Editorial: Resolution to shortfall is in sight

Tuesday, May 15, 2001 | 9:41 a.m.

Atwo-year, $121.5 million shortfall in Nevada state government's budget left Gov. Kenny Guinn and the Nevada Legislature scrambling to find ways to fill this hole. Initially any increase in taxes was dismissed, but after talk turned to reducing the governor's proposed budget, there was a growing realization that nearly a decade of budget cutting meant that there wasn't much meat left on the bone to trim. With state government services operating at a bare minimum in many instances, Sen. Mark James, R-Las Vegas, recently initiated a serious discussion about increasing taxes.

Until as late as last week many legislators would have just as soon had James drop what they believed was a politically perilous option. But how times change. Now it appears that momentum is building for James' proposal to levy a $500 fee on every company that registers with the secretary of state. This plan admittedly became politically palatable only after in-state companies were exempted from the new fee. Supporters of the plan contend Nevada companies deserve this exemption since they already are hit with the state's business activities tax, which amounts to a $100 assessment for every employee.

Despite his budding support for the measure, Guinn wisely is seeking a legal review to ensure that this plan can pass constitutional muster since it treats out-of-state firms differently than those with a presence in Nevada. The last thing the state needs to do is pass legislation that later would be found unconstitutional. That would just postpone the need for cuts -- and they could be even more severe if the state has to implement them after a protracted legal battle.

Even if this proposal eventually does get enacted, the fact remains that legislators still are taking a Band-Aid approach to the state's tax policy. It is ridiculous for legislative sessions to chronically result in last-minute, hasty decisions on how to fund budget shortfalls. The problem is that Nevada doesn't have a stable tax structure -- and legislators keep refusing to do anything about it. Until they do take this part of their jobs seriously and make some reforms to the state's tax policies, don't be surprised if in two years legislators madly scurry about to find another short-term measure to fill another budget shortfall.