Severe state budget cuts seen

The next round of budget cuts will make the past round seem mild, with Nevada Gov. Jim Gibbons' senior staff projecting a shortfall of more than $1 billion in the two-year budget cycle that starts next July.

State Budget Director Andrew Clinger expects some uptick in tax revenue, but the increases in revenue will be gobbled up by rising public school enrollments, higher caseloads for Medicare and other social programs and higher wages for government employees.

To prepare, Gibbons has asked departments to find ways to cut 14 percent from the budget the Legislature approved in 2007. Those cuts would reduce spending by about $800 million in fiscal 2009-2011 " still at least $200 million shy of the projected shortfall.

"These appear to be the worst budget cuts for Nevada state government since the Great Depression," said state archivist Guy Rocha.

Gibbons and legislators already have cut $1.2 billion from the current two-year budget cycle, managing to avoid significant layoffs. But the reductions relied mostly on delaying one-time expenses, such as building construction, on the transfer of money between accounts and draining the state's "rainy day" fund for fiscal emergencies.

Only about a third of the cuts reduced continuing expenses. In other words, the easy choices have been made.

The state has offered few hints about what the 14 percent cuts would look like. Preliminary projections aren't public documents under state law, according to the governor's office.

While most department heads are discussing their proposals only in broad terms, state Corrections Director Howard Skolnik said Tuesday he'd have to close prison facilities.

Health and Human Services Director Mike Willden said his department has been asked to prepare a budget with $150 million less in spending a year than the current level.

"We'll see significant program cuts, downsizing in the workforce," Willden said. "I can't say if there will be layoffs or the elimination of vacancies."

To meet the current cuts, he froze 700 vacancies out of 5,300 positions, stopped new programs from coming online and reduced payments to doctors who take patients on public assistance. Meanwhile, caseloads in services such as food stamps, welfare and other government assistance have climbed by as much as 50 percent.

Willden said the state faces federal oversight or lawsuits if staffing ratios get too low or wait lists for programs get too long.

"We have federal rules and state laws hanging over our head, and we have to provide services in a certain manner," Willden said. "We're reaching a point where that will be difficult."

Gibbons said the cuts wouldn't be across the board, adding, "They have to reflect our priorities, like education, children's health care and public safety."

Department heads will provide the governor's budget recommendations by Sept. 1 and the governor will release his budget in January.

The 2009 session is shaping up to be bloody since the first-term Republican governor says he won't support new or higher taxes " and Assembly Speaker Barbara Buckley, D-Las Vegas, says she won't approve cuts like those made during last month's special session. She wants a review of the state's tax structure.

During the financial crisis in the 1990s, then-Gov. Bob Miller made cuts of about 11 percent. Mental health facilities were closed and patients ended up in emergency rooms, Buckley said. Lawmakers have spent years trying to rebuild those services, only to have to cut them back again.

"This boom and bust cycle doesn't make sense," she said.