Columnist Jon Ralston: Leadership needed to solve state’s tax dilemma

Wednesday, March 7, 2001 | 9:05 a.m.

Jon Ralston, who publishes the Ralston Report, writes a column for the Sun on Sundays and Wednesdays. Ralston can be reached at 870-7997 or by e-mail at ralston@vegas.com

CARSON CITY -- So they had this meeting Tuesday in the Legislative Building to talk about taxes, then emerged to insist that it had nothing to do with taxes.

They, in this case, are Session '01's Democratic leaders, who convened a sit-down with lobbyists for the state's major industries and business organizations. The Democrats have been fairly somnolent as GOP Gov. Kenny Guinn has encouraged private discussions of a business tax while publicly maintaining his no-new-taxes facade.

But as paralysis has gripped the Gang of 63 and the special-interest community in the wake of the sudden erasure of the teachers' union's 4 percent profits tax, the Democrats decided to show everyone they can lead, too. Or, at least that they can pretend to lead, too.

Let's face it: This is all about public relations. It's not like there's a mystery here. Almost to a man and woman, the Gang of 63 know there is a problem with how the state funds programs -- and most of them, some Republicans, too, think it's time to raise more money. Yes, I mean taxes, the dreaded word no one wants to say. But if Guinn will say it privately but not publicly, so, too, can the Democrats.

Speaker Richard Perkins, when pressed repeatedly in a media briefing after the hour-long confab with the business and gaming folks, repeatedly refused to acknowledge there was any discussion of taxes. But he also was candid enough to concede that the state's declining revenues have caused a $30 million dollar deficit in the current biennium, and one that will snowball in future budget years. And that's not even taking into account the estimated $20 million-$25 million revenue shortfall in projections that is expected when a re-evaluation is done in a few months.

"We are either going to have to cut or find another revenue source," Perkins declared, echoing the sentiments of many others in the building, as well as Guinn. But it was also clear from what he said -- and what the business interests, except for the Las Vegas Chamber types, believe -- that cutting would be disastrous.

Perkins referred to Nevada's pathetic ranking in per pupil funding -- $1,000 below the national average by some estimates -- and its putrid standing in areas such as mental health funding and child health care. But in so doing, Perkins perfectly crystallized the two questions that are befuddling lawmakers -- one has an indisputable answer, the other is a thorny philosophical issue.

The first is an accounting question -- can the state continue to fund state government the way it had been? Well, it can't. Gaming and sales cannot keep up with growth. So you need a third leg to the stool, and the sturdiest and fairest leg should come from business, especially out-of-state corporations who have become rich on the booming Nevada economy but contributed very little to help pay for infrastructure and programs.

The second question is how much should programs be enhanced. That is, how much should per-pupil funding be increased? How much money should be plowed into child welfare? How many dollars should be spent on mental health?

Those are the tough questions, and you can't even consider them unless you address the first one. And while some in that meeting remain optimistic that a solution will begin this session, without the leverage of the teachers' tax, there's very little room for optimism.

Perkins pointed out the difficulty getting consensus among the special interests, much less garnering the two-thirds of each house to pass any new tax.

Perkins, using the shibboleth, claimed that he and other lawmakers had a "pretty frank discussion" with the special-interest folks. These colloquies are always frank, aren't they? If they're not "candid" or "open," that is.

Perkins claimed that there was agreement that "our tax structure is broken." But that agreement, except for the self-interested or the blind, has existed for a decade. Everyone knows the problem. It's only a lack of political will that prevents a solution.

Yes, there are economic factors that may militate against action this session -- the looming power crisis, for example, or a national recession, or tax-cut fever in Washington. And, yes, there are some who want to have the state try to wrest money from Clark County, which is seen as cash-rich, to try to alleviate the problem -- I call this the "reverse fair share plan."

But at some point, the leaders of both parties will have to emerge from the back room and decide whether they will wait for the private sector to dictate or whether they will just do their jobs. I think there's a word for that: It's called leadership.