Gov. Jim Gibbons confirmed Tuesday that his proposed budget includes cutting the salaries of state workers, including teachers, by 6 percent.
Altogether, that would save the state an estimated $432 million over the biennium.
Gibbons admitted a proposed 3 percent room tax hike, designed to raise $125 million a year, was being considered but refused to confirm it is part of the package, saying, "you'll have to wait 'til Thursday."
Despite the state's budget woes, Gibbons said he hopes to present a more positive picture in Thursday's State of the State address.
"Whether it's a recession or depression doesn't matter because, at the end, there's always a recovery and that's what we're preparing the state of Nevada for," he said.
He said he hopes to show Nevadans and the Legislature a state government that is becoming smaller and more efficient to meet the state's needs as the economy recovers.
Director of Administration Andrew Clinger said there will be "some" layoffs if lawmakers adopt the budget plan. Gibbons indicated most of those would come from positions eliminated by combining state agencies.
The comments came during interviews after the Board of Examiners meeting Tuesday.
Gibbons and his staff are struggling with how to reach a $5.7 billion budget -- $1.1 billion less than last biennium. And that's without an additional expected $1.1 billion in rollups, or unbudgeted costs such as increased Medicare spending.
When new revenues such as the room tax are added in, the General Fund is expected to be just over $6 billion for the coming two years. When all federal, highway and other money is added in, however, total state spending will undoubtedly top $16 billion.
Gibbons has maintained his pledge of no new or increased taxes unless they are supported by the voters. He can take the 3 percent room tax increase because it was approved in a November advisory question by voters in Clark and Washoe counties.
The biggest savings, however, will come from the 6 percent salary reductions, saving $432 million, and the elimination of nearly all the 2,700 vacant state positions " worth just shy of $300 million over the biennium.
Add on the $125 million a year from the room tax and nearly $1 billion of the shortfall is covered.
Gibbons and his staff have refused to reveal how they will cover the remaining $1.1 billion shortfall caused by the rollups, saying simply that the press and public will have to wait until Thursday.
The state of the state address begins at 6 p.m. in the Assembly Chambers and will be broadcast live by television stations across the state.
Contact reporter Geoff Dornan at gdornan@nevadaappeal.com or 687-8750.