Gibbons says budget can balance sans taxes

Gov. Jim Gibbons Wednesday rolled out a plan he says will fill the $900 million hole in the state's $6.2 billion budget without raising taxes.

A review of the proposal shows it would create an even bigger shortfall " $1.33 billion " for the 2011 Legislature to cope with.

"It is the wrong time to ask our citizens and businesses to pay more," Gibbons said.

Asked his reaction to lawmakers who have essentially said they plan to ignore his budget proposals, Gibbons said: "I can't help what they ignore. All I can do is show them how to balance this budget without raising taxes."

The key element in Gibbons' plan is an idea that has been rejected by the past four Legislatures: Selling the tobacco settlement payments for the next 20 years for a lump sum now.

The revenue, stemming from a major court settlement between states and tobacco companies, is used in Nevada to help fund Millennium Scholarships for college students and various public health programs and services. Even with the "securitization" sale, Gibbons said the programs could continue for the next two years.

Gibbons said selling the payments would raise $340 million.

Another $160 million would come from the line of credit approved by the special session of the Legislature last year. That funding is in the form of a loan from the Local Government Investment Pool managed by the Treasurer.

Both of those sources, however, are one-time money which would be gone after this budget cycle.

So are most of the other revenue sources used in the plan.

The plan includes $347.2 million in stimulus package funds, which won't continue beyond 2011.

The $206.5 million saved by suspending merit and step increases for public employees and the $6.9 million from the two-year suspension of longevity payments are supposed to expire in two years.

Also listed as "temporary" is the 4 cents worth of property tax the state wants to take from Washoe and Clark counties " worth $69.4 million.

The 3 percent lodging tax supported by voters is supposed to go to education after this next biennium, so that $219.8 million won't be available to the state, either.

Finally, the package includes $51.8 million taken from the All Day Kindergarten budget which, for this next biennium, would be replaced by stimulus money " also not available in two years.

Added together, those "one-shot" sources of money total $1.33 billion which won't be there when the governor and lawmakers begin crafting the 2012-2013 budget.

That number is before any increases in caseload demands on the state, inflation and other "roll-up" costs. Those roll-ups totaled about $1 billion this time and are expected to be more than that two years form now.

The new budget details provided by the governor also show that if government programs were maintained at current levels " something neither Gibbons nor lawmakers see as possible given the state of the economy " the total shortfall would rise to $3.1 billion.

Contact reporter Geoff Dornan at gdornan@nevadaappeal.com or 687-8750. The Associated Press contributed to this report.