Columnist Jon Ralston: Tennessee gives Nevada glimpse of tax future

Wednesday, Aug. 8, 2001 | 9:16 a.m.

Jon Ralston hosts the public affairs program "Face to Face" on Las Vegas ONE and also publishes the Ralston Report. His column for the Sun appears on Sundays and Wednesdays. Ralston can be reached at 870-7997 or through e-mail at ralston@vegas.com

"Tennessee, Tennessee, there ain't no place I'd rather be."

-- Grateful

Dead

A REPUBLICAN governor who not only talks about tax reform, but who also puts his veto where his rhetoric is.

A Legislature so divided over taxes that its members have taken to publicly ridiculing each other and threatening to quit.

And local governments forced to look beyond their own fiefdoms when the state moves to cut off their money.

If you want to see what gubernatorial leadership looks like, if you want to see what a messy endeavor tax reform can be, if you want a cautionary tale for Nevada, look east this week and consider what is happening in Nashville.

As legislators prepared Tuesday to override GOP Gov. Don Sundquist's veto of a barebones budget, they were ignoring the chief executive's long call for tax reform in a state with one of the country's lowest tax burdens.

Like Nevada, Tennessee does not have an income tax -- its budget is built upon sales taxes. But unlike Nevada, Tennessee is not experiencing explosive growth, although it is finding it more difficult to provide state services.

Sundquist, like Nevada's Kenny Guinn, recognized the problem a few years ago and began calling for tax reform. During the last session, Sundquist did what Guinn only hinted at and proposed a tax on business profits that was scuttled by Democratic lawmakers. Then this year, Sundquist again called for tax reform, and when his words were not heeded by the Legislature, last month the governor vetoed the budget, forcing a new session this week.

If you think Nevada's Legislature was craven in how it balanced the budget -- using a silly car rental tax and secretary of state fee increases to minimize the political pain and continue the leadership vacuum -- the Tennessee folks were even worse.

Instead of heeding Sundquist's call for reform, the lawmakers balanced the budget using four years of tobacco settlement money while cutting the governor's education and health care initiatives. I probably shouldn't tell the Gang of 63 this news because it might give some of them ideas for Session '03, when Guinn has kind of, sort of, promised to do something.

Lawmakers in Tennessee have been cowed, observers have written, by anti-tax protests that escalated toward the end of the regular session to windows being broken in the Capitol. The demonstrators believe that Sundquist's call for tax reform is code for an income tax.

The statements by the Tennessee governor and lawmakers are striking in the parallel they have and will have in Nevada. To wit:

* One state senator told the Nashville Tennessean that his colleagues have to act responsibly and show leadership by passing a state income tax to fund needed programs. "We need senators to resolve to solve the problem and get beyond the question of: 'What is the political impact on me?' " Sen. Bob Rochelle said. The Mark James of Tennessee?

* Sundquist said publicly what Guinn has said privately, which is that community leaders have to get involved to apply pressure. "Frankly, I was disappointed we didn't have more people down here who are getting hurt -- mayors, county executives, business leaders, teachers, bankers, state employees," Sundquist told the Knoxville News-Sentinel. Not every state can have leadership such as we have here by the Las Vegas Chamber of Commerce.

* Sundquist has tried to force local governments to jump on the tax reform bandwagon by emphasizing how much they have at stake if they don't. He has threatened to freeze or withhold state money that is shipped to local governments to balance the budget in the future. Local governments, Sundquist told the News-Sentinel, "ought to understand that they have more at risk than anyone -- except our children." Copy that down, Gov. Guinn.

* After the embarrassment of a session, several Tennessee lawmakers openly talked of quitting. One House leader called the Senate "stupid." One senator used the same word to describe the upper house leadership. Lawmakers, the media observed, broke down into three caucuses: the do-nothing group that wanted to do, well, nothing; the tax-reform caucus, which wants to do something; and the so-called "patch people," who favor some kind of Band-Aid plan. Sound familiar?

The Tennessee nightmare should be instructive. But I'm not hopeful. Sundquist, to his credit, says he will call lawmakers in for a special session later this year just to force them to talk about tax reform.

Are you listening, governor?