Governor aims to fix shortfall

CARSON CITY — With no easy choices in the face of what he is calling the state’s worst-ever budget crisis, Gov. Jim Gibbons on Friday announced his intention to convene the Legislature into a special session June 23 to tackle an ongoing revenue shortfall.

Tops on the chopping block, at least for some GOP lawmakers, is a 4 percent cost-of-living adjustment set to take effect July 1 for state and university employees and school teachers. Repealing the adjustment, or COLA, would save the state $130 million.

But Gibbons’ proclamation calling the 63 lawmakers to Carson City will be generic enough to allow for virtually any type of fix, from cutting state programs to employee furloughs to considering Lt. Gov. Brian Krolicki’s proposal to use the state’s annual tobacco settlement payments to generate up to $775 million in bonds to help keep the state solvent.

“We are facing the worst fiscal crisis in the history of the state,” Gibbons said. “My office has been contacting lawmakers to solicit their input, but I believe the only responsible action is to convene the entire Legislature so that all can participate in crafting the solution and all options can be considered.”

The proclamation calling for a five-day special session is expected next week. It will cost at least $250,000 to bring lawmakers in for a week. Only Gibbons can call the Legislature into session. He can limit the topics of discussion, but he cannot limit its length.

Gibbons also plans to deliver a televised address next week to outline to Nevada residents the fiscal problems facing the state and the tough choices that must be considered.

“No solutions are off the table,” he said. “We have a serious problem and we are going to find a viable solution that will work for the current and future benefit of our citizens.”

Already, $913 million has been cut from the current budget. But as much as another $90 million in cuts must still be made to balance the budget.

A special session is fraught with risk, however, because there is no clear consensus among lawmakers on how to balance the current budget. Usually there is some general agreement in place going in so that the session can be completed as quickly as possible.

Lawmakers and the governor will have a week to see if an agreement can be reached.

Democrats expressed surprise and anger at the call, which came just one day after a meeting with Gibbons on the budget troubles that produced no agreement on a solution.

Both Senate Majority Leader Bill Raggio, R-Reno, and Senate Minority Leader Steven Horsford, D-Las Vegas, told him at the meeting a special session would not be necessary.

The call is also a surprise because officials with the Gibbons administration in the past several days said there would be no special session and no attempt to cut employee raises.

But Raggio said he changed his mind after learning that layoffs might be needed if some alternative to balancing the budget is not found. He said he is drafting a bill to repeal the COLAs, including those for teachers, even though contracts with individual school districts for raises starting July 1 have already been ratified.

If state revenues begin to climb, Raggio said the Legislature can restore the pay increases when it meets in February.

“It looks to me like we have run out of options,” he said. “Any additional cuts will require layoffs. My purpose is to avoid layoffs. We have to forgo the pay increases, or there will be layoffs, layoffs of teachers, university employees and state employees.

But Horsford said the decision to call a special session was made unilaterally by Gibbons and Republican leaders.

Horsford said such a move should be a last resort, and is a waste of taxpayer dollars at a time when money is in short supply.

“We are in a budget crisis, we all know that,” he said. “But the people we represent are also facing lean times. They expect real solutions and not these political maneuvers.”

Horsford said he will work to find a solution to the budget problems between now and June 23 with the hope of heading off the special session.

Assembly Speaker Barbara Buckley, D-Las Vegas, said Gibbons’ decision to call a special session was a calculated move to “divert attention away from his spate of bad publicity and his text messaging issue. He wants to change the topic of conversation.”

Gibbons used a state cell phone to send more than 850 text messages in March and April 2007 to the Reno woman with whom he is accused of being involved. Gibbons denies having a sexual relationship with the woman.

Buckley added Democrats will work next week to come up with their own budget shortfall solution that will not harm teachers or school districts. The plan will be presented at the special session, she said.

Some Democratic lawmakers said they are vehemently opposed to eliminating the COLAs, which is also a major concern of the Clark County School District.

If the teacher COLAs are cut and districts cannot get out of their agreements with their employees for pay for raises starting July 1, school boards will be faced with finding the money to pay for the increases in other areas of their budgets.

Lynn Warne, president of the Nevada State Education Association, called the proposal to repeal the COLA outrageous.

“We hear that all options are on the table, but the only option we’ve heard is to take the COLA from hard working families, educators included,” she said. “Since many school districts have already ratified the pay increases the districts will be on the hook to pay them.

“I don’t know how they will do that without impacting student programs,” Warne said.

Assembly Majority Leader John Oceguera, D-LasVegas, said lawmakers talked Thursday with Gibbons about saving money by implementing a four-day, 10-hour work week for some employees, but not about repealing the pay increases.

“There were other options for us to talk about,” he said. “We were going to meet again. I have immense respect for the office of the governor, but I have lost confidence in this governor because he has flip-flopped on this issue. It doesn’t show leadership. He is putting us in a box.”

Assembly Ways and Means Chairman Morse Arberry, D-Las Vegas, who learned about the special session from a reporter, said governors traditionally secure the agreement of legislative leaders before holding special sessions. That way they avoid controversies and quickly secure approval of items on the agenda.

Arberry said a special session could be very contentious because he and other Democrats do not want to postpone the pay increase.

He said: “Everybody needs to be on board on this, or there is going to be trouble.”

Ben Kieckhefer, press secretary to Gibbons, said the call for the special session is not politics but the desire to bring the entire Legislature into the decision-making process.

“We’ve reached a point where any additional cuts are not going to be even slightly easy,” he said. “Everything is going to be painful from here on out, from layoffs to significant reductions to services.”

Kieckhefer said Gibbons has demonstrated leadership in the budget crisis.

“We balanced a $913 million shortfall so far without layoffs, without raising taxes and without any major cuts in state services,” he said.

But with continuing weak gaming revenue reports, there is another $60 million that must be found to balance the budget, a figure that could grow to $90 million when revenues are reprojected yet again, Kieckhefer said.

Assembly Minority Leader Heidi Gansert, R-Reno, said legislators really don’t have any other option than delaying the pay increases, or there will be layoffs. Cutting $130 million in pay increases could save jobs for 2,000 people, figuring their pay at $55,000 a year, she said.

“Eliminating the COLA will save jobs,” she said. “It just makes sense. We are at a point because of the economic slowdown that we don’t have other choices.”

But Dennis Mallory, chief of staff for the American Federation of State, County and Municipal Employees Local 4041, said eliminating the pay raises would be devastating for state employees. His union represents state workers.

“I just spent $300 on gas driving to places around the state,” he said. “How are we going to pay for gas and everything else without the pay increase?”

Mallory said he feels confident that most legislators will vote against delaying the 4 percent increases.

Special sessions usually lasting one day have become routine at the end of regular legislative sessions because lawmakers have had a hard time finishing up their work in the constitutionally-limited 120 days. But special sessions for other reasons are rare. The last was in December 2004 to consider the impeachment of the late Kathy Augustine, who was state controller at the time.

Lorne Malkiewich, director of the Legislative Counsel Bureau, estimated that a one-day special session, if it dealt with only a couple of simple topics, would cost about $100,000. Most of that would be the expense of lawmaker pay, per diem and travel. Each additional day would cost about $50,000.

If hearings at the committee level are required, then more staff may be needed and costs could go higher, he said.

Asked whether lawmakers can be ready in a week, Malkiewich said: “Failure is not an option. We have 10 days to prepare. I’m glad we got the word (Friday) rather than (Monday).”

Contact Reporter Sean Whaley at swhaley@reviewjournal.com or 702-687-3900. Contact Capital Bureau Chief Ed Vogel at evogel@reviewjournal.com or 702-687-3901.