With spending plan set, lawmakers address question of how to pay for it

Just one week remains to put together the funding by the legislators’ self-imposed deadline. With just $5.5 billion projected from existing tax sources over the next two years, new revenues, probably increased rates for sales and payroll taxes, will be called for.

"We have over the last three months discussed a variety of possibilities — lists and lists and lists of possibilities," said Assemblywoman Sheila Leslie, D-Reno. "Now we have to narrow it down and see what there is consensus to do."

A joint legislative subcommittee approved the last major piece of the spending side of the budget Tuesday evening, voting to put about $300 million more than Gov. Jim Gibbons had proposed into the state’s higher education system.

Legislators said it will take several days for staff to input all the budget decisions into a master document and determine exactly how much spending has been approved. But a source involved in the closed-door negotiations put the figure at $6.8 billion "and change."

Because it took two days longer than planned to pass the higher education budget, the lawmakers are behind schedule as they aim to get the budget passed by May 21 so that there is enough time to override an expected gubernatorial veto.

Assembly Speaker Barbara Buckley, D-Las Vegas, said legislators will meet Saturday and probably Sunday. By early next week, "we will hold hearings on the revenue necessary to balance the budget," she said.

Thus far, there has been no formal proposal on the table for public consumption on taxes. Asked when there will be one, Buckley said, "As soon as it’s introduced. It’s being developed now. There is no plan at this moment."

But she affirmed that the plan, when it emerges, probably will involve increases in existing taxes because the creation of a new tax structure would take time to implement and wouldn’t bring in money right away.

"In the short term, for this biennium’s budget, we will need to use existing sources because it can take 12 to 18 months to implement anything new," she said. "We will have to change the rate of an existing tax if we want to bring in revenue in the first year."

Of the approximately $1.3 billion gap between expected revenue and planned spending — and that number is very approximate, since nothing is yet on paper and most of the spending decisions are still preliminary — about $300 million is expected to be bridged by federal stimulus dollars.

The $1 billion or so remaining will come partly from tax increases and partly from other sources, such as diverting revenue from local governments. In addition to a plan proposed by Gibbons to take a small percentage of property tax revenue from Clark and Washoe counties, some say one possible source is a Clark County School District construction fund that is flush with money.

Republican leaders involved in the discussions on the budget plan have said there is a limit to the amount of taxes they will support. They are reluctant to put a number to it, but sources say it is between $700 million and $800 million.

"There’s a reasonable limit, I keep saying that," Senate Minority Leader Bill Raggio, R-Reno, said. "But I’m not going to throw out a number."

The Republicans also are demanding reforms to the structure of public employee retirement and health benefits in exchange for their votes on taxes.

"I’m very focused on reforms to (the Public Employees’ Retirement System and Public Employees’ Benefits Program), as well as prevailing wage and collective bargaining," Assembly Minority Leader Heidi Gansert, R-Reno, said. "I wouldn’t call it a condition, but I do know it’s important to the members of our (Republican) caucus."

Late in the day Wednesday, the members of the core group of about a dozen legislators who have been doing the heavy lifting on the budget went into their latest meeting.

Buckley said the goal of the confab was "to discuss our remaining deadlines for the things that still need to be done," including what appropriations bills will need to be drafted and when to introduce them in committee hearings.

Gibbons, who has spent much of the session firing away at legislators of both parties from the sidelines, issued a news release Wednesday reiterating his objections.

"I will not support any tax hikes or new taxes that will kill jobs, kick people out of their homes, put businesses out of business, and put Nevada families into poverty," Gibbons said in the release. "These legislators who support those ideas can sneak around with their secret plans, but I will continue to do everything in my power to stop them."

The revised $6.3 billion budget plan Gibbons proposed last week relies on a $220 million hotel room tax increase as well as a scheme to sell investments based on the state’s future earnings from a tobacco settlement.

Contact reporter Molly Ball at mball @reviewjournal.com or 702-387-2919.