Nevada Closes 22 Percent Budget Gap

Nevada lawmakers and Governor Jim Gibbons on Sunday (Feb. 28) agreed to a plan of deep cuts and fee increases to close a shortfall that amounts to 22 percent of the state’s current two-year budget. But the agreement is just a prelude to what will likely be even deeper problems a year from now in a state that has repeatedly slashed its already-lean budget.

The deal reached Sunday and finalized early Monday morning between the Democratic-controlled Legislature and Gibbons, a Republican, eliminates an $887 million shortfall, including by slashing 6.9 percent from K-12 and higher education budgets, The Las Vegas Review-Journal reported . It reduces spending by about 10 percent for most state agencies, resulting in four-day work weeks of 10 hours a day for most state workers, according to the Review-Journal .

To raise revenue, the Legislature hiked fees, “including on mining claims, applications for water rights and new gaming licensees, bank foreclosures and parks for a total of more than $50 million,” the Review-Journal reported.

Underscoring the direness of Nevada’s finances, the fee increases come after a legislative session last year that saw a record $781 million in tax increases, including higher levies on businesses and hotel rooms and a higher sales tax.

Gibbons, who has tried to stick to a pledge of no tax increases, vetoed last year’s plans before the Legislature overrode him to enact the measures. On Sunday, he agreed to the fee increases, choosing a risky political path as an already embattled governor in a gubernatorial election year. A poll released last week showed him trailing his Republican primary opponent, former federal judge Brian Sandoval, by 7 points.

Gibbons, who has gone through a messy divorce while in office, last week was forced to apologize after getting into a confrontation with a Nevada television reporter after returning from a governors’ conference in Washington, D.C.

The weekend’s work may have been the easy part. Lawmakers will be staring at a budget shortfall of $2 billion to $3 billion a year from now, the Las Vegas Sun reported .

“Legislative leaders say the traditional bubble-gum-and-Scotch-tape fix that has seen the state through several rounds of budget cuts, including the special session and its $887 million shortfall, simply won’t work then,” the paper reported. “The Great Recession, they say, has brought into stark relief the flaws of Nevada’s tax structure, which is overly reliant on gaming revenue and sales tax.”