WEEK IN REVIEW: CARSON CITY

Sun, May 20, 2007 (6:55 a.m.)

CARSON CITY - A governor in trouble, a tax break gone awry, a downturn in the housing sector - add it all up, and it will certainly make for good theater during the Legislature's final two weeks, assuming lawmakers finish on time.

But whether 63 legislators and the governor can move the state forward in critical areas - education, transportation, health care, energy, child welfare - is very much an open question.

The pace is quickening as the 120-day deadline nears, and some are worried events have spun out of control.

"We've got two weeks left, and we have a mess," Senate Minority Leader Dina Titus, D-Las Vegas, said. "I've never seen anything like it."

Others are more measured, but there's no question that certain forces have made big solutions more challenging.

Missteps and an FBI investigation have hampered Gov. Jim Gibbons' ability to lead; a tax cut for environmentally friendly , or "green , " buildings has cost more than ever expected, and the sharp downturn in the housing sector - and the revenue it produces - have forced legislators to dampen expectations about all-day kindergarten and other big policy ideas.

Legislators and lobbyists said anxiety over figuring out a fix for the green building tax cut problem was a key obstacle to completing other business.

Monday will offer another distraction with the release of a thick legislative audit dealing with the activities of Lt. Gov. Brian Krolicki when he was state treasurer. Current Treasurer Kate Marshall and some Democratic legislators have questioned contracts he signed on behalf of the state, the alleged destruction of office records and a publicly financed advertising campaign he appeared in to market the state's college fund just months before the 2006 election.

Krolicki has denied any wrongdoing. The attorney general is investigating.

In a sense, the timing of the audit release is oddly propitious, because legislative leaders have reached an impasse on budget negotiations and likely need a cooling-off period before any more wrangling over the two-year $7 billion budget.

Depending on whom is asked, negotiators are either very close, or very far apart.

The key is the education budget, which the Legislature must, by law, pass first.

Sen. Bob Beers, R-Las Vegas, vice chairman of the Finance Committee, is pessimistic: "We've got two different camps with a lot of train between them." Asked about how things were progressing, he said, "They're not.

"If you stand still long enough you might be able to see some movement."

Assemblywoman Sheila Leslie, D-Reno, vice chairwoman of Ways and Means Committee - normally an optimist - said the two sides aren't far apart.

Assemblywoman Bonnie Parnell, D-Carson City, chairwoman of the Education Committee, agreed, saying she expected both sides to reach an agreement early next week.

Assembly Democrats had hoped to expand all-day kindergarten from at-risk schools to all children, although that seems unlikely given pessimistic sales tax revenue figures from the state's budget forecasters.

The budget outlook is not as hopeful as legislators had assumed going into the session. The state will take in upward of $100 million less than expected between now and 2009.

Republicans hope to protect higher education and the governor's priorities. Gibbons proposed budget allocated 33.1 percent of the total to K-12 education, down from 33.9 percent in the current budget. Assembly Democrats have sought to increase that portion.

The situation is complicated by the green tax breaks, which could cost the state as much as $900 million in the next decade. Legislators are working furiously to find a fix.

Transportation issues have also captivated the Legislature, and Gibbons proposed a plan earlier this month that would divert money to roads from the hotel-room tax that now goes to the Las Vegas Convention and Visitors Authority.

That plan has attracted little to no support in the Legislature, in part because of the loud concerns raised by the tourism industry. Gibbons, meanwhile, has pledged not to raise or introduce taxes, which is another obstacle to a deal.

Legislators are trying to lower the public's expectations about transportation improvements, with Sen. Randolph Townsend, R-Reno, saying, "The issue is going to be too overwhelming for us to get our arms around in the next 20-some days."

Titus agreed, adding that Gibbons' recent veto of legislation suspending the green tax cuts and his subsequent executive order making certain exceptions had demoralized legislative leaders.

And yet Leslie said the public could expect a stronger social safety net as a result of budget appropriations this session, particularly in mental health and child welfare services. She said she's noticed a shift in the Legislature's attitude toward the criminal justice system, allocating money for drug abuse treatment. Leslie also pointed to gains in renewable energy and consumer protection.

Still, she expressed frustration with the Legislature's failure to keep pace with Nevada's aggressive growth. Budgets for roads, education and health care will all fall short, Leslie said. She blamed much of that failure on a combination of factors: Nevadans' intolerance for taxes, the power of the business lobby on government and the reluctance of the Republican leadership to raise either taxes or propose new fees. As a result, Nevada will always be playing catch - up, she said.

"I think the best we can do is methodically strengthen our infrastructure as much as possible," Leslie said. "Some might think that's putting a finger in a dike It's not a bold new plan, but if it's a little better than what it is today, that's something."

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