CARSON CITY, Nev. — Gov. Brian Sandoval concedes it could take until the end of his four-year term before "Nevada will be Nevada again."
On Monday, the newly elected governor unveils his blueprint on how a state ravaged by record unemployment, foreclosures and bankruptcies will claw its way out of the Great Recession. Sandoval took office vowing to close a budget gap of between $1 billion to $3 billion without raising taxes or imposing new fees. If economists estimates of the higher amount are correct it would be about equal to half the state's current general fund budget.
Critics scoff at the Republican governor's no tax stance. Someone will pay, one way or another. They say it's a matter of who and at what price.
Since he began his campaign to unseat former Republican Gov. Jim Gibbons, Sandoval, 47, has said consistently that he will veto any bill that includes a tax or fee increase.
The Economic Forum, an independent panel of financial business experts, has projected Nevada will have $5.3 billion to spend over the next two-year budget cycle that begins July 1. That's roughly 17 percent less than the current biennium.
Sandoval's State of the State address to a joint session of the Legislature will focus on the bleeding budget, economic development and education.
"Those are the major components of the future of our state," he told reporters earlier this week. "You're going to see a different approach."
Sandoval said job creation is Nevada's ticket out of the recession, and he said businesses are waiting to see what tax policies come out of the 2011 Legislature.
"They like the fact Nevada wants to be unlike other states that are over-regulated and over-taxed," Sandoval said. "But they appreciate there's a legislative session coming up."
Both the Senate and Assembly are controlled by Democrats, though they lack two-third majorities required to pass new taxes or override a veto.
Sandoval dismissed suggestions that the quality of Nevada's public school system deters new businesses from locating in the Silver State.
"Yes, I agree it's unacceptable that we lead the country in dropout rates," Sandoval said. "Yes, we need to improve, but there's some great schools as well.
"I think businesses appreciate that we recognize there's an issue and I'm going to be pushing forward with a very aggressive plan to improve the delivery of education in the state of Nevada," he said.
Sandoval has talked of tough choices and shared sacrifice — warning state workers that he will propose 5 percent salary cuts instead of furloughs, and telling cash-strapped local governments they'll be asked to take over services now provided by the state, or contribute more of their own tax revenues to the state.
"We're looking at where services are most appropriately provided," Sandoval said, adding that consolidating agencies "will result in the elimination of some positions."
Employee groups argue state workers have borne the brunt of budget cuts over the past two years, when salary cuts combined with higher health and retirement contributions reduced actual wages about 10 percent.
The governor's rigidity over taxes has frustrated advocates for the poor, labor groups and educators, who say talking about cuts without considering the state's sources of revenue that are heavily dependent on sales and casino taxes — sources highly vulnerable to economic volatility — ignores a crucial side of the budget equation.
"The only people we see sacrificing are teachers, children, students, seniors and the disabled," said Jan Gilbert, with the Progressive Leadership Alliance of Nevada. "Everyone except those businesses that aren't paying very much in taxes."
Gilbert said the group, which spearheaded a failed initiative last year to increase taxes on the mining industry, is organizing a protest on the Capitol grounds Monday night.
Sandoval said his budget aims to protect Nevada's most needy residents, and will preserve a program that provides personal care assistants to the elderly and disabled.
Sandoval said Nevada businesses already are struggling under the weight of higher unemployment insurance rates and using savings to stay afloat. He said his budget will retain a tax break for small businesses, and reduce rates paid by larger employers that were imposed temporarily in 2009.
"I think they are doing their fair share and they're doing whatever it takes to keep people employed," he said.
The governor's budget also will include $60 million from the general fund to pay interest on $645 million Nevada has borrowed from the federal government to pay jobless benefits after the state's unemployment trust fund went broke in October 2009.
Dan Klaich, chancellor of the Nevada System of Higher Education, said he's seen no firm budget proposal from the governor's office, but is bracing for very significant cuts.
"We're getting glimpses of the mountains, but there's a pretty heavy fog over them," he said.
While the administration has proposed giving institutions greater control over how tuition and fees are spent, it's also suggested that the Board of Regents, which oversees the state's universities and community colleges, has the ability to mitigate cuts from the general fund by raising those expenses paid by students.
"We're about to take a cure here that is worse than the disease," Klaich said, adding that deep cuts to higher education "is not, in my opinion, in the short- or long-term best interests of the state.'
Increasing tuition and fees to absorb cuts by the state would make higher education unaffordable for many Nevadans, he said.
With 180,000 Nevadans out of work, "people are turning to higher ed in greater numbers more than ever, yet we're talking about things that are going to close off that access," he said.