SAN FRANCISCO — A special session of the Nevada Legislature to deal with the state's growing budget deficit, originally slated to start yesterday, has been rescheduled for Friday.
Gov. Jim Gibbons, a Republican, changed his mind on the timing Friday, less than a week after announcing the original date for the session. He said the delay is needed to process new, and even gloomier, revenue projections.
"Today's revelation that unemployment in Nevada has reached levels not seen even in the months following the terrorist attacks of Sept. 11 reinforces the need for this special session of the Legislature to cope with our budget crisis," Gibbons said in a statement announcing the delay. "However, because this and much more new information is just coming out today, I believe it's prudent to give lawmakers and the staff from the executive and legislative branches the time to let this information sink in."
Nevada's unemployment rate was 6.2% in May, the U.S. Bureau of Labor Statistics announced Friday, up from 5.7% in April and up from 4.7% in May 2007.
On Friday there was a meeting of the state's Economic Forum, a five-member panel created to forecast general fund revenue. The forum, which consists of political appointees who are not employed in state government, weighed revenue forecasts from legislative staff and Gibbons' budget staff, and mostly sided with the gloomier forecasts from the governor.
It was the latest in a series of reduced revenue projections coming from the various bodies that monitor Nevada's budget.
The adopted budget for the 2007-2009 biennium forecast $6.8 billion in general fund revenue. Now the state is projecting actual revenue of about $5.6 billion, a drop of about 17.6%.
Since the budget was enacted, Nevada's two biggest revenue sources the sales and use tax and the percentage fees tax collected on gambling have seen their projections cut by $311 million and $204 million respectively for the millennium. The state has no income tax.
Nevada has been hit very hard by the mortgage lending crisis.
According to a report released this month by RealtyTrac, an online marketplace for foreclosure properties, Nevada in May posted the highest state foreclosure rate in the nation for the 17th month in a row.
The weakening of the local housing market has been linked to the softness of sales tax collections. But declines in tax receipts from gambling also point to softness in tourism, a pillar of the local economy.
While the special session is imminent, there appears to be no roadmap on how it will play out. The two major parties split control of the Legislature, with the GOP controlling the Senate and Democrats the Assembly.
The Republican governor has stated his adamant opposition to tax increases. Senate Majority Leader Bill Raggio, R-Reno, proposed deferring cost-of-living wage increases for state employees and teachers that are slated to take effect July 1.
Democrats aren't biting.
"It is clear that rolling back the cost of living adjustments for teachers and other workers is not only a bad idea but that it doesn't have the support of our elected legislators," Democratic Senate Leader Steven Horsford said in a statement last week.
School district officials have also chimed in to warn that they cannot simply cut cost-of-living adjustments that have been agreed to in labor contracts.
The governor already has used his authority to implement a series of budget cuts to state agencies.
Fitch Ratings assigns its AA-plus underlying rating to Nevada GO bonds, but revised its outlook to negative in March, citing "the state's deteriorating financial condition, where reserves could be reduced to minimal even if additional budgetary corrective action is taken."
Standard & Poor's rates Nevada GOs AA-plus with a stable outlook; Moody's Investors Service rates them Aa1 with a stable outlook.