Tough task ahead for tax committee

Erin Neff

Friday, Nov. 23, 2001 | 9:59 a.m.

During the 2001 legislative session, everyone from teachers to health officials begged lawmakers to raise more money for services.

A looming $1 billion shortfall, coupled with continued growth straining the services, led lawmakers to consider a variety of solutions. But in the end, the session adjourned with only the tweaking of two small taxes and the promise to once again study the issue.

Now another study group -- the Governor's Task Force on Tax Policy -- has been convened, but some of its members and taxpayer advocates alike question how quickly the state's skewed tax structure can be righted.

For one thing, the committee will not make any recommendations until Nov. 15 -- after next year's elections for governor, Assembly and Senate.

"Understanding the magnitude of it all, first and foremost we want to do it right," said Committee Chairman Guy Hobbs, former chief financial officer for Clark County. "I think one of the keys is validation of the problem."

Thus the committee's first job will be revisiting some of the existing studies on the state's tax structure, which relies heavily on volatile sales and gaming taxes.

But committee member Brian Greenspun, editor of the Las Vegas Sun, said it's clear something must be done.

"We shouldn't come up with a tax policy or a new revenue producing policy like the ones that we've had for the past 20, 30 years," said Greenspun, 54, a Republican appointed to the committee by Assembly Speaker Richard Perkins, D-Henderson. "Every two years people complain there's not enough money.

"That's no way to run the fastest growing state in the union and one of the richest states in the union," Greenspun added.

Carole Vilardo, president of the Nevada Taxpayers Association, said she thinks the post-Sept. 11 economic slowdown will make it even harder for lawmakers to increase taxes or institute new ones, regardless of what the committee recommends.

"You have to look at every tax that generates revenue for the state," she said. "The recommendations may be very incremental with changes made over several (legislative) sessions."

That's not what committee member Ken Lange wants to hear.

As president of the Nevada State Education Association, Lange launched a petition drive prior to the 2001 Legislature aimed at instituting a 4 percent net profits tax on businesses to raise money for education.

Lawmakers entered the session uncertain about whether the initiative would succeed. But the Nevada Supreme Court ruled the petition drive unconstitutional and the Legislature largely shelved the question.

"While we promoted one particular tax, now is the time to look at all the other options," said Lange, 47, a Democrat appointed to the committee by Perkins. "We're all going to sit back and say we've got to evaluate this in light of the current environment.

"But what will happen if we don't do something?" Lange asked. "We have to come up with something. We can't wait another two years."

The other seven committee members all told the Sun they had no preconceived ideas about what the state should do. But several committee members offered their philosophies on taxation that could provide a glimpse into what the committee recommends.

"The gaming industry's position has been that we will participate in new tax revenues if and when other businesses come on line," said committee member Mike Sloan, a senior vice president of Mandalay Resort Group.

Sloan, 47, is a Democrat who previously served on the 1988 Price Waterhouse study of the state's tax structure. Although he jokingly describes himself as a tax-and-spend liberal, Sloan said he does favor looking at a corporate income tax for businesses such as Cox Communications and Saks Fifth Avenue, which have operations here but home offices in other states.

"I can't think of any reason in the world why they should be doing business here without a corporate income tax," said Sloan, who was one of Gov. Kenny Guinn's appointments to the committee. "If we need more money, that's one of the places I'm going to look."

Committee member Luther Mack, who will soon operate his ninth McDonald's restaurant in the Reno area, said that as a businessman he wants to make sure that taxes are collected and paid in the most productive way before he implements any new ones.

"There's an opportunity to fine-tune what we have," said Mack, 62, a Republican who is also chairman of the Nevada State Athletic Commission. "Gaming pays a lot now. We need to know, not what they can afford, but how we can implement a fairness.

"Right now I'm not sure we're doing that," added Mack, who was appointed by Senate Majority Leader Bill Raggio, R-Reno.

Nancy Wong, who is vice president of Arcata Associates Inc. of Las Vegas, said she -- like each committee member -- will represent the perspective of a particular sector of the economy.

"It will be interesting to see how group dynamics will be," said Wong, 39, a Democrat appointed to the committee by Guinn. "All of us realize the responsibility, and I think all of us have to look beyond the industries that we're identified with."

Greenspun, whose family developed Green Valley and who has a financial interest in casinos, agrees that all committee members must put their personal interests aside.

"I go into this thing with certain biases," Greenspun said. "Property tax, taxes on gross goods and services and gaming taxes would all be against my interests. Yet if I think it's the right thing to do, I'd support it."

As president of the Nevada Mining Association, Russ Fields said he brings a "great understanding of mining's role and contributions to the state's economy."

Like Mack, Fields said he first wants to examine the state's existing revenues and look for ways to streamline collection services to raise more money.

"I realize that it will likely be more extensive than just tweaks here and there," said Fields, 49, a Democrat appointed by Raggio. "We want this to be comprehensive and last for more than 10 years. We don't want to do this every year."

Eva Garcia-Mendoza, a Democrat appointed by Guinn to the committee, was a part of a committee examining the state's tax problem 15 years ago.

"I'm not going to commit myself to anything," Garcia-Mendoza said. "We've got a very favorable business climate in part because of our tax structure."

Garcia-Mendoza, 50, is an immigration attorney who has owned her own firm for 21 years and is a founding member of Business Bank of Nevada. She was also appointed by Guinn to the committee.

Hobbs said that while it is premature to suggest particular taxes the committee may recommend, he noted the difficulty the panel would have suggesting a personal income tax.

A personal income tax would require a Constitutional amendment -- a process that could take five years.

"It's conceivable that there are some things that have to carry over to future (legislative) sessions," said Hobbs, 46, a Republican appointed to the committee by Guinn.

Hobbs will convene a technical committee to assist the task force with statistics and research. Some of the possible members of the technical committee are retired City of Las Vegas lobbyist Marvin Leavitt, Clark County Aviation Director Randy Walker and Assistant Clark County Manager Mike Alastuey.

"Some of the other reports were done by people who had a stake in the outcome," Hobbs said. "We have to differentiate fact from spin."