Winners and losers emerge in budget deal

GOV. JIM GIBBONS

The Republican governor, who set the state record for vetoes — 48 in the 2009 session with 25 overridden by lawmakers — decided to talk instead of fight with Democratic leaders of the Legislature.

Gibbons and legislative leaders set aside political differences to negotiate ways to fill an $887 million budget gap.

When Gibbons called the special session, he sent over a $6.9 billion, two-year budget-balancing proposal that cut most state agencies and state education spending by 10 percent but didn’t call for new taxes or fees. He proposed limiting tax deductions for mining to raise revenue, while threatening to veto taxes or fees unless the industries volunteered to pay. In the end, he agreed to new fees on bank foreclosures, mining claims and for gaming investigations of new licensees to lessen the effect on education and social programs.

Some political analysts think Gibbons might have upset his conservative GOP base by accepting fees. Others think that he came across well by reaching out to moderate Republicans and Democrats in a series of marathon face-to-face talks.

"We don’t necessarily see what Joe Six Pack sees," said Richard Perkins, a former Democratic Assembly speaker who is now a lobbyist for the mining and insurance industries. "As much as the governor has been unengaged in the past, this is the most engaged I’ve ever seen him, and that cannot be bad.”

STATE SENATE MINORITY LEADER BILL RAGGIO

Nevada’s longest-serving lawmaker came across as a statesman, working with Democratic leaders to craft a veto-proof deal in case Gibbons didn’t go along.

The Reno Republican and Gibbons overcame a public war of words that had the governor inaccurately accusing Raggio of not attending budget meetings before the special session. The two set aside personal animosity after the governor made a courtesy call to the state Senate minority leader’s office Wednesday to set up meetings that resulted in the budget deal.

Raggio’s support for Gibbons’ gubernatorial Republican primary rival Brian Sandoval is at the heart of the dispute.

"The most conservative wing of the Republican Party has just written Raggio off, but I don’t think Raggio cares," said Erik Herzik, a political science professor at the University of Nevada, Reno. "Most everybody in the Legislature knows how good and how important Raggio is. He’s got nothing to prove to the far right."

Term limits prevent Raggio from seeking re-election, and the 2011 regular session will be his last.

STATE SENATE MAJORITY LEADER STEVEN HORSFORD

The Las Vegas Democrat stood up strongly for saving education and social services, two key components of his base of support. He also pushed hard for increased revenue from the gaming industry but lost that battle in a big way.

In the end, he was a key driver of the effort to reach across the political divide to solve the budget crisis.

"If you’re more liberal, you’re going to say great, he gave ’em hell," Herzik said of Horsford’s efforts to increase funds for education, seniors and the poor by going after increased corporate revenues. "But that’s a very risky place to be in Nevada politics, and the business community is saying that Mr. Horsford is showing his ideological stripes."

ASSEMBLY SPEAKER BARBARA BUCKLEY

Buckley, D-Las Vegas, was at the heart of the deal-making, with her office ground zero for bipartisan talks with the governor. She made the budget trains run on time and engineered compromises as she did during the 2009 session, a difficult job when the results are spending cuts, new taxes and fees.

She apologized at one point on the Assembly floor after passing a bill to impose a four-day, 10-hour a day workweek on state employees, saying she knew it would be a hardship for some.

"This is the most difficult and unfortunate thing lawmakers have to do, cut budgets," said Perkins, the former speaker. "This is not why you run for office. You run for office to build things. This is not building a better Nevada. It’s trying to maintain what we have left."

The budget cuts supported by the termed-out Buckley haven’t been popular with special-interest groups and might be among the reasons she decided against running for governor.

"She’s a winner because she’s the one who got it done, but it’s a very costly victory," Herzik said.

ASSEMBLY MINORITY LEADER HEIDI GANSERT

The Reno lawmaker and her unruly Republican caucus of 14 managed to slow things down during the special session by introducing an alternative GOP budget plan that was all but ignored.

The one provision that got attention was a proposal that essentially let private investors buy rights to unclaimed property collected by the state, which could have resulted in $91 million in revenue. Democrats balked at the idea, saying it was risky and amounted to borrowing against the future.

