Gibbons to unveil budget plans Thursday

Thursday is B day: The day Gov. Jim Gibbons rolls out his proposed budget for the coming two years.

Throughout the budget crisis, he has stuck by his pledge not to raise taxes. To continue to do so, he must fit his budget within the $5.65 billion in revenue projected for the coming two years by the Economic Forum.

That means the administration is building a budget that will be 34 percent smaller than the biennial spending plan approved by the 2007 Legislature " just $5.65 million in General Fund money compared to $6.8 million for the current budget.

Gibbons will spell out how he can balance the state budget in a Thursday evening speech to the combined Senate and Assembly.

The question is where and how to cut without running into legal trouble. Health and Human Services officials have expressed concerns that deep cuts there would draw fire from the federal government. And corrections officials are worried further cuts to prisons will bring a federal lawsuit that puts control of the department in a federal judge's hands.

Gibbons has said repeatedly he wants to avoid further impacts to the budgets of public schools, public safety, higher education and human services. But those four categories make up 92 percent of the General Fund budget.

That means you could eliminate every other agency and program in the state and still only get a quarter of the way to the 34 percent budget reduction needed unless they find some way to reduce spending or raise additional funding.

The core of the plan appears to be the idea Gibbons floated as a trial balloon in early November: Cut employee salaries.

He said at the time it would be better to cut pay a bit than have massive layoffs, adding that he would take a pay cut from his $141,000 a year salary.

According to published reports, which spokesman Dan Burns won't confirm but hasn't denied, the budget will get half that shortfall by reducing both state worker and public school teacher salaries 6 percent.

Using the costs of this past year's raises in the Legislative Appropriations Report, a 6 percent decrease in all salaries paid by the state would save up to $432 million over the biennium. Of that, a third would come from state workers, the remaining two-thirds from teachers' salaries.

In addition, there is an estimated $125 million a year available if the spending plan includes the 3 percent hotel-motel room tax increase approved by Washoe and Clark county voters in an advisory ballot question Nov. 4. Gibbons has said he will support tax or fee increases if they are supported by voters.

The room tax hike is expected to be in the proposed budget.

The other major savings will come from the elimination of nearly all of the 2,700 vacant positions in state government. At an average pay of $55,400 per worker including benefits, that saves $148.8 million a year " $297.6 million over the biennium.

Added together, those proposals total just under $1 billion, all but filling the gap between revenue and expense.

However, that's before "rollups" are added in. Rollups are those cost increases the state can't control, including inflation, contractual increases in rent and maintenance, the cost of gasoline for highway patrol cars and other such things. Rollups totaled nearly $1 billion in the current budget. 

Gibbons is proposing one part of normal rollups, step increases for state workers, be eliminated for the coming two years. Butthat doesn't save a large amount of money.

One of the largest components of rollup costs, which is beyond state control, is medical inflation for prescription drugs, supplies and equipment, projected to be at least 10 percent a year.

He will deliver his state of the state address to lawmakers in the Assembly chambers.

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