Legislature approves cost-cutting measures

In a one-day special session, the Legislature on Monday approved four pieces of legislation needed to cover the state's $340 million budget shortfall for the remainder of this fiscal year.

The 25th special session went smoothly for the most part, lasting just over eight hours.

But there were a couple of glitches in the process " primarily in the Assembly where the Republican caucus, including the leadership, balked at provisions they said would impact rural areas more than urban and at language taking a piece of the surcharge fee collected on car rentals.

They cited, among others, taking the county portion of the minerals lease fees this year " a $7 million hit to counties.

Assembly Democrats pushed the legislation through on a party- line vote with 28 Democrats for the two pieces of legislation and 14 Republicans opposed. That vote meets the requirement for a two-thirds majority.

The opposition included Minority Leader Heidi Gansert and Assemblyman Tom Grady of Yerington, who were in the negotiations, helped develop the proposals and signed off on them.

In addition, 10 Assembly Republicans voted against the bill containing the $160 million "line of credit" from the Local Government Investment Pool. 

James Settelmeyer of Douglas County said the plan didn't go far enough in cutting existing budgets.

"We must look at the disease itself, not just the symptom," he said.

And Pete Goicoechea of Eureka called for "at least a 10 percent reduction in salaries or hours (of state workers)" before using something like a loan to balance the budget.

The vote wasn't completely party-line. Minority Leader Heidi Gansert, R-Reno, joined the majority saying the line of credit "is going to allow us to bridge to the regular session." Without it, she said, rural services including clinics and regional centers would be forced to close along with conservation camps that provide inmate firefighters in rural Nevada.

Peggy Pierce, D-Las Vegas, voted against the bill, the only Democrat to do so, because she doesn't believe any more cuts should be made to agency budgets.

In the Senate, both Assembly bills passed easily with AB1 moving a variety of non-general fund revenues into the state treasury receiving a unanimous vote and AB2, which contains the $160 million "line of credit" opposed by only one senator, Barbara Cegavske of Las Vegas.

Gov. Jim Gibbons plans to sign the four pieces of legislation today.

The biggest piece of the package is the line of credit at $160 million. Director of Administration Andrew Clinger has said, however, that piece will be taken last and only as needed to maintain a minimum $200 million balance in the General Fund. And taking the $25 million from the Indigent Accident Fund will mean that hospital bills for those indigents won't be reimbursed this year.

Health and Human Services Director Mike Willden told lawmakers, however, that those bills will remain eligible for payment out of the fund next year since the plan only drains the account  for one year, not permanently. The fund gets annual revenue totaling 2.5 cents of the property tax rate.

That part of the plan was opposed by county officials who say counties are responsible for those bills if the state doesn't cover them. The majority of the money goes to University Medical Center in Las Vegas and Renown in Reno where most indigents receive the bulk of their treatment.

Counties will lose another estimated $12 million as the mineral lease revenues which now go to them are diverted to the public schools, reducing the state's obligation to those schools by that much this year.

And $14 million will come from the Insurance Verification Fund, which normally goes to the Highway Fund, not the General Fund.

Altogether, non-General Fund revenue sources will lose a total of $76.8 million under the plan.

Transportation loses $30 million as the remaining money originally appropriated for the I-15 construction project is pulled back into the treasury. Lawmakers already took the rest of that money.

Having the mines in the state pay their net proceeds tax a full year in advance will generate another $38 million in one-time money. That move, however, will sunset in two years, giving mine companies a break as they won't have to pay for a year.

The plan also reduces collection allowances which businesses now get out of the sales, liquor, cigarette and other taxes they collect for the state.

Assemblyman John Carpenter, R-Elko, complained that reduction is unfair because it costs his businesses money to calculate those taxes and make the payments to the state.

Altogether, the package brings the total amount of reductions to this two-year budget cycle to $1.5 billion.

Buckley told the Assembly at the start of the special session the purpose of the cuts is to get the state through to the Feb. 2 start of the 2009 Legislature. Gibbons has referred to the reductions as "short term, stop gap" measures to help the state survive until then.

Sen. Bill Raggio, R-Reno, said that when the 2009 session opens, lawmakers will have a full 120 days to fix Nevada's tax system and the state budget so that it can provide necessary services. He told fellow senators no one likes the cuts but that there is no other choice at this time.

Contact reporter Geoff Dornan at gdornan@nevadaappeal.com or 687-8750.