Special session: Lawmakers reject $234 million in Gibbons' budget cuts

Three days into Nevada's 26th special session, lawmakers have rejected more than $234 million of Gov. Jim Gibbons' proposed cuts to close the state's $888 million budget gap.

That means they'll have to either find that much more revenue or make other cuts to state agencies not proposed by the administration.

Details of some measures to generate money for the state, such as fees or tax increases on the gaming and mining industries, are still hazy. Senate Majority Leader Steven Horsford, D-Las Vegas, who discussed the plan with high ranking gaming officials on Thursday, said they'll be spelled out "when they're done."

Horsford added he's confident he will get $100 million in new revenues from the mining industry, $50 million more than what's in the governor's budget proposal.

Still, while much of those revenue-generating deals are still under wraps, the difference between what the governor proposed and what lawmakers are approving grew this week - most of it coming from education.

Gibbons cut General Fund support for both K-12 and higher education 10 percent. Lawmakers want to limit the cut to 5 percent. The difference would be $121.2 million - $33.4 million for higher education and $87.8 million for K-12 - less than the governor's proposed cuts.

In addition, the majority of members in both houses tentatively voted to reject $113.48 million worth of administration recommendations.

A significant piece of that is the proposed contract with InsureNet, a company that claims it can guarantee the state at least $30 million by installing cameras to catch unregistered and uninsured drivers. The plan drew protests from civil libertarians.

On a party line, informal vote, Assembly members rejected the proposed closure of Nevada State Prison - which prison officials say would save $12.4 million this budget cycle.

Some $24.9 million of the growing gap is in changes both houses approved to AB3, which sweeps money out of reserve accounts throughout state government.

They rejected the governor's recommendation to impose a premium holiday on the Public Employee Benefits Program but voted to use the Retired Employee Group Insurance trust to cover some of those premiums. The net difference is a cost to the state of about $11.3 million over the governor's plan.

Legal counsel advised them they couldn't legally take $750,000 from the Question 1 environmental program bonds, $200,000 from the fund for Silicosis and Disabled Pensions, $100,000 from the Uninsured Employers Claim Account and $500,000 from the Self-insured Association Insolvency account - all of which were removed from the "sweeps" bill.

Altogether, AB3's changes would save $197 million, compared to the $222 million in Gibbons' proposal.

The plan passed the Assembly 41-1 and Senate 17-3 with Republican Maurice Washington abstaining.

In addition, lawmakers revealed plans to add back $25.1 million in health and human services cuts that they described as "the ugliest cuts." That is in addition to the $9.3 million Gov. Jim Gibbons added back last Friday, saying those reductions were too drastic for seniors, the mentally ill and other at-risk populations. The total those moves add to the gap is $34.4 million.

They want to add back $9.48 million in higher education salary reductions and $704,000 in reserves the administration wanted to sweep from Supreme Court accounts.

Amid strong protests from the American Civil Liberties Union, they want to put back more than $1 million to prevent elimination of the Nevada Equal Rights Commission.

Even so, they have agreed to cuts that will take money from the Millennium Scholarship, Trust for a Healthy Nevada and Retired Employee Group Insurance Trust.

The plan essentially drains the Millennium Scholarship fund, taking $5 million and eliminating the scheduled $3.8 million annual transfer from unclaimed property - a total of $12.6 million for the biennium. It provides a small infusion of cash - $2 million - from the College Savings Plan Endowment Account to keep the scholarship alive. But analysts say it will be unable to fully fund demand within a couple of years.

It takes $30 million from the Trust for a Healthy Nevada, which, like the Millennium, is paid by tobacco settlement money, emptying that account this biennium.

It uses the retirement insurance trust to replace premiums paid by the state.

Altogether, the tentative changes will require $234.68 million more revenue to balance the budget.

The problem lawmakers will face is paying for those changes. Under Nevada's Constitution, the governor has the power to set the agenda of any special session and Gibbons has not included any broad revenue increases.