Every Option Under Discussion as Governor, Lawmakers Seek Solutions to Massive Budget Shortfall

(Updated at 2:50 p.m. on Jan. 27, 2010)
CARSON CITY – When budget cuts come to higher education and the public school system to help balance a state spending plan that is $1 billion out of balance, those decisions should be made by the Board of Regents and local school officials, two members of Gov. Jim Gibbons cabinet said today.
Deputy Chief of Staff Stacy Woodbury said proposals to close the Nevada State College at Henderson or implement other program changes at the Nevada System of Higher Education will have to be made by the Board of Regents.
What Gibbons and the Legislature must do is set the reduced level of funding available to higher education and let regents decide how to meet the new financial target, she said.
Deputy Chief of Staff Lynn Hettrick said the state is facing a budget shortfall of nearly $1 billion, and that major cuts in programs will be needed. Suggestions from lawmakers that the dollar amount will equate to a 22 percent cut in programs may be “a bit” high, he said.
“I hope it doesn’t go to 22 percent,” Hettrick said.
Both Woodbury and Hettrick made their comments in an interview on the Nevada NewsMakers television program.
In a telephone interview, Assembly Speaker Barbara Buckley, D-Las Vegas, said legislative fiscal staff are saying the cuts required are in the $900 million range, and that if cuts were implemented with a March 1 start date, the effect would be a 22 percent cut. That is not to say cuts of 22 percent will be implemented, but it shows the severity of the problem, she said.
In what she called a collegial meeting between lawmakers and Gibbons on Tuesday, there were preliminary efforts to reach consensus on what cuts could be made, Buckley said. There are few alternatives to cuts available, but “sweeping” every bank account in state government could potentially bring some relief. If $100 million could be identified in this process, it would help reduce the level of cuts required, she said.
Buckley called the state’s predicament, “unbelievably dire.”
Both Woodbury and Hettrick said during the interview that Gibbons also wants to give local school boards and parents the ability to decide how to implement any cuts that will have to be made to the public school system.
Gibbons has proposed eliminating a state mandate for all-day kindergarten and class-size reduction in the lower elementary grades so that school districts can decide which programs to fund, Woodbury said.
Hettrick said eliminating the mandates would empower the local school districts.
Woodbury also said Gibbons is not at this point proposing to shift the cost of any state programs to local governments, or seek additional funding for the state budget shortfall from counties and cities.
“They can’t bear it any more than we can,” Woodbury said.
Gibbons has proposed eliminating the requirement for collective bargaining between local governments and school districts and their employees to give them more flexibility in dealing with salaries and their own budget issues, she said.
Woodbury said the state must also consider opting out of federally mandated programs, including Medicaid. The program as it now exists is unsustainable whether new recipients are added to the rolls under a national health care insurance bill or not, she said.
Despite concerns about the sustainability of the Medicaid program, Gibbons later today issued a news release saying he does not believe now is an appropriate time to opt out of Medicaid.
Even so, Gibbons encouraged legislators and the state’s Congressional delegation to consider the fact that Nevada cannot afford to continue increasing its Medicaid spending at the current rate of growth.
“The average growth in general fund Medicaid spending over the past decade is close to 10 percent,” Gibbons said. “Our ever-growing Medicaid burden undercuts our ability to fund other state responsibilities and is crowding out education, public safety and infrastructure as components of our budget.”
The prime driver of Nevada’s Medicaid spending growth is caseload. While an average of 96,000 Nevadans per month received Medicaid in Fiscal Year 2000, that number jumped almost 250 percent to 238,891 Nevadans receiving Medicaid in December 2009. 
Hettrick said Gibbons also wants to minimize layoffs, since those employees would tap into the already severely strained unemployment compensation program.
Buckley said talk of layoffs at this point is premature.

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