CARSON CITY, Nev. (AP) — A state financial panel Friday slashed Nevada's revenue projections for the current biennium by $580 million, setting the stage for a likely special legislative session to deal with a gaping budget hole.

Gov. Jim Gibbons convened the Economic Forum to update revenue projections for the rest of the two-year budget cycle that ends June 20, 2011.

Under state law, the forum's projections must be used to set the state budget. It last met May 1 to forecast revenues for the rest of the 2009 fiscal year, which ended June 30, and also the next two years.

For 2009, actual revenues fell roughly $20 million, or 0.7 percent, short of the nearly $2.8 billion anticipated.

During a daylong hearing, economists gave bleak outlooks on the state's economic health and main revenue sources, the largest being sales and use taxes and taxes paid by casinos.

The panel cut sales and use tax projections by $183 million; casino taxes by $117.2 million; and a live entertainment fee by $40 million. Business tax projections were reduced $143 million. Other revenues adjusted involved commercial recording filing fees, insurance and property transfer taxes, and taxes on tobacco products.

Economists said Nevada's economy will remain strangled by continued job losses and curbed tourist spending and may never return to its robust days when visitors and construction demand fueled state coffers.

"We're really in unprecedented times here in Nevada," Bill Anderson, chief economist for the Nevada Department of Employment, Training and Rehabilitation, told the five-member Economic Forum. "The recovery, when it does unfold, will likely be relatively slow and relatively choppy."

Earlier this month, the state Gaming Control Board reported casino revenues in November rose for the first time in nearly two years.

"We are seeing signs of improvement," Frank Streshley, a Gaming Control Board analyst, told the forum, adding that visitor counts and tourism projections for Las Vegas, the state's tourist hub, are slowing rising.

Still, the next few years will remain challenging.

"I'm still looking at this as a recovery market, not a growth market," he said.

Gibbons, a no-tax advocate, has asked state agencies to prepare for possible budget cuts of up to 10 percent. The governor also has said all options to balance the budget would be considered, including layoffs, extended furloughs and salary cuts.

Anderson said Nevada's economy has shed 120,000 jobs since December 2007, when the recession began to take hold, and the trouble was escalated by a collapsed housing sector, tighter credit markets and weak consumer spending.

Those three factors, he said, "hit at the core of Nevada's economy."

In construction alone, 50,000 jobs were created between 1997 and 2007, as major projects on the Las Vegas Strip brought in thousands of workers and led to a boom in housing construction. In the past two years, those jobs were lost.

The state reported Friday that Nevada's unemployment rate climbed again to 13 percent from 12.3 percent in November. That's the second highest jobless rate in the nation.