Miller orders government hiring freeze

CARSON CITY -- Saying the state faces the "potential for a very serious economic problem" because tax revenue has slowed over the past two years, Gov. Bob Miller today ordered a hiring freeze for most state agencies.

The governor said the freeze will save about $7.5 million this fiscal year, which ends June 30.

"While indications are that revenues are turning upward from where they have been, as governor, I must take the difficult but responsible action now to prevent our state budget from becoming irreparably out of balance," Miller said.

Collections from state sales and gaming taxes have come in lower than expected compared with last year, which had also fallen short. Projections called for a revenue increase of 6 to 7 percent over the 1998 fiscal year. The actual increase so far, however, has been 4 percent.

State Budget Director Perry Comeaux said the revenues for the 1998 fiscal year came in $23 million lower than expected. Tax collections are expected to be $50 million lower than expected this fiscal year, he said.

Adding to the problem is the need for the state to appropriate about $34 million early next year for local school districts, whose tax revenues are also coming in lower than expected, Comeaux said. He also said that another $15 to $16 million will be needed to pay for class-size reduction programs in the schools. This is money that had been expected to be covered by tax revenue.

Also, Comeaux said the state will need to replenish many of the state's emergency accounts, which are becoming depleted because of heavy expenses this year.

The shortfall in tax receipts, combined with the extra appropriations, is costing the state between $75 million and $90 million above anticipated costs. Miller said budget experts, however, believe unspent money in state budgets may reach $67 million, which could be used to offset the decline in revenues.

The hiring freeze takes effect Wednesday and will be similar to the one ordered in 1991 by Miller during the slump in the economy. The governor said the freeze will apply to most agencies. Exempted will be certain public safety functions and other key positions as well as some non-general fund agencies.

Non-general fund agencies derive their money from fees or from other sources outside the general tax revenue.

Miller also said an exception will be computer programmer positions to correct the Year 2000 problem in the state's computer program.

"Depending on the performance of the Nevada economy in the coming months, these steps should bring the budget within $20 million of where we need to be on June 30," Miller said.

"After we receive the revised revenue forecasts from the state Economic Forum on Dec. 1, I will revisit the situation and consult with the governor-elect to determine what additional steps, if any, should be taken.

"Nevada has enjoyed a great deal of prosperity in recent years, but we have also survived the depths of recession. By working together, we will achieve the goal of a balanced budget by June 30."

Comeaux said there were about 1,970 vacant positions in government last week. That's 12.6 percent of the state's 15,605 work force.

In addition to the freeze, Comeaux said his office will be directing agencies to make other savings, where there have been smaller than expected caseloads.

Looking to the upcoming 1999-2001 biennium, Comeaux said there won't be any big pay raises for public employees or major increases in staff.

"We're going to have to pull in our horns," he said.

Assemblyman Morse Arberry, D-Las Vegas, chairman of the Ways and Means Committee, said he supports the governor at this point. "He has the finger on the pulse now and we (the Legislature) are not in session," Arberry said.

"Once we get in session and if the revenues turn around, we will allow hiring to continue," Arberry said. "We must give the taxpayers the services they deserve. People are demanding more services. The state is growing as a whole.

"People are saying, 'Hey, I pay my taxes on time and when I go into a state agency I don't want to have to wait in line. But as of now I support the governor."

Senate Majority Leader William Raggio, R-Reno, said the freeze was "very prudent." He said he has talked with Miller about the freeze and he doesn't foresee any adverse effect.

"There is not a critical situation at this point but it's the prudent thing to do," said Raggio, who heads the Senate Finance Committee. "Whoever is the new governor will have to take a hard look at new programs." He said there may be enough money only to maintain the present ones.

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