More budget changes made

"I have shown we can balance the state budget without raising taxes," Gibbons said during an afternoon news conference.

But like the original budget plan, the supplemental proposal also is likely dead on arrival at the Legislature, where lawmakers already have recommended their own budget changes.

Gibbons challenged the Legislature to use his plan instead. The Legislature’s approach, he said, will bring about $1 billion in tax increases.

Repeated attempts to get a response from legislators were unsuccessful Wednesday.

The Gibbons supplemental plan will be presented later at a joint Senate-Assembly budget committee hearing.

Under his new plan, Gibbons would cover the $900 million shortfall by using $357 million in federal stimulus funds, securing $52 million by cutting out full-day kindergarten programs in 23 schools, taking out a $160 million line of credit next year instead of this year and securing $340 million by adopting a controversial tobacco asset sale plan supported by Lt. Gov. Brian Krolicki.

Gibbons agreed last week to prepare amendments to his original $6.17 billion, two-year proposed budget.

He made the changes because the Economic Forum last Friday revised down by $500 million its December forecast of tax revenues state government will receive over the next two years.

The forum, a group of five business people, estimates the amount of tax revenue available for state government to spend. Its estimates are binding on the governor and Legislature.

On top of the forum’s forecast, state government by law has to find another $391 million to cover declines in sales taxes and property taxes that public schools receive in addition to state appropriations.

At the news conference, Gibbons conceded his plan doesn’t have much chance of success at the Legislature.

"Now is not the time to raise taxes," he said. "How do I tax a single mom with two children who has lost her job."

A joint Senate-Assembly budget committee agreed Monday to limit salary decreases to teachers to 4 percent and to 4.6 percent for state employees. State employees get the cut by taking 12 unpaid furlough days a year. Gibbons wants 6 percent pay cuts.

The same committee Friday is expected to restore more than $300 million of a $473 million cut Gibbons proposed for the higher education system.

The tobacco plan might be the most untenable part of his proposal

In November, Krolicki said the tobacco asset sale plan might no longer work because of the decline of the New York financial markets.

Buyers would not be ready to buy Nevada tobacco assets, he said.

Under the plan, Nevada would receive a lump sum payment by agreeing to pay buyers what it receives each year in tobacco settlement funds.

The buyer would receive the $45 million a year that Nevada now receives from tobacco companies under a settlement to compensate the state for some of its costs in paying for tobacco-related illnesses suffered by indigent people.

In a letter to the governor and legislators, Krolicki said Nevada might now secure $300 million to $500 million by selling the tobacco fund asset and, if necessary, pledging to buyers unclaimed property funds the state receives.

During the news conference, Gibbons was challenged for saying he does not favor new taxes when his budget always has included a 3 percentage point room tax increase passed by legislators in March. The tax brings in $220 million over two years.

Gibbons did not veto the tax increase, but let it go into law without his signature.

"That did not violate my promise," the governor said.

Contact reporter Ed Vogel at evogel@ reviewjournal.com or 775-687-3901.