Long-term tax solutions are elusive

Erin Neff

Tuesday, March 20, 2001 | 11:17 a.m.

CARSON CITY -- Politicians, business leaders and educators agree the state's revenue structure is flawed because of its heavy reliance on the volatile sales tax.

But when the Nevada Supreme Court ruled a teachers' tax initiative unconstitutional last month, momentum for any real tax proposal downshifted into neutral.

Now the halls of the Legislature Building are again filling with talk to "study" the issue in the interim. In other words -- do nothing this session.

"We have suggested that we in fact take another look," Pat Shalmy, Las Vegas Chamber of Commerce president, said. "Before we start looking at a new tax, we need to take a comprehensive look at long-term solutions."

Kara Kelley, chamber chief operating officer, added: "We don't believe that can take place between now and June.

"We're not going to do it with a gun to our heads, saying the sky is falling."

But an expected state shortfall, coupled with a souring national economy and the incredible needs the state's growth has placed on education, are leading some to seek a solution before the session ends June 4.

"This is a problem that's been studied to death," said David Goldwater, D-Las Vegas, chairman of the Assembly Taxation Committee. "I think there's a short-term crisis that needs to be addressed this session."

On Monday Assemblyman Bob Beers, R-Las Vegas, introduced a bill to shift all of the motor vehicle privilege tax to public schools -- a change that would bring an estimated $60 million to schools in Clark County alone.

Michael Alastuey, a Clark County lobbyist, said the shift would drain $60 million from the county and lead to a decline in services.

But Assembly Bill 457 also lets the county commissions raise property taxes to make up for that loss. The measure would apply to Clark, Washoe, Douglas and Elko counties, and in Carson City.

"It's admittedly a very big hit for the local governments," Beers said.

Beers and Goldwater, the co-sponsor of AB457, both said they were unsure if the bill can pass, given staunch opposition from local governments.

"Right now you only hear state government complaining that there's not enough money," Beers said. "At the very least, I think this will help spur some dialogue since we are two sides of the same coin."

Goldwater said the bill may result in a proposal from local governments to help offset the loss of the privilege tax revenue.

In 1981 the state shifted from a predominantly property-tax fueled revenue stream to a reliance on the sales tax after California voters approved a similar shift.

The state's growth, especially in Southern Nevada, has stressed systems that get the bulk of their revenues from the state -- like schools and prisons.

As a result, several measures have been introduced to stab at the overall revenue problem by instituting a pointed tax. The teacher's union had proposed a 4 percent tax on business profits. Sen. Joe Neal, D-North Las Vegas, has again proposed raising the state's gaming tax -- this time from 6.25 percent to 10.25 percent.

"We've got to look at this comprehensively, without focusing on any one industry," Shalmy said. "It would be bad politics, bad government to do something emotional during a session when reapportionment is on the table."

Goldwater agrees in theory, saying the state just doesn't seem to be ready for a lasting solution -- such as a shift away from sales taxes and back to property taxes.

"Nobody wants to raise taxes in isolation," Goldwater said. "What does need to happen for long-term solutions is that the politics of it need to mature."