in the state Gaming Control Board.

The subcommittee tentatively agreed to restore 14 of them after being told that the loss of auditors would mean large casinos are examined every three years instead of every two and a quarter years.

Adding back the 14 employees would cost about $2.4 million over the next two years.

The subcommittee also rejected the governor’s recommendation to eliminate the Consumer Health Assistance program. The office has 10 full-time employees. Eliminating them would save more than $960,000 over the next two years.

The subcommittee tentatively agreed to keep seven or eight employees. That would mean adding back about $200,000 to the budget.

Gibbons had reduced the staff of the Nuclear Projects Office from seven to two. But the subcommittee is leaning to having a staff of four, plus providing a $50,000-a-year contract to a former employee.

The action by the subcommittee, if adopted, would add $683,000 to the budget over the next two fiscal years.