Governor’s plan: Layoffs, pay cuts, tax loophole closures

By Cy Ryan

Published Tuesday, Feb. 16, 2010 | 11:58 a.m.

Updated Tuesday, Feb. 16, 2010 | 7:42 p.m.

CARSON CITY — Gov. Jim Gibbons’ proposal to close the state’s $887 million budget shortfall brought a quick response from lawmakers, who attacked the plan for its additional cuts to education.

Gibbons proposed an additional $35 million in cuts for K-12 schools, on top of the $166 million he has already proposed.

The additional cuts are meant to “maintain equity with state workers,” who received a 4.6 percent pay decrease through furloughs, according to Gibbons’ chief of staff, Robin Reedy.

Because the state doesn’t directly control teacher and many university employee salaries, school district and many higher education salaries have not been impacted.

The governor is seeking a 1.75 percent salary reduction for teachers in public schools and professors in the university system.

Speaker Barbara Buckley and Senate Majority Leader Steven Horsford said lawmakers have been looking at ways to lessen the proposed cuts to education.

“This is going the wrong way,” Buckley said.

Horsford said Gibbons is making “the situation worse. This will harm children and education.”

Gibbons on Tuesday signed a proclamation calling the Legislature into a special session at 9 a.m. Feb. 23 to deal with the state’s fiscal crisis.

He laid out topics for legislators to consider and included a spread sheet of cuts to state programs, sweeps of different bank accounts and some revenue increases.

Among those proposals are a 10 percent cut to many state agencies; a plan for state workers to go on a four day a week, 10 hour a day schedule; closing many state offices an extra day; reducing funding for the Nevada Millennium Scholarship; and increasing state worker furloughs from 8 hours a month to 10 hours a month.

While legislators have been working with Gibbons’ staff, they are preparing their own list with suggestions they say will lessen some of the most dramatic cuts.

Mining industry to pay more

Among the biggest surprises in the plan was that Gibbons included a $25 million a year increase in the amount mining companies pay on the net proceeds on minerals.

Gibbons would change state law to reduce the number of exemptions the companies can take.

Gibbons denied that the proposal amounted to a tax increase. “It is simply clarifying the deductions that they are allowed to take,” he said.

Not so, said Jim Wadhams, a mining association lobbyist.

“When more revenue is exacted from any of us, as taxpayers, that’s a tax increase,” Wadhams said.

Chuck Muth, president and CEO of Citizen Outreach, which has pressured politicians, including Gibbons, to sign a pledge not to raise taxes or fees, also said the proposed change amounts to a tax increase.

“There’s no way to wiggle out of that one,” he said.

“It’s not that he’s doing it,” Muth said. “It’s denying what he’s doing. To be disingenuous, to propose a tax increase and say it’s not a tax increase, that’s what’s most aggravating.”

Reedy, Gibbons’ chief of staff, said “it’s a matter of fairness. The fact is, they pay very little.”

Wadhams said that the mining industry has been willing to come to the table and had been talking to legislators about paying a one-time fee or pre-paying some taxes.

Horsford said he wanted to “allow mining and other private-sector industries to come to the table and be part of something meaningful.”

He wouldn’t say how much he believed could be raised from the mining industry.

Impact of cuts on other state agencies

Other functions of state government also would be impacted by the proposed budget cuts.

The DMV, now open six days a week, is looking at scaling back to four or five days a week, said Edgar Roberts, director of the DMV. He said offices could be closed Sundays, Mondays and Tuesdays.

For Nevada’s prisons, Department of Corrections Director Howard Skolnik has spent the past year saying his department couldn’t institute eight hour a month furloughs without jeopardizing the safety of inmates and workers.

Now, Gibbons is ordering all departments to institute 10 hour monthly furloughs, without exemptions, his staff said.

That would increase the pay cut for state workers from the existing 4.6 percent to about 5.77 percent, Reedy said.

Skolnik said prison programs would have to be eliminated, there would be rolling inmate lock-downs and prisons would have to be closed.

The governor is recommending the 140-year-old state prison in Carson City be closed and inmates be transferred to other institutions. He is also suggesting shutting down the Casa Grande Transitional Housing Facility at a savings of

$1.9 million.

At the Department of Health and Human Services, Director Mike Willden said he would request welfare offices remain open five days a week.

The state processes 1,000 applications a day for things such as food stamps, welfare and Medicaid.

“The burden and pressure will be too hard to run four days a week,” Willden said.

The federal government sets goals that states process applications in a timely manner — generally between 30 and 45 days. Eight months ago, the state was hitting its goals about 95 percent of the time. Now, it’s only reaching them 80 percent of the time.

Additionally, the governor wants to sweep an estimated $89 million from reserve funds.

An estimated $14.7 million would be swept from a program that provides health insurance for state and other government employees.

To generate more money, the governor wants to hire Chicago-based InsureNet to set up cameras on highways around the state to find and penalize uninsured drivers.

Nevada would receive a guaranteed $30 million.

If the state doesn’t recoup at least that amount in additional fines and fees, the difference would be paid in June 2011 from a trust fund established by the company.

Also under Gibbons’ proposal, the state Attorney General’s Office would reduce its consumer advocate’s budget by $500,000 next fiscal year.

With these cutbacks, the governor is projecting increased retirements of state employees, saving another $5 million.

He didn’t, however, include tackling a water ruling that has placed in jeopardy the Southern Nevada Water Authority’s pipeline project, saying it needs more analysis. But he left the door open to include the matter on the special session agenda before it adjourns.