Here comes the Democrats’ tax plan, but is it DOA?

Wednesday, May 4, 2011 | 3:56 p.m.

On Thursday, with 32 days left in the session and two days after Gov. Brian Sandoval presented the sunny side of the budget picture, the Democrats will present a tax plan that could raise as much as $1.5 billion, sources say.

Details have begun to leak and there are few surprises: A sales tax on services, a phased-in franchise tax (don’t call it a gross receipts tax), a lift of sunsets on sales and payroll (Modified Business Tax) taxes, with an eye toward repealing the hated MBT later and lowering the overall sales tax rate.

The reaction of the Democratic caucus is likely to range from “great” to “it’s not enough.” The reaction of the Republicans is likely simpler: Hell, no! The reaction of outsiders, depending on their cynicism level, is likely to range from “it’s about time” to “it has no chance.”

The roll out, scheduled to be done to business groups in front of the media Thursday morning, will be followed by an afternoon news conference. There are several points to make here:

The contrast with the Progressive Leadership Alliance of Nevada’s plan, presented Wednesday, will be of marginal help. When a group talks of corporate income taxes and mentions personal income tax, they make a good foil for Democrats trying to portray their ideas as reasonable. And even if some believe they can get enough GOP votes – at least for the sunsets – even if it fails, the base will know they tried. But will Democrats be satisfied with a noble loss?

Some believe it is almost certain to fail and that the Democrats will not push this through the summer. Instead, they will close Sandoval’s budget at his levels, let him wear the consequences, whatever they may be, and propose that a tax plan be put on the ballot. They may be able to sell that to voters in 2012, but I can also hear Republicans salivating to run against a tax question and seeing it as a ticket to recapturing the Legislature.

But the overarching issue here is that Gov. Sunny has positioned himself, with that speech Tuesday evening (posted elsewhere on this blog), as returning $440 million to the budget, salvaging social service and education programs. He all but dared the Democrats – again – to release their tax plan, which they will do Thursday and the governor will release a statement that says: “Now is the worst time to raise taxes. The economy is recovering. This could kill the recovery. It’s time to start closing budgets and go home.”

Or words to that effect.

Even Sandoval and his aides were shocked by how much money the Economic Forum put in play, perhaps twice or three times as much as some had foretold. So he looks even more like Gov. Generous than he had hoped and his message Tuesday was pitch perfect.

Sandoval understands, as Jim Gibbons did or could not, the power of the executive branch, both rhetorically and substantively. It is difficult for the Democrats to surmount that disadvantage, especially with many Republicans believing the Democratic leaders have treated them poorly. It was astonishing to hear state Sen. Ben Kieckhefer, a freshman Republican and possible tax vote, say on “Face to Face” on Tuesday that he had not once been called into Senate Majority Leader Steven Horsford’s office. One Democrats suggested Kieckhefer "should get over himself and do the right thing." But it's clear the rift between the parties is possibly irreparable.

Combine the real or perceived lack of outreach with the governor’s powers to convene – or not – a special session – and his willingness to use his bully pulpit, the outlook is bleak for the Democrats.

There may even be Democrats in the state Senate already willing to close the budget at the governor’s level. If so, the pressure increases on the Assembly to wave the white flag after putting Republicans on the record.

I still think Sandoval’s budget could do much more harm than he realizes to the state’s education system. But even if I am wrong, he has played this perfectly, and as good as he has been, he found with the economic projections that it’s better to be lucky than good.