With the state budget continuing to reel from Nevada’s cratering economy, Gov. Jim Gibbons has softened his no-new-taxes line.

The state has already gone through several rounds of budget cuts to accommodate falling tax revenues. With Las Vegas taking some of the hardest hits from the national mortgage meltdown, sales tax revenues are significantly off, and even gambling tax revenues — which have withstood previous recessions — have dropped.

State officials are now predicting revenue will be down a further $300 million for the current fiscal year, which ends June 30, despite more than $1 billion in previous budget adjustments.

In addition to continuing revenue declines, the Republican governor is facing newly empowered Democrats, who gained control of the state Senate last week and added to their existing majority in the Assembly.

“Nothing is off the table,” Gibbons told reporters after a meeting with top lawmakers last Friday.

Legislators convene in February to begin hashing out the next two-year budget. Under its most recent budget projections, the state can expect $5.7 billion in general fund revenue during the 2009-11 budget cycle, while it would need $7.2 billion to keep services at current levels, according to the Gibbons administration.

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