Tax task force urged to ‘tweak’ state budget

Erin Neff

Thursday, April 18, 2002 | 9:49 a.m.

A panel studying the state's tax problems was told the crisis could be easily "tweaked" each year at budget time.

On Wednesday, the group heard a grim economic forecast suggesting Nevada's current budget shortfall could grow to $432 million in the next eight years.

Previously an analyst working for the Governor's Task Force on Tax Policy suggested the state's total deficit would top out at $250 million in 2008. And another consultant, Marvin Leavitt, told the panel that "tweaking" the budget each cycle could make up the shortfall.

On Wednesday, Jeremy Aguero, an economist who is heading the task force's technical working group, said the deficit would be $307 million in 2010, provided no government services are improved or increased.

Using less conservative numbers, Aguero said the deficit could easily be $432 million at the same time.

In prior meetings, the panel has heard pleas from educators to provide a steadier stream of revenue that would give them more money for programs and services. Representatives from both K-12 and higher education have said they cannot improve the quality of education unless they have more money to accommodate growth, increase teacher pay and reduce the programs they have to cut.

The state's so-called structural defect is a result of Nevada's reliance on sales and gaming taxes -- two volatile revenue streams highly susceptible to national recession or even a slight economic downtown at the local level.

Panel members asked Chairman Guy Hobbs on Wednesday when the group could begin making recommendations about the types of taxes to be implemented or increased. Hobbs said he wanted the group to understand how the technical working group arrived at long-term revenue and expenditure assumptions.

The task force was created by the 2001 Legislature after a teacher's union initiative to raise business taxes was thrown out by the Supreme Court and lawmakers failed to pass any laws raising significant money for education.

The union sought to raise teacher salaries as the first step to improving education. Nevada ranks last nationwide in federal funding per student and has a per-pupil average about $1,000 less than the national average.

At one point in Wednesday's meeting, Aguero suggested there was no link between the average salary a teacher makes and educational performance of the students.

But panelist Ken Lange, executive director of the Nevada State Education Association, challenged that assumption and his fellow panelists rejected that idea.

The task force will make recommendations about how to change Nevada's tax system sometime after the November elections. The report will be available for the 2003 Legislature to consider.