Gibbons tells cabinet to plan for bigger cuts

Gov. Jim Gibbons told agency heads Tuesday to prepare plans for possible budget cuts of up to 10 percent to meet an ever increasing revenue shortfall.

Budgets outlining cuts of 6 percent, 8 percent and 10 percent are to be submitted by Jan. 5, according to a memo from Budget Director Andrew Clinger.

"The governor is being very prudent," said Gibbons spokesman Daniel Burns. "He wants the state of Nevada to be prepared for any eventuality."

The bigger reduction scenarios came two weeks after Gibbons asked for proposals on how to reduce spending by 1.4 percent and 3 percent.

For the first three months of the two-year budget cycle that began July 1, state revenues are down about $53 million from projections on which the $6.8 billion general fund spending plan was based.

"That's just for the first quarter," Burns said. "There's eight quarters in the biennium."

Under reduction targets estimated by the Budget Office, a 10 percent cut would amount to $436.5 million through June 30, 2011.

Burns said the administration also sent out an e-mail to all state employees, seeking suggestions on how to save money.

At a news conference last week, Gibbons said all options for reducing the budget were on the table, including possible layoffs, extended furloughs and shortened workweeks.

The latest budget cut plans come as the governor considers whether a special legislative session is needed to deal with the state's fiscal problems. He has ordered new revenue projections by early January from the Economic Forum, an independent panel whose projections under state law must be used to set the state budget.

Nevada, heavily dependent on gambling and sales taxes, has been hard hit by the recession as gamblers and tourists keep a tighter grip on discretionary spending. Nevada's unemployment rate of 13 percent is second-highest in the nation.

Some lawmakers have said plans for a special session are premature, and questioned whether spending reductions could best be made by the administration and through an interim legislative process.

If a special session is called, Gibbons would set the lawmakers' agenda.