Steeper wage cuts to be sought by Gibbons

CARSON CITY -- On the eve of a critical meeting of the state Economic Forum, Gov. Jim Gibbons said Thursday that he will ask legislators to increase the 6 percent salary reductions he proposed for state employees, teachers and university workers.

Because of the continuing recession, Gibbons expects the forum will estimate today that state tax revenue over the next two years will be $350 million to $500 million less than the projections it made in December.

The new estimate of the forum, a group of five business leaders, will be binding on state leaders as they formulate a budget this month.

The governor built his two-year, $6.17 billion budget on the earlier projections. To bridge an additional $350 million to $500 million shortfall, the salary reductions would have to be 11 percent to 16 percent, according to Andrew Clinger, Gibbons' budget director.

The governor said during a news conference that he will issue an amended spending plan to legislators to reflect dwindling tax dollars.

Gibbons said he would propose other reductions besides salary cuts, but the wage reductions would be the primary way he would balance state spending without raising taxes or giving employees pink slips.

"I do not want to lay state employees off," Gibbons added. "It is better to have a job than not have a job."

Raising taxes during a recession is just "foolish," he said.

The governor was surrounded at the news conference by five of the most conservative Assembly Republicans: Ty Cobb and Don Gustavson, both of Reno, Ed Goedhart of Amargosa Valley, and John Hambrick and Richard McArthur, both of Las Vegas.

Within an hour of his salary cut announcement, legislative leaders of both parties expressed their frustration.

Assembly Speaker Barbara Buckley and Senate Majority Leader Steven Horsford, both D-Las Vegas, said salary cuts would hurt teachers and students the most, since most state spending goes toward schools.

"You would have larger class sizes, the elimination of sports," Buckley said. "The governor is taking a slash and burn approach to budgeting. It makes no sense."

Horsford said the Legislature will end up cutting spending by more than $1 billion, but he refused to state how specifically lawmakers will deal with a budget hole that some have estimated at more than $3 billion.

Some tax increases are coming because the Legislature cannot cut spending by 42 percent from the levels of service it approved in 2007, Horsford said,

The state still has not received word from the federal government on whether it will secure $396 million in federal stimulus funds that could be plugged into education budgets, he added.

During his news conference, Gibbons said he expects legislators will vote to increase taxes by more than $800 million over two years and that he immediately would veto that plan.

But Buckley dismissed that announcement, saying the idea that Gibbons will veto taxes is nothing new and that legislators are planning accordingly.

To adjourn as scheduled on June 1, the Legislature would have to pass tax increases and its budget plan by around May 25.

Under the state constitution, Gibbons has five days after he receives budget or tax bills to sign or veto them.

By passing such legislation early, legislators would have time to override his veto and still adjourn on June 1.

Senate Minority Leader Bill Raggio, R-Reno, said Gibbons' plan to cut salaries even more he has proposed would be "very difficult to do."

Raggio said he does not favor adding new types of taxes but would support some increases in existing taxes.

He would not say how much in tax increases he can support.

Assembly Minority Leader Heidi Gansert, R-Reno, was conspicuously absent from Gibbons' news conference.

In a prepared statement, she defended decisions by legislators, including herself, to add spending to the governor's proposed budget.

The changes total around $70 million, she said.

"Examples of what we have added back include the continuation of services for children with autism, funding to keep rural mental health clinics open and continuing health insurance for children," Gansert said.

"The increases are very small given the size of the budget and do provide essential services."

During the news conference, Jodi Stephens, Gibbons' legislative liaison, said Raggio told her several months ago that she and other members of the governor's staff could not attend legislative budget discussions held by legislative leaders because of Gibbons' anti-tax stance.

In an interview, Raggio emphatically denied the allegation. "That conversation never occurred," he said.

Raggio acknowledged he has had only about five meetings with Gibbons this session, but emphasized the governor has never refused to discuss issues with him.

"I don't want to get into a fight with the governor," Raggio said.

Buckley said she has spoken about 10 times with Gibbons, but not for several weeks.

When Kenny Guinn was governor, Buckley said she spoke with him daily at the end of legislative sessions.

"We rarely see this governor," she added.

At the news conference, Goedhart said he and other conservative Republicans have been rebuffed in their efforts to persuade legislative leaders to hold hearings on bills to reform the Public Employee Retirement System and the state health care system and other measures to reduce long-term state spending.

"Now it is too late," he added.

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