Gov. Gibbons Hacking Another $333M From Nevada Budget

SAN FRANCISCO -Nevada's weakening economy will trim another $333 million from the state's biennial budget, Gov. Jim Gibbons announced this week.

The Republican governor had already announced $560 million in spending cuts in December, but said Monday that more cuts will be needed because of even lower-than-expected revenue, combined with an unanticipated Medicaid caseload and higher-than-expected expenses for public school support.

Gibbons said he won't support tax or other revenue increases.

"These are difficult economic times, for not just state government, but for the people of Nevada," he said in a statement. "Nevadans are paying more for milk, gasoline, health care, heating fuels, and just about everything else, so I cannot see asking them to pay more for government, as well."

The Department of Budget and Planning now predicts that general fund revenue for the current biennium, covering fiscal 2008 and 2009, will be about $6.2 billion, or 8.7% lower than the projections in the adopted budget.

Sales tax receipts, which bring in a bit less than a third of general fund receipts, are expected to come in more than 11% below projections, a $250 million drop. Nevada does not levy an income tax.

In a sign of the extent of the woes afflicting the Silver State's real estate market, projections for real property transfer tax revenues were cut by almost 33% from the original budget.

Fitch Ratings on March 24 revised the outlook for the state's credit rating to negative, while affirming its AA-plus rating for Nevada general obligation debt.

"The effects of the correcting housing market, including its influence on business and consumer spending and ultimately state revenues that were bolstered by housing activity, are quickly weakening the state's financial position," the Fitch report said. "The broad downward revision in the state's revenue projections, more pointedly in sales and real estate property transfer taxes, reveals the pervasive effect of the housing market downturn."

The report was issued before the state sold $32.5 million in GOs in a competitive deal March 25. UBS Securities LLC was the low bidder for both series included in the sale. NSB Public Finance was financial adviser.

Moody's Investors Service and Standard & Poor's both affirmed their double-A plus ratings and stable outlooks.

Nevada is selling $132 million in revenue bonds backed by motor-vehicle fuel taxes in a competitive sale Thursday. Public Resources Advisory Group is financial adviser for that deal.

 

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