Gibbons says government will shrink

CARSON CITY, Nev. (AP) - Nevada Gov. Jim Gibbons on Monday blamed state legislators for Nevada's fiscal crisis and said education reforms and smaller government are needed to close an $880 million shortfall.

In a special "State of the State" address, the first-term Republican also announced a Feb. 23 special legislative session to deal with the state's worsening money problems.

"We are working on solutions to turn this recession into an opportunity to reinvent our state's government," Gibbons said in the televised speech. "The dire economic situation we are facing now requires immediate action."

A staunch no-tax proponent, Gibbons said the state must make tough decisions, and raising taxes is not an option.

"Society is changing. State government must change with it," he said. "We must focus on the important services which ensure life, health, education and public safety."

Programs that "make some people feel good" but are unaffordable need to be eliminated, he said, adding, "We must cut government spending to ease the burden on our citizens and our businesses."

Gibbons last week announced he would call for the closure of the 140-year-old Nevada State Prison in Carson City, laying off 234 state workers, and proposed 10 percent cuts to most state agencies, including public education and higher education.

He also touted his education reform plan announced in January to give school districts and parents more say over educational decisions.

Senate Majority Leader Steven Horsford, D-North Las Vegas, said while legislators agree new taxes in the midst of Nevada's worst recession since the Great Depression are not an option, lawmakers are not united behind the governor's proposals.

In his Democratic response, Horsford said cutting state agencies 10 percent will only close about half the deficit and "roll back decades of progress" in mental health services, public schools and higher education.

To fill the void, Democrats are proposing shifting school construction funds to meet immediate operational needs, reducing the school year and reopening current teacher and administration contracts to implement salary reductions.

Horsford said other options could include closing some buildings and departments and reducing operating hours and "sweeping" general fund subsidies received by some state agencies that are otherwise mostly funded by fees.

Unless Nevada's tax base is expanded, Horsford said the state will face a $3 billion shortfall when the next biennium begins July 1, 2011.

Democratic gubernatorial candidate Rory Reid said the governor has failed to spur long-term economic development, adding "cutting education is "a devastating course of action."

"But this situation is a result of the void of leadership in the governor's office," he said in a statement. "The failure to develop any strategy for diversifying our economy - even in the face of global recession, brought us to this day. The signs have been there for years that Nevada's economy could not survive by relying only on tourism."

- Reporter Brian Duggan contributed to this report.