Facing a budget hole: Government vs. Business

Victor Joecks

The recession has financially affected both businesses and governments in Nevada. But as a pair of articles from the Las Vegas Sun show, the two institutions are handling difficult decisions quite differently.

First, the free market forces businesses to face reality and make difficult decisions, or they’ll go bankrupt.

Gaming giant Harrah’s Entertainment’s ability to steer clear of bankruptcy while carrying massive debt through the Great Recession has many people wanting to know its secret.

But when two key executives gave a Las Vegas business organization an inside look at what Harrah’s did to survive, some of the moves turned out to be surprisingly simple – time-honored formulas of hard-nosed cost-cutting and getting back to basics.

Jan Jones, Harrah’s senior vice president of communications and government relations, recalled how she tried to fight dramatic cuts to her budget in 2008 by arguing her case with CEO Gary Loveman.

“I took all my information to Gary and told him he was putting the business at a huge risk (by cutting her budget). He said to me, ‘If what it takes to save this business means that I have to close the entire corporate office, that is what I will do. These are your numbers. Make them work.’ And then he got up and he left.

“Looking back at it, I know now that it really took a leader who was saying, ‘Hey, get over it.’ ” …

Within nine months, Halkyard said Harrah’s cut $550 million in annual costs. (Emphasis added)

Government institutions, however, react in a much different way when faced with difficult decisions.

During its recent special session, the Legislature cut education funding by 6.9 percent. The higher education system’s presidents are preparing to eliminate certain programs, services and staff as a result.

Eric Sandgren, dean of the College of Engineering, said the five programs could be on the cutting board because they are some of the most expensive programs on campus.

There’s nothing we can sacrifice without damaging the university,” Sandgren said. (Emphasis added)

Now, keep in mind that the NSHE is facing a cut of less than half of the 6.9 percent number that’s been reported, as Regent Ron Knecht explains.

The Legislature will be cutting only our general fund allocations, which supply 35 percent of our $1.7 billion operating budget.

(Side note: If you haven’t read his entire op-ed, stop reading this and read it now. I’ll still be here when you’re done.)

So UNLV is facing some tough choices (especially since it won’t touch professor salaries), but these choices have to be made.

The real question is: When will anyone at UNLV or the legislature show the kind of leadership Harrah’s CEO Gary Loveman showed?

Citizens are waiting for the innovations and cutbacks in government that will make the numbers work. And yes, NPRI does have a good place to begin.