STATELINE - Nevada Gov. Jim Gibbons on Friday called for government cutbacks rather than higher taxes to solve a state revenue shortfall expected to reached $1.2 billion by the end of the fiscal year.

"It's not about taxes, ladies and gentlemen, it's about spending," Gibbons told attendees of a regular meeting of the Tahoe Douglas Rotary Club at MontBleu Resort Casino & Spa.

If the Nevada government outspends the revenue it generates, the state is destined to lock itself into a future of budget problems, Gibbons said.

The governor and state lawmakers already have been forced to approve a long list of budget cuts to try and close the deficit before the start of the next two-year budget cycle in July 2009, according to Associated Press reports.

But the budget worries may not end there, Gibbons said.

"I'm not sure that this economy has seen the bottom," Gibbons said Friday. "I hope it does, or has."

The governor is considering major budget reductions in the next two-year budget cycle because of fears of another huge revenue shortfall in that period, according to The Associated Press.

On Friday, Gibbons said a cap on growth in state government spending may be necessary to prevent future budget problems.

Also during Friday's speech, Gibbons said federal lawmakers need to quickly find a solution to the current U.S. economic crisis.

America will be subject to economic hardships on par with the Great Depression "if we allow for our financial market to collapse," Gibbons said.

Despite the financial challenges facing the state and nation, the current economic downturn is a trough in an economic cycle and is something Nevada will be able to rebound from, Gibbons said.

"It's going to get better, and we're going to get stronger," Gibbons said.

After the speech, Gibbons took two questions from the audience, including one from Betty "B" Gorman, president of the Lake Tahoe South Shore Chamber of Commerce, who asked how the governor intends to increase economic development in Nevada.

Attracting business through a state economic development team, as well as turning the state into a leader in the area of alternative energy are keys to increasing state revenue without raising taxes, Gibbons said.

Development of alternative energy will take time but will lead to Nevada "exporting energy and importing dollars into the state of Nevada," Gibbons said.

Gorman was "generally pleased" with Gibbons' speech and response, saying efforts to bring businesses to Nevada need to be focused on the state's assets, with alternative energy being one of those assets.

Tahoe Douglas Rotary Club Member Greg Felton approved of Gibbons' call for efficiency and effectiveness at all levels of government.

"I like his message," Felton said, adding he would have liked to hear the governor's opinion on how Indian casinos will affect the long-term viability of Nevada's economy.

Felton also said he was slightly concerned Gibbons didn't give any direct assurances Friday of no new taxes.