Guinn weighs new tax

Wednesday, May 10, 2000 | 11:03 a.m.

CARSON CITY -- Unless local governments take on more responsibilities, the state may have to tax such services as dry cleaning and hair cuts to ward off future budget deficits, Gov. Kenny Guinn said Tuesday.

The administration has been looking at whether some of the social or other programs financed by the state would be better off with the counties.

"Whose responsibility is it?" Guinn said. "It's a policy decision we're talking about."

The governor, talking with reporters about the state budget and finances, said his administration is not looking at raising existing taxes, but he didn't rule out adding some.

One possibility mentioned is expanding the sales tax on charges on services provided by such people as dry cleaners, attorneys, barbers and hairdressers. Coupled with that would be a decrease in the rate.

"It makes sense to look at this," state Budget Director Perry Comeaux said, referring to the taxation of services. "The service sector is growing faster than manufacturers."

If the state continues to receive "medium" tax revenues and continues to make "historical expenditures," it will start to be in the red by 2003, Comeaux said. There could be a $400 million deficit by 2009.

Increasing state workers' pay is a Guinn priority. He said it won't be the last thing considered in building a budget -- as has happened in the past.

"We're going to put salaries in the budget so we don't get behind three, four or five years," Guinn said.

State workers didn't get a pay raise in 1999 but will receive a 2 percent cost-of-living raise in July.

The Guinn economic forecasts also don't take into account the money the state could lose with the expansion of Internet business. An individual making purchases on the Internet doesn't have to pay Nevada's sales tax. And Internet sales are growing.

Guinn is getting an early start on building his budget to present to the 2001 Legislature.

"I'm not saying we're in a crisis mode today, but we are already slowing down," he said referring to state sales tax collections.

During the past 10 years the state has averaged an 8.5 percent increase in the "blended" collections from the sales and gaming tax. Guinn said he would be happy if that continues, but he noted that there are no major casino expansions planned for Las Vegas and Indian gambling in California is expected to hurt downtown Las Vegas, Laughlin and Reno.