Budget forecast looking worse

CARSON CITY -- A new fiscal analysis further underscores that lawmakers will need to raise taxes to keep the doors of schools open and the doors of prison cells locked, according to Assembly Speaker Barbara Buckley.

The analysis predicts revenue for the next biennium will be as much as $500 million less than estimated just five months ago.

"We are all just trying to save the essentials. There has to be a balance," Buckley, D-Las Vegas, said Wednesday.

"On one hand, businesses are laying off employees, but the effects of a 37 percent cut are staggering," said Buckley, who as soon as today could announce with other legislative leaders additions to the governor's proposed budget.

Legislative fiscal analysts estimated state government would receive $5.1 billion in tax revenue in the biennium beginning July 1, or roughly 37 percent less than the $8 billion Gov. Jim Gibbons said in January would be needed to keep services and spending on track.

The current budget, as approved in 2007, is $6.8 billion. After budget cuts earlier this year, spending stands at about $6.3 billion. The $5.1 billion in revenues would represent revenue shortfalls of 25 percent in relation to the approved budget, and about 19 percent in relation to actual spending.

Back in December, the state Economic Forum estimated the state would receive $5.6 billion in tax revenue during the July 1, 2009, through June 30, 2011, budget cycle.

But with gaming and sales taxes falling every month, that figure now is $500 million less.

With the latest analysis, Senate Minority Leader Bill Raggio, R-Reno, said state government might be $2 billion short of what it needs to fund essential services.

But he was not ready yet to talk about tax increases.

Before that happens, Raggio said, Republicans and Democrats must agree what state spending is essential and determine whether the federal government will give Nevada a waiver to secure $395 million in economic stimulus funds.

Assembly Minority Leader Heidi Gansert, R-Reno, also isn't talking about tax increases now, saying businesses are having as difficult a time staying afloat as state government.

"We have gone from being in dire straits to a state of crisis," Gansert said "But it is the private sector, too. They are seeing layoffs and a rollback in wages. We don't want to hurt them more."

The Economic Forum, a group of five business leaders, meets again May 1 to make new estimates on state tax revenues. Whatever total tax figure it sets is binding on the Legislature in approving its budget, unless lawmakers add revenue from tax increases.

A Democratic budget plan that specifies tax increases probably won't be released before the May Economic Forum meeting.

The latest news about Nevada's economy substantiates Gibbons' belief that legislators should not increase taxes, said his communications director, Daniel Burns.

"The economy is getting worse. Whenever has there been a worse time to raise taxes? You aren't going to create jobs or stimulate the economy. You are going to kill jobs and kill the economy."

Gibbons will veto any tax increase bills coming out of the Legislature, Burns said.

Buckley anticipates the veto. She said the Legislature needs to pass its budget and tax increase measures at least six days before the scheduled June 1 adjournment date.

The governor has five days to sign or veto bills after they are sent to their desks.

That will give the Legislature time to override Gibbons' veto and go home on June 1, Buckley said.

With Democrats controlling the Assembly by a 28-14 margin and the Senate with a 12-9 edge, they need the support of two Republicans in the Senate to override a Gibbons veto if their members remain united.

Contact Capital Bureau Chief Ed Vogel at evogel@reviewjournal.com or 775-687-3901.