EDUCATION

Public schools, colleges and universities took a 6.9 percent reduction in state support over the next 16 months. It could have been a lot worse. The K-12 system and higher education could have been hit with 22 percent cuts if the governor and legislators had backed spending reductions equal to the actual decline in the state’s tax revenue. It was not known Sunday how many teachers and professors face layoffs because of what lawmakers did over the weekend. The reduction to state education funding represents a loss of $117 million to the K-12 system and a loss of $46 million to higher education.

All and all, education emerged from the special session better off than expected.

THE PUBLIC

Nevada residents will see and feel the results of state budget cutbacks in their daily lives.

Legislators deferred debate on whether to hit the public with tax increases until the 2011 regular session, but visitors to state parks will pay higher entrance fees.

The Legislature approved a four-day, 10-hour a day workweek for state employees, which limits the ability of the public to do business with state government offices and agencies. Most offices will be open from 7 a.m. to 6 p.m. Monday through Thursday. State workers supported the change as a way to reduce the budget deficit.

The change does not apply to public schools.

Agencies could apply to the state Board of Examiners, headed by the governor, for exemptions from the proposed workweek. In Utah, which adopted the four-day schedule, the Department of Motor Vehicles was reopened on Fridays for a five-day schedule. In Nevada, some DMV offices are open six days a week.

Health and Human Services Director Mike Willden has said that Nevadans on food stamps and Medicaid already have seen the effect of previous budget cuts: longer lines and longer waits to process applications for aid. Willden has said he will seek an exemption to the four-day week for welfare offices.

STATE WORKERS

Legislators approved a bill implementing a four-day, 10-hour a day workweek for most state agencies. State workers, who took a 4.6 percent pay cut in the 2009 legislative session through monthly eight-hour furloughs, escaped additional reductions.

MINING

Because of the skyrocketing price of gold, now selling at more than $1,100 an ounce, the mining industry told lawmakers it expects to pay about $62 million more into the state general fund from a net proceeds tax — money mining would be paying anyway — to help solve the budget crisis.

Also, the industry agreed to a new $125 fee on mining claims to raise another $25.7 million. The fee is supposed to be a one-time charge. As a result, mining came away from the table almost fiscally unscathed in the long term.

Herzik declared mining "the big winner," but it might be a short-term victory.

The Progressive Leadership Alliance of Nevada is pushing a voter initiative to change the "net proceeds of minerals" tax to a gross tax. That would prevent mining operators from deducting expenses before calculating the tax they owe on the value of minerals they extract.

GAMING

The gaming industry staved off an effort by Democrats to make it pay $32 million a year for the cost of regulation by the Gaming Control Board. Lobbyists argued that the casinos couldn’t take the budget hit after a record $6.7 billion loss in 2009 and layoffs of about 34,000 employees. Gibbons threatened to veto any budget bill that would force gaming to pay up, and key Republicans sided with him and against Horsford, angering Democrats who were trying to squeeze a bit from every possible revenue source.

The budget deal does start a new fee for investigation of new gaming licensees, which would raise $4.2 million.

"Everybody had to give up something but gaming, which we rely on too much," said Mark Peplowski, a political science professor at the College of Southern Nevada.

BANKING

Nevada has the highest foreclosure rate in the nation, and lawmakers decided to make the banking industry pay more to take action against homeowners. The special session raised fees on banks to file foreclosure notices from $50 to $200, raising $13.8 million for the general fund.

NEVADA BUDGET

The governor and lawmakers patched the budget hole but still need to right the state’s listing budgetary ship, which could sink without major changes during the 2011 session.

For years, state leaders have debated a broad-based tax on business instead of only relying on gaming and mining, a tax that won’t drop much during recessions and gives state government a dependable source of revenue.

Horsford warns the state is facing a possible deficit of $3.4 billion for the next two-year budget cycle, which starts July 1, 2011.

"The state of Nevada will continue to lose because of the economic crisis, and lawmakers are going to have to do something in 2011 to fix things," said Guy Rocha, former state archivist. "I would say to voters to pick the leadership you want carefully because they are going to shape the future of Nevada."

Contact Laura Myers at lmyers@reviewjournal.com or 702-387-2919.