Nev. governor plans emergency address on budget

CARSON CITY, Nev. | Nevada’s budget is so far out of balance that by one account the state could lay off every worker paid from the general fund and still be $300 million in the red. The economic downturn has hit so hard that prisons may be closed, entire colleges shuttered and thousands left without jobs.

Against the backdrop of an imploding economy and an $881 million shortage, Gov. Jim Gibbons will try in an emergency “State of the State” address Monday to explain the depth of the state’s financial crisis and how he is fixing the gaping hole in the budget.

It won’t be pretty.

Nevada, with a heavy reliance on discretionary spending through gambling and sales taxes, has been especially hard hit by the recession as tourists and gamblers hold on to their money. The state’s unemployment rate has hit 13 percent, and a once-booming housing market that created thousands of high-paying construction jobs has gone bust, with Nevada topping the nation in foreclosures.

In his address, Mr. Gibbons plans to call the Legislature into a special session in late February and instruct lawmakers on areas they can focus on. It will be left to the state Assembly and Senate to tackle painful education and social services cuts.

“Nevadans need to get used to the idea of shrinking state government,” said Mr. Gibbons’ spokesman Daniel Burns.

Senate Majority Leader Steven Horsford, North Las Vegas Democrat, said Nevada faces “very, very ugly” options. Mr. Horsford will give the Legislature’s response immediately after Mr. Gibbons’ televised 6 p.m. speech.

Details of the governor’s address have not been released. But the first-term Republican who is seeking re-election has released pages of proposals for closing the hole in the $6.9 billion budget passed by the 2009 Legislature.

The governor has said he anticipates 234 state layoffs, and notices already are being sent to employees who must be given a 30-day warning.

Lynn Hettrick, deputy chief of staff, said the governor wants to try to avoid more layoffs because the state must pay the full cost of unemployment benefits for affected workers. Nevada is on track to borrow $1 billion from the federal government to meet jobless claims because its unemployment insurance trust fund has gone broke.

“When we lay somebody off, it doesn’t save us very much money,” Mr. Hettrick said. “Between that and taking the money out of the economy, it really doesn’t make sense for Nevada to lay off people.”

Still, budget cuts could result in thousands of layoffs with the shock waves reverberating for years.

While Mr. Gibbons has told state agencies to prepare for 10 percent cuts, his proposals so far total only $418 million, less than half the deficit.

Assembly Speaker Barbara Buckley, Las Vegas Democrat, said balancing the budget would require 22 percent cuts across the board. She said the state could lay off every worker paid from the state general fund and still be $300 million short.

Mr. Gibbons, a staunch no-tax proponent, has said new taxes are not an option, and legislative leaders seem to agree raising taxes is unpalatable in the sour economy.

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