Budget shortfall expands

CARSON CITY -- Key lawmakers said Wednesday the hole in Nevada's budget has grown by another $100 million, bringing the projected shortfall closer to $3 billion to maintain current government service levels in the next two fiscal years.

Leaders from both the Assembly and Senate held a closed-door meeting with key business leaders to discuss the dire economic situation and to look for solutions to the state's financial crisis.

Several revenue-raising ideas were discussed, including a modified business tax, changes to the sales tax and taxes on services, but no recommendation was made.

Weeks ago, legislators said the budget shortfall had grown by $500 million from an official estimate in December, and on Wednesday revised that amount to $600 million.

"It was a wake-up call to say that we're broke," said Tim Crowley of the Nevada Mining Association. "They got a validation from everyone in the room that we feel your pain, and recognize that we're going to have to raise taxes."

The meeting between several legislators and more than a dozen business representatives was held in advance of revised revenue projections that the state Economic Forum will release on May 1. Those final revenue projections must be used by legislators when they revise the state budget.

Any new holes in the budget not covered by the anticipated revenue must be filled by raising more revenue or by making additional cuts.

Attendees were given a packet of information that included a list of preliminary add-backs to Gov. Jim Gibbons' budget totaling $62.1 million to improve funding for health and human services, public safety and cultural affairs.

The list did not include major outstanding budget decisions such as proposed cuts to higher education and state employee salaries.

"They're waiting for the May 1 numbers, and there's the worry that there always is, that those numbers could be worse," said Richard Morgan, lobbyist for state university-college system regents. "It's a crisis situation. It has the full attention of the legislative leadership, and it certainly has the full attention of the folks who came in today."

Assembly Speaker Barbara Buckley, D-Las Vegas, said the business leaders brought a variety of ideas, including raising taxes in the short term and "sunsetting" the increases if not needed once the economy improves, looking at a long-term solution such as broadening the tax base, or simply raising the rates for existing taxes.

Another idea was to focus on businesses that pay little or no taxes, such as consultants.

"We need to fix the overall structure of taxes for the long term for the state," said Mike Cate of Pavers Plus, who also attended the meeting. "It's a situation where you can't let one or two industries try and take care of the whole state. It just doesn't work anymore."

Buckley said the next steps the Legislature will take to raise revenue are to hold open hearings and town hall meetings.

The lawmakers have been setting priorities for what they will add back to the governor's proposed budget, but depending on how much the revenue projections fall, some of those add-backs may be impossible.

"My hope is that we will be able to restore some of the governor's cuts that just did not make sense for our state," Buckley said. "We may have to do some cuts, but to the level he suggested, I think it would just be intolerable."