Guinn suggests plan to expand state’s tax base

Friday, May 5, 2000 | 11:42 a.m.

If forced to do so, Gov. Kenny Guinn said he would seek to expand the state tax base to better reflect Nevada's booming service sector economy.

Guinn said Thursday during a break at a Fiscal Forum he was hosting in Las Vegas that "what will come out of this is not to raise taxes but to spread the base."

Without disclosing details he said this could include businesses that provide services. The state sales tax, for instance, is a tax on goods but not on services such as those provided by lawyers and accountants.

Though Guinn so far has advocated no tax increases for the 2001 Legislature to consider, his chief of staff, Scott Scherer, conceded that spreading the base would amount to new taxes for those individuals or companies who are not covered by existing taxes.

"We're not looking at a state income tax because that's in the state Constitution," Guinn said. "But we have people doing business who are not in a (tax) category. You have to look at the masses because they are also using the schools and the streets."

The two-day forum, which ended today at the Community College of Southern Nevada's West Charleston campus, was convened by Guinn to give fellow politicians and the public a detailed look at state budget projections through fiscal 2009. The prognosis is not rosy.

Because state economists do not expect the gaming industry to continue to expand in Nevada the way it did in the 1990s, even the most optimistic of projections show a potential state budget deficit unless politicians approve new tax policies. Among the potential dangers affecting the state's future economy are the spread of Indian gaming in California and slumping world gold prices that have hampered Nevada's mining industry.

State economist Bill Anderson presented charts that showed annual budget shortages could fall between $64 million and $1.05 billion by 2009 based on projected expenditures versus revenues.

"With no change in policy, will we have a problem in the future?" Anderson said. "Yes, we will. How much will it be? It depends on what scenario you buy into."

Anderson and other economists who addressed an audience that fluctuated between 100 and 150 people agreed that the state's tax system has not done an adequate job taking advantage of Nevada's booming economy. They said part of the problem is that some of the state's major taxes, such as the tax on gross gaming receipts, are not tied to inflation.

Guinn, noting that he had to cut $251 million from the budget last year, cautioned that Nevada was teetering on a fiscal crisis that has seen state employee salaries lag well behind their counterparts in local government. But he also said there is little flexibility because programs such as education, Medicaid and prisons that consume the greatest share of the state budget are difficult to slash.

"I will not consider any tax increase and if I do, it would only be in the event of a fiscal crisis," Guinn told the forum. "The budget can be balanced every year, but at what expense?"

State Sen. Joe Neal, D-North Las Vegas, said the forum presentation added fuel to his ongoing petition drive that seeks to increase the 6.25-percent gaming tax rate paid by the largest casinos. If he gathers 44,009 valid signatures by November, the Legislature will be forced to consider his plan. If lawmakers defeat the plan as Neal expects, the measure would be placed before voters on the 2002 general election ballot.

"The gaming tax should be increased because they are most responsible for the growth," Neal said. "The gamers take the position that they want to be capitalists, but they want the general public to be socialists."

But there is bipartisan opposition among other legislators to any tax increase at this time.

"Hopefully, nobody wants to raise taxes," said Senate Majority Leader Bill Raggio, R-Reno. "I don't think that will happen this session."

Senate Minority Leader Dina Titus, D-Las Vegas, warned against "Band-Aid" budget solutions.

"We should not unnecessarily rush to raise taxes," Titus said.

Steve Kanigher is a staff writer for the Sun. He can be reached at (702)-259-4075 or by e-mail at steve@lasvegassun.com.

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