Governor Seeks Bigger Budget Cutting Scenarios from State Agencies

(Sean Whaley/Nevada News Bureau) – In a sign that the Gibbons administration is concerned Nevada’s fiscal crisis may worsen further before it gets better, a memo to state agency officials sent out today seeks even tougher budget cutting scenarios than those outlined earlier this month.

The memo from state Budget Director Andrew Clinger asks state agencies to “determine proposed budget reserves in the amount of 6 percent, 8 percent and 10 percent for FY 2010 and FY 2011 and submit them to the Budget Office by the close of business on Tuesday, January 5, 2010.”

Gov. Jim Gibbons has already asked for budget cutting scenarios of 1.4 percent and 3 percent from his agency chiefs. Those plans are due today and are being sought because general fund tax revenues so far this year are $53 million below estimates.

In addition, the state Medicaid budget is expected to see a deficit of $55 million by the end of the two-year budget on June 30, 2011, due to unexpected caseload growth.

Ben Kieckhefer, a spokesman for Department of Health and Human Services Director Mike Willden, said the agency will provide Gibbons with the requested budget reduction plans, but that, “we’re not talking about any easy scenarios.”

As an example, a 10 percent cut in fiscal year 2011 for the agency would equate to just over $102 million, or nearly the equivalent of the entire general fund budget of both the Health Division and the Welfare Division, he said.

The agency will follow protocol and submit the requests by the deadline. The information will remain confidential until the governor decides what to do with it, he said.

“We’re talking entirely new levels of cutting,” Kieckhefer said.

Gibbons is analyzing both tax revenues and expenditures to determine what cuts may required to balance the state budget. He is also evaluating whether a special session of the Legislature will be required to implement any cuts. He also wants input from the Economic Forum, a panel of private fiscal experts, to weigh in on the future of the state’s budget revenues.

Sen. Bob Coffin, D-Las Vegas, a member of the Senate Finance Committee, called the request for such levels of budget cuts premature.

“We don’t have any projections,” he said. “Has the Economic Forum met yet? I would want the results before I ask for a remedy, because I don’t know how sick I am.”

The new budget cutting scenarios being sought by Clinger assume an effective date of March 1 for the current fiscal year.

“At this time no decision has been made as to whether these budget reserve recommendations will be implemented, however this information will be considered in the decision making process for closing the current projected deficit,” Clinger said.