Saying things have gone from bad to awful, Nevada Gov. Jim Gibbons convened an emergency budget meeting with legislative leadership and other elected officials and said the state may try tobacco bonding its way out of the hole.

“I believe we are in the midst of the worst fiscal crisis in the state’s history,” Gibbons said in a statement Wednesday, when he announced yesterday’s meeting. “It’s important that all state leaders are on the same page about where we stand, and together we consider our options moving forward.”

Gibbons compared the state’s ongoing budget woes to the budget crisis of fiscal 1992 and 1993, during which revenues fell short of projections by about 5% a year. By contrast, he said, general fund revenue is expected to fall short about 6% for fiscal 2008, which ends June 30, and 11% in fiscal 2009.

The state on Wednesday released gaming tax collections for May 2008, and they were 3.52% lower than the previous year. The state is now facing an additional projected budget shortfall of $67.5 million for the current biennium, bringing the total budget shortfall for the biennium to $980.5 million.

Nevada has been hard hit by the problems of the mortgage industry and is a national leader in foreclosures.

Gibbons said that the ideas he will consider include a proposal from Lieut. Gov. Brian Krolicki to raise money by securitizing proceeds of the Master Settlement Agreement with tobacco companies.

Krolicki, a former state treasurer, released a proposal last week that the state’s share of the tobacco settlement, under current market conditions, could support a $670 million securitization bond issue that would generate $600 million in up-front cash for the state.

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