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Gibbons Prepares for Major Speech to Nevadans on the State Budget Crisis, Ways to Fill $881 Million Gap

CARSON CITY – Gov. Jim Gibbons will give one of the most watched speeches of his political career in just a few hours as he outlines Nevada’s economic crisis and talks about a state budget deficit that could lead to layoffs, critical program cuts and higher fees for college students.
Gibbons will deliver his State of the State address at 6 p.m., a rare event in a non-legislative year that points out just how dramatic the state’s economic picture is in the midst of a nationwide recession. The state faces an $881 million budget shortfall.
Gibbons is expected to focus on the sorry plight of state finances, which mirror those of many residents in the state with the second highest unemployment rate in the nation and the fact that there are no easy options to getting the budget balanced. But the 20- to 25-minute speech may lack a lot of specifics because so much still remains under discussion.
Many potential partial solutions to the shortfall, such as asking the Nevada mining industry to pay some taxes up front, remain a work in progress, according to a Gibbons Administration official.
And while Gibbons is expected to call the Legislature into special session later this month to address the shortfall, a precise date may not be identified in his comments because so much remains unresolved.
In an interview with the Nevada News Bureau today, Gibbons said: “We have tentatively set the date as Feb. 23rd.  I think that is what we are going to do.  That may get moved, if needed, and I will announce and explain that tonight.
“We’re just doing the Executive Order now on what we feel we can legally accomplish, whether we can get that done in time.  But it will happen between the 23rd and March 1st, just as soon as we can, with adequate notice.”
Only the governor can call a special session, and the governor also has the power to set the agenda to be discussed by the Legislature. Taxes won’t be a part of the agenda, he said.
“We are going to put all the issues with regard to Nevada’s financial problems into one special session,” Gibbons said. “So, we will include Race to the Top, the financial issues, the budget, all of it.”
Nevada needs to change a current state law prohibiting the use of student achievement data to evaluate teachers in order to become eligible for the federal Race to the Top school improvement funds.
But Gibbons is also expected to ask lawmakers to consider his education reform proposals, including eliminating mandates for smaller class sizes and all-day kindergarten, as ways to help balance the budget. He is also expected to call for the creation of a school voucher program that would pay parents 75 percent of current per pupil funding.
Gibbons Administration officials and state agency chiefs continue to meet with legislative leaders on an ongoing basis to find ways to cover the shortfall and balance the budget.
Gibbons has already proposed a 10 percent cut to most agencies and programs, including public education, to bridge a portion of the gap. However, at $418 million, the cuts, including 235 state employee layoffs, only get the state part of the way to eliminating the shortfall.
The governor’s proposed cuts would mean the closure of the Nevada State Prison in the capital and fee increases for participants in programs such as the Nevada Check Up health insurance program for low income families.
One administration official said that once all the possible cuts, savings and other accounting measures are tallied up, any remaining shortfall will likely have to be covered by salary reductions for state employees and teachers.
Some lawmakers however, have not yet rejected the idea of seeking money from local government capital construction funds as a way to lessen the impact of budget cuts on state programs and employee salaries. Gibbons has rejected the idea of using such funds, which could set up a showdown if lawmakers push this as a possible solution to balancing the budget.

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