A shortsighted proposal

Wednesday, June 4, 2008 | 2:06 a.m.

With the state facing a financial crisis, Gov. Jim Gibbons is considering a plan to sell off future revenue due to the state for a quick cash infusion.

As David McGrath Schwartz reported in Tuesday’s Las Vegas Sun, sources say the state could receive a one-time payout of $500 million to $700 million in exchange for future money from big tobacco companies.

Under a 1998 legal settlement, Nevada and 45 other states receive annual payments from tobacco companies based on their sales in each state. Since 2000 Nevada has received more than $367 million, which has gone to fund the state’s Millennium Scholarship program as well as a variety of health programs.

Selling off the future revenue would require legislative approval, either in a special session or in next year’s regular session.

Previous proposals to “securitize” the tobacco settlement money have failed to make it out of the Legislature. Assembly Speaker Barbara Buckley, D-Las Vegas, said those proposals showed that Nevada would receive “pennies on the dollar.”

The governor likes to say he has been “prudent” in handling the budget, but this proposal is a sign of desperation. Gibbons has been insistent on keeping his no-new-taxes pledge, which will be increasingly difficult considering the state doesn’t take in enough money to pay for basic services. He recently told state agencies to prepare for 14 percent cuts in their budgets for fiscal years 2010 and 2011.

Gibbons’ spokesman, Ben Kieckefer, admits that selling off the future revenue would be “essentially another stopgap.”

Nevada doesn’t need any more stopgaps. It needs a solution. The problem underlying the current budget crisis is the state’s tax system, which hangs the budget precariously on volatile sources of revenue. Several lawmakers are in favor of looking at solutions, but Gibbons has no interest. Instead, he seems content to use stopgap measures to merely delay the problem, not solve it. That is unacceptable.