State’s shortfall $2.2 billion

CARSON CITY -- Accounting changes by Nevada lawmakers created a revenue shortfall estimate of $2.2 billion that, while grim, is less than a nearly $3 billion gap to close if government services stay at current levels, the state's budget chief said Monday.

Budget Director Andrew Clinger declined to call the change sneaky. But he said that legislators clearly made the projected shortfall for the next two fiscal years look smaller though new revenue updates have pushed it to the higher amount.

When legislators discussed state budget woes at a news conference Thursday, they listed revenues recommended by Gov. Jim Gibbons at a little more than $6.1 billion. But Gibbons' spending plan has a revenue figure of less than $5.7 billion, a difference of more than $400 million.

The Republican governor's plan also lists several tax-related solutions the Democrat-controlled Legislature can take to ease the shortfall.

By putting the solutions into the governor's top line of less than $5.7 billion in estimated revenue, the lawmakers' revenue estimate climbs to more than $6.1 billion. That accounting change is the biggest factor in the updated revenue shortfall, dropping from Clinger's $2.8 billion to the legislators' $2.2 billion figure.

"The effect of that is to make the amount needed to maintain current services look smaller by already including in the top line new revenue that they have to approve," Clinger said.

Using the higher shortfall figure makes unlikely the passage of a tax package that is lower than the record $836 million tax increase passed by lawmakers in 2003 and still maintain current services or even a somewhat reduced service level.

Using the lower shortfall figure, the legislators could get below $836 million in new or higher taxes once federal stimulus dollars and other adjustments are included in the final budget mix. They would not face 2010 campaign ads accusing them of backing the biggest tax increase in Nevada history.

To get below $836 million, the legislators would not be able to maintain current government service levels but could leave intact "essential services" and avoid some of the deep cuts proposed by Gibbons. Those cuts include 50 percent reductions in budgets for the two state universities in Reno and Las Vegas.

John Ritter, a Southern Nevada businessman who has been working with the Legislature and a group of business leaders to find revenue solutions, said at the Thursday news conference that he estimates the business community could pay about $1 billion in new taxes.

Asked whether she agreed that the state needs an additional $1 billion, Assembly Speaker Barbara Buckley, D-Las Vegas, seen as a candidate for governor next year, said, "I don't think the B-word is sustainable."

In declining Thursday to release their list of spending priorities and "add-backs" into Gibbons' proposed budget, Buckley and other legislative leaders said they would wait until the state Economic Forum releases its final revenue projections on May 1.