Gov. Jim Gibbons on Tuesday raised the amount agencies may lose from their budgets to 8 percent.
The announcement was made at his morning cabinet meeting and sent to all agencies in a memo at noon.
"Based on our revised projections of the general fund shortfall for fiscal year 2008 and 2009, the budget division has deemed it necessary to increase the recommendations for budget reserves from 5 percent to 8 percent," states the memo from Director of Administration Andrew Clinger.
That will reduce general fund spending by state agencies not exempted from the cuts by $281.6 million, a significant increase from the $181.1 million agencies had to cut at the 5 percent level.
Clinger said the 8 percent brings the total reduction in line with the projection of how much the sales and use tax will actually fall short. He presented that number to legislative and local leaders at a forum on the budget crisis a week ago, saying then that it was significantly more than 5 percent.
He also warned that the total could go even higher since that is just the sales tax shortfall and doesn't include any reductions in projected revenue from the Modified Business Tax and Real Estate Transfer Tax. Both of those revenue sources are expected to fall short of the amounts used to build the state budget.
Those numbers will be out next week or in the first week of December.
The memo directs agencies to provide the budget office with their recommendations on how to make those cuts by Dec. 5.
The list of exempted agencies includes K-12 education, the Department of Public Safety, judicial and state worker salaries and the Department of Corrections.
Gibbons added juvenile justice and child welfare to the list of those exempt from the reductions. Clinger said with juvenile justice and child welfare on the list, just about half of general fund spending is now exempt from any cuts the governor eventually orders.
The biggest hit remains with the Department of Health and Human Services, which will now have to reduce spending $140 million compared with $95.7 million under the 5 percent reduction.
At the university system, where Chancellor Jim Rogers has been fighting strongly to be exempted, the cuts will increase from $64 million to $102.5 million.
The memo also repeats that the agency recommendations are to be treated as confidential, saying the governor will make public his final plan once he rules on where and what will be cut. Confidentiality, it says, includes a ban on providing the raw recommendations to the legislative fiscal analysts.
Gibbons said it is up to the agencies to recommend where and how they should be cut. He said every agency is different and that a "one-size" approach wouldn't be right.
Clinger said while some may rely heavily on vacancy savings, others may recommend eliminating or reducing one-shot projects and technology.
He said other options include delaying or reducing new programs, eliminating or delaying rate increases to providers and delaying capital improvement projects.
Also on the list is the possibility of reductions to existing programs by reducing caseloads, the number of clients served.
Gibbons said in addition to setting out priorities, he has also asked agencies to tell him what the impact of specific cuts would be. He said some agencies may be able to take deeper cuts than others. He said he and his top advisors and fiscal staff will review all the recommendations before deciding where and what to cut, probably in January.
