School tax plan excludes gaming proceeds

Monday, Nov. 1, 1999 | 11:23 a.m.

CARSON CITY -- The plan by the state's teachers union to push for a profits tax to raise $250 million a year for education so far excludes casino profits.

The union's preliminary proposal for a voter initiative would impose a 5 percent tax on business profits including restaurants, bars, hotel rooms and other activities in hotel-casinos, but not on gaming proceeds, said Kenneth B. Lange, executive director of the 22,000 member Nevada State Education Association.

State Sen. Joe Neal has proposed a separate voter initiative to increase the tax on gaming proceeds.

The state's schools need the money, Lange told the state Board of Education on Friday, to boost salaries of new teachers, provide raises for existing staff, upgrade technology and tackle $436 million in deferred maintenance at school buildings.

The union's plan currently calls for the first $25,000 of net profits to be exempted to help small businesses, Lange said. Studies show about half of the businesses in Nevada earn profits of $100,000 or more, he said.

Signature gathering for the petition would start in the spring. Union members must collect signatures of 44,009 registered voters with 10 percent representing 13 of the 17 counties. It would have to be completed by November and be submitted to the 2001 Legislature.

The Legislature would have 40 days to act on the issue. If the petition is rejected, it would go on the 2002 ballot and would become law if voters approve. The Legislature also could present an alternative measure on the ballot to give residents a choice.

"I hope the Legislature will step up to the plate and fund education," Lange told the state board. "But I remain skeptical that this will realistically happen."

So far the chambers of commerce in Las Vegas and Reno and Gov. Kenny Guinn have opposed the measure. Guinn, through a spokesman, said he does not support taxation through initiatives.

The petition proposal didn't garner much enthusiasm from some Board of Education members either.

"As a small business owner, I would be reluctant to support a business tax," board member Jan Biggerstaff told Lange.

Biggerstaff, who operates a printing business, said taxes were increased on business six or eight years ago based the number of employees. She questioned where that money is being spent.

But board member Gary Waters, a Clark County School District administrator, understood Lange's plea for more money. "I would support any referendum or any initiative that would increase the opportunity to expand the quality of education in our state.

"I'm expecting the business community would support this, especially since they have been so supportive for our school to careers program," he said.

Waters is also part owner of a small farm in Iowa, where a profit tax is imposed.

The board won't vote whether to endorse the profits tax, Board Chairman David Sheffield said after the meeting. The testimony of Lange, he said, backed up conclusions the state board has discovered that there is a need for additional funding.

Sheffield, an Elko miner, said the board will hear other tax proposals in future meeting. "What we're looking for is a more stable funding source for public education and to do some of the things we think are priorities.

"Of course, you've got the flip side," Sheffield said. "Being from the business community, you want to make sure the money is used effectively and efficiently."

Lange said this tax "will not translate into doom and gloom for the business industry." Texas was the last state to impose a profits tax. "It had little or no impact in attracting new business," he said.

Nevada's tax would be relatively low compared with other states, he said, including California where the rate is 9.3 percent.

Nevada has the narrowest tax base in the nation, Lange said. "No one knows when the boom will end," he said, referring to the current expansion in the economy. "This will broaden Nevada's tax base."

The board received a report from its staff showing $1.6 billion was spent on public schools in fiscal year 1998.

The breakdown said 61 percent went for instruction including teacher salaries; 8 percent to student and staff support including counselors, libraries, nurses and computer services; 5 percent on student transportation; 7 percent on school administration; 2 percent for district administration; and 17 percent on operations.