Where I Stand — Mike O’Callaghan: Making budget ends meet

Saturday, Feb. 24, 2001 | 10:16 a.m.

Mike O'Callaghan is the Las Vegas Sun executive editor.

GOV. KENNY GUINN is not only trying to balance the budget for this year's legislative meeting, he is looking to the state's future needs. He believes he can get the job done this session without an increase in taxes, but dark financial clouds are causing him trouble when peering into the future.

In the meantime, the Nevada Legislature and Congress in Washington are putting more bumps in the road ahead for him and local governments. This kind of legislating isn't a stranger in either Carson City or on the banks of the Potomac River.

Remember the special tax relief pushed through four years ago for Steve Wynn's art collection at his profitable and high-cost hotel? It was a real battle, but in the end a majority of the legislators collapsed under heavy and skilled lobbying.

This year entrepreneur Bill Walters has a bill introduced by powerful Sen. Ann O'Connell that provides for a tax exemption on his Desert Pines golf course. This, according to Mark Schofield, Clark County assessor, will cost local and state coffers $510,000 in revenue. This exemption will apply to any golf course located on the property of local government, so it doesn't end with Walters.

In the meantime, the Bush administration is pushing for the elimination of the estate tax. So what does this do to state revenue? Nevada picks up a share of the federal estate under a formula that doesn't add a burden on Nevada estates. If this pick-up tax wasn't in place or the federal tax didn't exist, the budget being worked on in Carson City today would have $104 million less than it now shows.

Guinn has already recognized the potential of losing large sums of sales-tax dollars because of the sales-tax-free status of Internet sales. Nevada's heavy reliance on sales taxes since the tax shift of 1981 has made it vulnerable to future Internet losses.

Last year Business Week magazine warned, "To compensate for the loss in tax receipts, which contribute about 40 percent of state revenues, governments may have to raise sales taxes. The burden would fall most heavily on people who don't shop on-line: the poorest 20 percent of Americans -- those earning less than $25,700 per household -- who already pay about 3.5 percent of their income in sales taxes. By contrast, the top 20 percent earners, who make $75,000 or more, pay just 1.3 percent. The more these upper-income shoppers buy at the virtual mall, the less they'll contribute to the cost of running public schools, hospitals and police departments."

Sure, there are plenty of good reasons to give a few tax breaks to businesses that are of importance to all society. A good example at this time would be a company willing to build a clean power-producing plant that would help all of us. I have to question if a golf course or art in a hotel could meet this standard.

Sen. O'Connell's SB82 justifies the tax exemption for Walters because:

* "Each year, the operator of the golf course makes at least one-half of the total available times to begin a round of golf available to residents of the county in which the course is located;

* "The golf course charges those residents no more than one-half of the seasonally adjusted maximum fee charged to nonresidents for playing golf, excluding any charge for renting carts, or provides a program of discounts to residents that is approved by the local government."

These are but a small number of the tax-whittling programs in progress that creates problems when planning for the future. Most of them are geared to help but a few and not the vast majority of our taxpayers. It would be wise for state and federal legislators to do a review of all special tax exemptions and remove all of them that don't benefit our state and nation as a whole. An end result may be that additional new taxes may not be needed.