Cathleen Allison/Nevada Appeal
Faced with a $2.3 billion gap between revenues and needs, Gov. Jim Gibbons is balancing the state's budget on the backs of state workers, local governments and the university system.
The Economic Forum projected the state would have just more than $5.7 billion in revenue this coming biennium. But Director of Administration Andrew Clinger says the state needs a total of $8 billion to pay its bills. That leaves a gap of $2.3 billion.
State workers will make up a large part of that gap, under the Gibbons plan, taking a 6 percent across-the-board pay cut. They also will pay a larger percentage of their health benefit premiums and Gibbons wants to suspend step increases for classified workers.
Altogether, those changes would save the state $800.3 million.
But Clinger said there also will be about 375 layoffs as a result of the shortfall and a total of 1,052 vacant positions will be eliminated. At an estimated $50,000 per employee, those layoffs save about $18.7 million a year.
In addition, he has proposed dipping into local government coffers, taking four cents of the $3.64 per $100 of assessed valuation counties are allowed to collect in property tax revenues from Clark and Washoe counties. In addition, the plan raises the amount of money the state charges local governments to collect and distribute sales tax revenues from three-quarters of a percent to 1.75 percent. Together, those changes net the state treasury $108.2 million over the biennium.
Together, those changes net the state treasury $108.2 million over the biennium.
But it is the university system that gets hardest hit by the proposed budget.
The Gibbons plan would reduce general fund revenue to higher education by 36 percent. That is $472 million less than the $1.3 billion higher education was budgeted for this budget cycle. That reduces the university system's share of the general fund from 19.4 percent to 13.7 percent.
Public schools also take a hit by 2.6 percent overall. The per-pupil funding guaranteed by the state will be cut from $5,098 this school year to $4,945 next year. The proposal also makes major reductions in categorical programs within the K-12 budget, eliminating at least temporarily the Regional Professional Development program, incentives for teachers to teach in at-risk schools and the Innovation and Prevention of Remediation Grant programs.
Overall, Health and Human Services programs will actually see an increase in funding " the only major area of the budget which does " by 4.2 percent. But Director Mike Willden said that is purely because of unavoidable increases in caseload, primarily Medicaid and welfare, because of the recession.
Willden said cuts include reductions to the mental health clinics budget and capping Nevada CheckUp, which provides health insurance coverage to children of the working poor. He said if extra money becomes available, Nevada CheckUp is the first place he would seek to restore.
Worst case scenario, he said, would force him to shut eight of the 20 rural mental health clinics.
Administration officials admit that one item in the revenue enhancements list is far less than certain: The projected 8 percent increase in the federal Medicaid match money. Increasing the match from 50 percent to 58 this coming year would bring the state $108 million but, first, Congress has to include that funding in the stimulus package for Nevada and the other states. Willden said he is "not at all certain" that money will materialize.
The largest revenue enhancement on the list is the estimated $292 million that a 3 percent increase in Clark and Washoe county room taxes will generate. Voters in those counties said in a November advisory ballot question they would support a room tax hike to help the state education and public safety budgets.
Despite the cuts in the general fund portion of the budget, the entire budget will be only $165 million less than the current budget. When general fund, federal fund, highway funds, inter-agency transfer money and other monies are added in, the proposed budget comes to $17.3 billion.
Finally, the proposed budget makes some savings by combining some divisions, primarily in the Department of Business and Industry. Housing and Manufactured
Housing will be combined as will Mortgage Lending and Financial Institutions.
Consumer Affairs in that department will be dissolved because, according to chief of staff Josh Hicks, its functions are handled by other divisions. Nuclear Projects will be cut from eight to two positions and moved back into the governor's office, saving rent as well as salaries. Hicks said that shouldn't be a problem because most of the office's legal and research work is handled by contractors.
Consumer health in the governor's office will be eliminated, WICHE moved into the university chancellor's office and POST will merge with the Training Division of Public Safety.
The merger that is likely to draw the most protest is combining the Tourism and Economic Development commissions, which tourism officials have already said they oppose.
Hicks said none of the mergers produce huge savings but, together, streamline government and save some funds.
The budget package now goes to the Legislature for a thorough review and modification, which begins with overview hearings next week.
- Contact reporter Geoff Dornan at gdornan@nevadaappeal.com or 687-8750.