Miller's freeze on hiring hailed as 'prudent'

CARSON CITY -- Gov. Bob Miller's order to temporarily freeze state hirings because of a shortfall in tax revenues has gained support from both sides of the aisle in the Legislature.

The action could spell doom for such things as the request from state workers for a 10 percent pay increase and for creation of a dental school at UNLV in the next biennium.

"This was very prudent," said Senate Majority Leader Bill Raggio, R-Reno, who has clashed in the past with Miller over budget issues. Assemblyman Morse Arberry, D-Las Vegas, who chairs the Ways and Means Committee, said he backs the governor but added he will take a look at the freeze when the Legislature convenes next year.

In addition to the hiring freeze, Miller is ordering agencies to make other savings in order to keep the state in the black.

State Budget Director Perry Comeaux said, however, "We're not in a recession. The economy is perking along."

The concern, Comeaux said, is that tax collections were expected to increase by at least 6 percent. Instead they rose only 4 percent during the fiscal year that ended June 30 and are expected now to increase only 4 percent to 5 percent this fiscal year.

That meant $23 million less in tax revenues last fiscal year and an expected $50 million shortfall this year.

The revenue estimates are made by the Economic Forum, a group of five specialists in finance. The forum's forecasts, which were made for the 1997-99 fiscal years in May 1997, turned out to be optimistic.

The forum is meeting today to take a look at how close it came and to start making its predictions for the 1999-2001 fiscal years. Those estimates are due Dec. 1.

Budget and population experts from the executive and legislative staffs will present to the forum their preliminary views of how things will look in the next two years. Comeaux thinks revenues will rise 4 percent to 5 percent in the coming two years, which he calls "healthy growth."

The forum then looks into its crystal ball and comes up with the projections that must be followed by the governor and Legislature.

Compounding the problem of lower than expected tax collections is the fact the state may have to pump an additional $50 million into local schools because their tax revenues did not reach expected levels.

"We have to make the schools whole," Comeaux said, referring to the sales tax and estate tax revenues that go to the schools that also didn't measure up to predictions.

Adding to the financial burden, the state must replenish a number of emergency funds that took care of unexpected expenditures since the Legislature adjourned in July 1997.

Balancing the scales is the fact that Medicaid and welfare numbers are not as high as predicted, which should mean some savings to offset the shortfall in tax revenue.

Comeaux added that the sales tax -- the biggest producer of revenue for the state -- has started to rebound in the past few months. In July it rose 5.5 percent, and it jumped 6.8 percent in August, the highest percentage growth in 17 months.

"Gaming (revenue) is not exactly burning it up, but it's not too bad," Comeaux said. "I'm worried about the sales tax."

The sales tax contributes 38.4 percent to the general-fund budget, and gaming taxes account for 35.1 percent.

State agencies have presented their "wish list" budgets which, in some cases, call for major expansion of programs. Raggio, chairman of the Senate Finance Committee, said they may turn into "maintenance budgets" because the state may be able to support only ongoing programs without any new ones.

Miller said the hiring freeze won't apply to public-safety agencies or computer programmers who must make sure the year 2000 problem is corrected. Agencies financed by special fees or federal funds won't be affected, and there may be other exceptions.

The governor expects the freeze to save about $7.5 million. Currently, of the state's 15,605 positions, 1,970 are vacant.

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