Gibbons plan dead on arrival

Carson City is a company town, that company being state government, and its inhabitants are sensitive to a state capital’s concerns.

At Heidi’s Dutch Mill Coffee Shop, people at tables around the restaurant eyed the group of neat, well-groomed young men at one table. They were aides to Gov. Jim Gibbons, including his chief of state, Josh Hicks. It was the day of the governor’s message to the 2009 Nevada Legislature, and they had finished writing his budget recommendations. Their crisp appearance belied the tiring weeks they had spent on the chore.

For many years, the governor’s budget director has begun this day by briefing reporters and answering questions on what will be in the governor’s budget recommendations. The information is embargoed, meaning the reporters can’t use it until after the governor delivers his message to the lawmakers, but it gives the reporters knowledge they can use to research and prepare their stories on the message in advance. So it was probably a good idea for Gibbons’ aides to have one last breakfast discussion before the briefing.

Reporters started wandering into the old Nevada Assembly hall in the capitol just after 9 a.m. For some reason, there was a high level of paranoia in Gibbons’ office about the briefing. A news release had been sent out reminding everyone that the gathering was for press only and that the information was embargoed until evening, and a guard was posted at the door. As it happened, either with or without assent of the governor’s office, some legislative staffers also got in.

The crowd for this briefing was probably a little larger than it would normally have been because the governor’s press office sent out a news release headed, “GOVERNOR JIM GIBBONS TO GIVE SPECIAL BRIEFING ON PROPOSED BUDGET.” No one wanted to miss seeing the governor talk about his budget recommendations, given the reports that he had been only perfunctorily involved in producing them.

On Jan. 4, the Las Vegas Sun reported that “so far he [Gibbons] has left the hours of decision-making in the hands of his senior staff members and at least one outside adviser. … Gibbons will occasionally be briefed on policy proposals, and Hicks said the governor will have the final say on major budget decisions. But so far, Gibbons has not participated in these [budget-writing] meetings … Gibbons has rarely been in his Carson City office during the past month.” On Jan. 13, a reporter asked him about his plans for room taxes and he said, “You know, I will have to defer that to somebody who has it.”

In the end, Gibbons did not appear. Hicks and Clinger and several department heads gave the briefing.

For weeks people had been wondering whether Gibbons would stay in campaign mode. The dynamics of politics dictated that if he stayed with his no-new-taxes pledge, which even the Las Vegas Chamber of Commerce has been asking him to drop, he will have abandoned any leadership role in the 2009 legislature, becoming “irrelevant,” to use the word of political reporter Patrick Coolican. Legislators believed Gibbons had one chance left to retain credibility in the budget emergency, by putting everything on the table.

Even the jaded capitol press corps was not prepared for the budget unveiled at the briefing. One telling moment came when a reporter, referring to a recommended halt to accepting children in a preventive health care program, asked why, “of all places,” the Gibbons administration would look to save money in that program?

Gibbons recommended that the legislature reduce Medicaid payments to hospitals for indigent victims of major accidents, cap the enrollees in children’s health insurance, reduce hours and seasonal closings of state parks, keep state museums open only four days a week, eliminate the state consumer affairs office, close the Nevada State Prison in Carson City, reduce nurse/mental health technician-to-patient ratio, reduce staff and legal funding for the state Nuclear Projects Office (which leads the fight against waste storage in Nevada), cut higher education funding by more than a third, take property taxes from the two metro counties, reduce state worker pay by 6 percent, and charge local governments more for collecting sales taxes for them.

A few programs, including some with powerful political symbolism such as the Millennium Scholarships and all-day kindergarten, did well in Gibbons’ plan.

While the Gibbons aides’ put the best possible face on the budget, the march of status quo in the governor’s recommendations was pronounced. Gibbons was essentially proposing to do almost nothing about hard times in the state except cut. And department heads struggled to put a positive face on what was happening. Mike Fischer, who heads the department that includes museums and libraries, said, “I mean, it’s not like we’re zeroed, and we’re not existent. We have a skeleton with which we can go forward … on rebuilding [after the recession].”

Not surprisingly, the cuts angered a lot of legislators. But they were enraged by the language Gibbons used in his speech that evening asking legislators to approve the program. Politicians are accustomed to spin, but legislators felt Gibbons’ verbiage was so deceptive that it undercut trust. No lawmaker used the term lie (though it did appear—columnist Jon Ralston: “Gibbons either is lying or he is ignorant") but disingenuous got a workout. It was one of the reasons that Republican statements of support for Gibbons were so lukewarm—all praised Gibbons’ speech but not one committed to support his program. “He didn’t show trust in the public or respect for us as legislators,” said one. Among their complaints:

• Gibbons: “The budget that I submit today … is $2.2 billion smaller than the one we submitted just two years ago.”

Gibbons’ budget recommendations are $700 million smaller than two years ago.

• Gibbons: “I also want to single out Budget Director Andrew Clinger and his entire staff for their tireless work putting together a balanced budget.”

The budget is not balanced. The accounting came out that way because Gibbons’ recommendations are padded with imaginary revenue—including three de facto tax hikes (room taxes, property taxes, and taxes on unpaid gambling debts) and money from Congress that Congress has not allocated.

• Gibbons: “For example, we had had to reduce state funding for Nevada state higher education.”

Those 14 words, which were the total number Gibbons used to describe his recommendations for higher education, barely hint at the severity of his cuts—47 percent at UNR, 52 percent at UNLV, 36 percent in higher education overall.

• Gibbons: “Likewise, I will not unfairly balance this budget on the backs of those in our society who can least afford to shoulder the burden, either.”

Gibbons asked lawmakers for authority to enroll another thousand recipients in the state preventive health care for low income children program, bringing it to 25,000, and then shut it off to remaining eligible patients, which would deny it to more than two thirds of those eligible. And by shifting part of the cost of medical coverage onto state workers while at the same time cutting their pay, Gibbons created a regressive arrangement that means the least senior and lowest paid state workers will pay 13 percent, and those at the top pay only 6 percent. Clinger said a more progressive configuration was considered and rejected.

• Gibbons: “Our existing tax system brought us record job growth and prosperity for decades.”

The Nevada tax system underwent fundamental changes in 1979 and 1981. If a tax system has an impact on prosperity, it is noteworthy that since those changes the income of Nevadans compared to the national median has declined steadily in those three decades. And during those years, the state has experienced four crippling budget crises.

Gibbons also trivialized the notion that the state’s tax system could be more stable than its present sales tax/gambling tax base. Yet he asked legislators for revenue from the property tax because, his budget director said in the morning briefing, “Property tax is generally a more stable source.”

Gibbons said, “The simple fact is that higher taxes kill economic growth and job creation.”

“That’s not true,” said economist Glen Atkinson. “If you do the right kind of expenditures, it builds health into the economy. … You need skilled people. If you’re going to a diversified economy, you need people who are educated. If you’re going to move goods and services, you need transportation, airports, highways and so forth. … If you want biotechnology, you need scientists, and it’s hard to attract them here.”

A 1988 Price Waterhouse/Urban Institute study, A Fiscal Agenda for Nevada, said much the same thing. Atkinson said that Nevada has been trying to get into medical high technology and undercutting the higher education system will badly damage that effort.