Friday, May 11, 2001 | 5:27 a.m.
CARSON CITY -- For a while, it looked as if Republican state Sen. Mark James was jumping off a diving board and poised to take a hard fall into an empty pool. But as he plummeted toward the concrete, certain to at least maim his political career and perhaps shatter it, a funny thing has happened: The pool has begun to fill with water.
As the endgame cometh, the question has become less how badly James will hurt himself and instead how many of his colleagues will wade into the tax waters, and whether the governor will pull the plug or make a splash himself. Democratic and Republican leaders have been apprised of James4 plan to raise tens of millions of dollars -- as little as $130 million and as much as $160 million during the next two years. And, sources say, neither side has rejected the plan yet. And Gov. Kenny Guinn also has been briefed on the idea and far from rejecting it outright, Guinn may tweak the proposal himself and lock arms with James at some point. Maybe.
This is a delicate dance: Proposing a new tax so late in the session, selling it to the public as a levy mostly on out-of-state companies who want to do business here, and setting the stage for an interim bereft of tax initiatives and replete with coalition-building.
There is, as one seasoned observer put it, a simple equation for a complex situation: It is A plus B equals C, the insider posited. A is the short-term fix -- filling the $121 million budget deficit and appeasing the teachers union that wants a raise. Then there is B, which is setting the stage for a long-term tax structure re-adjustment in 2003. And that would equal C, which is that solution, negotiated during the interim by various parties and then proposed by Guinn, should he be re-elected, in his 2003 State of the State.
The plan has several permutations wafting around the Legislative Building.
In essence, James wants to charge corporations who want to do business here a flat fee. To induce them to come here, James also proposes language limiting director liability. The long-range plan would be to use the franchise fee as an offset to the current business Activity Tax, which is a head tax, and then eliminate the BAT in favor of a broader business tax that would still be offset by the franchise fee in some way.
Legal questions need to be resolved. The political questions are less easily answered.
How do the important decision-makers -- I4ll get to the Gang of 63 in a moment -- the special interests and the governor, react?
The gamers, of course, love James4 idea. It barely nicks them and provides the nose under the business community4s tent. So their lobbyists will eagerly help James.
The teachers still want some raises built into this year4s budget, even if it blows a hole in the next biennium4s budget. And a 4 percent raise over the next two years is likely at this point -- most legislative leaders have signed off. But the twisted fiscal policy notwithstanding -- pay us now and fill the hole later -- the teachers will welcome any ongoing source of new revenue.
Even the chamber types, whose hubris reached new heights with a patronizing letter sent to Guinn last week, shouldn4t be too unhappy. With the credit for the BAT that will be crafted, small businesses will not be affected.
As for Guinn, who wants to help teachers, fund the budget and appease the business folks, this could be a trifecta. He could embrace the James plan as his own and emerge as a hero.
Which leaves this mystery: Can James and the lobbyists helping him fill the matrix that is not the usual 22-11-1 (majorities in both houses and the governor) and instead 28-14-1 (two-thirds in both houses and the governor)?
The key, though, remains Senate Majority Leader Bill Raggio. He might go for the plan, but he will balk if he senses his nemesis, Minority Leader Dina Titus, will try to peel away Democrats because James is getting the credit.
This is all about heading off a melange of tax initiatives that could sprout during the interim and clutter the ballot next year, making the governor and the gang very skittish. As they all campaign for reelection in blazing heat, rising power rates and possible blackouts, if they haven4t solved the tax problem and haven4t gotten everyone on board, they may feel the way James did when he jumped off that diving board a few weeks ago.
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