Budget Puzzle Remains Incomplete as Legislature Starts Special Session
Submitted by on Wed, 02/24/2010 - 8:42am
CARSON CITY – As the Nevada Legislature plodded through the first day of a special session called to erase a nearly $900 million budget shortfall yesterday, several key proposals promoted by different interests to help resolve the fiscal crisis remained works in progress.
Lobbyists representing the mining industry said they were talking with lawmakers but had nothing to announce on an acceptable method by which the industry could contribute financially to erasing the deficit.
“No update,” said Pete Ernaut, a lobbyist for the Nevada Mining Association, on the progress of talks with legislative leadership.
Ernaut and Jim Wadhams, a lobbyist representing the Newmont Mining Corp., both told lawmakers last week that they oppose Gov. Jim Gibbons’ plan to reduce deductions given to the mining industry on the net proceeds of minerals tax to generate $50 million toward the shortfall.
The gaming industry, another potential source of revenue to assist the Legislature in balancing the current budget, is also awaiting some concrete plan from lawmakers, said Bill Bible, president of the Nevada Resort Association.
Lawmakers are considering a fee increase on the gaming industry to cover the costs of operating the Gaming Control Board, the state agency that regulates the gaming industry. The gaming agency received $31.7 million in general fund support in fiscal year 2009. Raising fees by some amount would free up general fund money to offset some of the 10 percent budget cuts Gibbons has proposed for state agencies and education to balance the budget.
“If you look at last year it was the worst year in the industry’s history,” Bible said. “The industry is obviously struggling.”
Fee proposals have been raised with some gaming properties, but there has been no decision either way because there is no firm plan yet in place, he said.
“If you are going to support something you want to know what the proposal is and we don’t have the proposal,” Bible said. “Clearly you have to put it in the context of huge loses within the industry. It’s not like there is $32 million lying around in petty cash. It’s not there.”
The industry lost $6.8 billion in fiscal year 2009 according to a report issued last week by the Gaming Control Board. The same agency reported that calendar year 2009 saw the largest percentage decline in gaming revenue since records first were kept in 1955.
Another source of revenue, a $4.2 billion, local government capital construction fund that could be tapped by the Legislature, remains in play as part of a solution to the budget shortfall.
Senate Majority Leader Steven Horsford, D-Las Vegas, when asked about the fund, said: “We’re scrubbing it. It looks positive.”
Local government officials have asked the Legislature not to tap into the fund, which is made up of funds for construction projects for many local government entities, from the water district to the Clark County School District.
Clark County Commissioner Tom Collins, attending the first day of what could be a four-day or longer special session, said the fund should be used for its intended purpose: to build much-needed infrastructure in Southern Nevada. The public works projects, from roads to school rehabilitation, create good paying jobs in the region’s devastated construction industry, he said.
Tapping into the fund could also harm local government bond ratings, Collins said.
“If you go take somebody’s bank account you harm his credit worthiness,” he said. “Then you weaken those local governments whether it is a city or a county. We’ve been responsible in Southern Nevada. Don’t jeopardize our credit worthiness because of maybe the faults of the state program. If you take away that funding, you will take away jobs.”
Gibbons is so far standing by his budget plan, but some lawmakers have questioned a few elements, including the mining tax deduction and a program to use traffic cameras to catch uninsured drivers. The Gibbons administration believes that $30 million could be captured from the project.
Some lawmakers remain skeptical.
Senate Minority Leader Bill Raggio, R-Reno, said he believes that $200 million to $300 million of the governor’s budget plan is unworkable, creating a hole lawmakers must now figure out how to fill.
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