SAN FRANCISCO Facing an escalating budget crisis, Nevada Gov. Jim Gibbons announced that he would call a special session of the state Legislature.

"We are facing the worst fiscal crisis in the history of the state," Gibbons said Friday. "My office has been contacting lawmakers to solicit their input, but I believe the only responsible action is to convene the entire Legislature so that all can participate in crafting the solution and all options can be considered."

The governor's office is expected to make the formal proclamation this week to call the Legislature to Carson City next week.

The news came after state revenue officials reported another disappointing month for gambling tax collections, which were 3.52% lower in May than the previous year, adding $67.5 million to the $980.5 million shortfall already projected for the 2007-2009 biennium.

Senate's Majority Leader Bill Raggio, R-Reno, supported the call by Gibbons, a fellow Republican. Raggio said lawmakers need to consider deferring cost-of-living increases for state employees and teachers that are slated to take effect July 1.

"On reflection, I have come to believe that deferring the scheduled COLAs until the next legislative session is an important tool that will enable us to handle this budget crisis while avoiding painful layoffs, and only the Legislature can authorize that action," Raggio said in a statement.

The special session call was not popular with Democrats, who have a majority in the Assembly. Assembly Speaker Barbara Buckley, D-Las Vegas, told local reporters she believes that the special session call is an effort by Gibbons to distract the public from the increasingly public details of his ongoing divorce proceedings.

School district officials also said the a suspension of school COLAs would wreak havoc because they are incorporated into already ratified labor contracts between local school districts and teachers.

The session may be an opening for the state's lieutenant governor, Brian Krolicki, to lobby for a plan he has proposed to securitize the state's revenues from the Master Settlement Agreement with tobacco companies.

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