Budget shortfall hits $564M

Lawmakers were told Thursday Nevada's projected budget shortfall is now $564.7 million.

But despite the continued growth of the budget crisis, Sen. Bob Coffin, D-Las Vegas, found himself tilting at windmills in his demand that legislators be involved in deciding where and how to make budget cuts.

"It is wrong to cut these budgets without the Legislature's approval," Coffin argued.

He said the appropriations act that provided general fund money to Nevada agencies requires the Legislature be consulted.

"In a very secretive manner, you have continued to move forward as if the Legislature doesn't count," Coffin said.

But Director of Administration Andrew Clinger said the section of that act Coffin referred to only involves the Legislature if the state's ending fund balance falls below $80 million.

With the cuts ordered by Gov. Jim Gibbons, he said that balance will be $177 million in June 2009, more than double that amount. The governor's counsel Josh Hicks pointed out another section of that act gives the governor specific authority over any budget reductions.

Clinger also told the committee it was the governor's decision in 1992-93 when 3 percent cuts were ordered by then Gov. Kenny Guinn. He said the reductions were presented to the finance committee as an informational item, not an action item.

Coffin also complained Legislative Commission Chairman Randolph Townsend, R-Reno, refused to put on that commission's agenda an item to sue the governor over the issue.

Senate Majority Leader Bill Raggio, R-Reno, told the committee that leadership has been advised by their legal staff that Gov. Jim Gibbons has the authority to make those cuts without legislative involvement. He said in view of that, a lawsuit would make no sense.

Other members of the committee, which includes most of the legislative leadership in both the Senate and Assembly, made it clear by their silence Coffin is alone in his desire to participate in making any budget cuts.

One member of leadership said outside the meeting none of them wants to put their name on the cuts and effectively share the blame with the governor.

The deficit increased from about $517 million a week ago because, Clinger said, the latest monthly figures forced a reduction in projected gaming revenues. He said gaming tax money is now expected to fall $25.5 million short of projections used to build the state budget. That comes to about $542 million for the 2007-09 biennium. But Clinger said the 2007 fiscal year also was short - by $23.1 million - because of the economy.

Altogether, that brings the shortfall to $564.76 million.

The shortfall was originally projected at about $170 million in October, but that was just in sales and use tax revenues. The total quickly escalated to $285 million when first quarter numbers for the business, real estate, insurance and other taxes were added.

Thursday, Clinger said the governor's 4.5 percent general fund reduction will require cuts in ongoing programs of $263.8 million plus $50.4 million from one-shot and capital improvement budgets.

He said $5.1 million from the Grant Sawyer Office building settlement and $13.3 million from the unappropriated general fund balance will help.

But he said the rest of the cost - $232 million - will come from the state's Rainy Day Fund, which now contains $267 million.

The areas hit hardest by the cuts are K-12 education at $92.7 million, the university system at $57 million and Health and Human Services at about $81 million.

But the HHS reduction also costs the state about $45 million in federal matching funds. The state also will lose another $40 million because the federal government is reducing Nevada's Medicaid match ratio next year.