Las Vegas Sun

March 29, 2024

MEMO FROM CARSON CITY:

Crumbling finances cast pall over capital

Reality sinks in: Agonizing, unpopular actions must be taken

A feeling of despair settled on Carson City last week. It was like fine desert dust, perceptible and sullying to everything it touched.

“Grim is the word. I can’t think of a better word,” said state Sen. Warren Hardy, a Republican with a sprawling Clark County district.

His account was seconded by legislators and lobbyists, including veterans who have decades of experience and have seen nothing like this.

And Hardy counts himself a sunny optimist: He says he’s usually so optimistic that if he were in “Moby Dick,” he’d jump in a rowboat and bring the tartar sauce. (Friends of the whales: He’s joking.)

“I think we’re all starting to come to the realization we’re going to have to cut things we didn’t want to have to cut and take actions we didn’t think we’d have to take,” he said.

The bad news came in the form of new revenue expectations, $400 million to $500 million less than forecast.

“Remember everyone was saying Gov. Jim Gibbons’ budget was the end of the world?” he said, referring to the bipartisan criticism of across-the-board 6 percent pay cuts and a 36 percent cut in higher education.

“And we’re $500 million short of funding a budget was the end of the world. We have to find revenue to fund that budget.”

Or as Tray Abney, a lobbyist for the Reno-Sparks Chamber of Commerce and former aide to Gibbons said, “Suddenly the governor’s budget is looking robust.”

Hardy said the newest batch of bad news would make a tax increase even more difficult, as it reflects a staggering economy that can’t take another hit in the form of a significant tax increase.

At a news conference last week, John Ritter of Focus Property Group, a company that has been hammered by the recession, said he thinks a tax increase that would net $1 billion is necessary.

Assembly Speaker Barbara Buckley, D-Las Vegas, said that’s not going to happen.

But the state is now $2.16 billion short of what it needs just to maintain service levels from 2007, after you factor in automatic cost increases such as inflation and contractual raises.

Federal stimulus money of about $600 million should help a little, but the draconian cuts are coming.

Hardy said members of both parties had hoped to stave off wage and benefit cuts or deep cuts across the board. That seems impossible now, he said.

If there’s an upside, Hardy said, he’s never seen more bipartisan comity during his more than two decades in Carson City as both legislator and lobbyist.

“We’re all looking at each other,” he said. “There’s nothing to fight about. There’s no point in pointing fingers. We’re all in it together.”

Like kids at a crummy summer camp.

Ever the optimist, though, Hardy said he sees some signs we’ve hit bottom.

“If you look on page two instead of page one, you see some good signs,” he said.

Las Vegas Sands, after hitting a 52-week low of $1.38 per share, closed at $4.48 Friday.

MGM Mirage had a 52-week low of $1.81, but closed at $4.65.

“I should have bought some,” Hardy quipped.

Indeed, if a state could sell stock in itself, now would be a good time to buy. Hard to see how it could get much lower.

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