Panel says Nevada shortfall could hit $1.1 billion

Erin Neff

Thursday, Feb. 14, 2002 | 11:12 a.m.

The state could face a $1.1 billion deficit by 2010 without new taxes, a panel appointed to study Nevada's tax structure concluded Wednesday.

In its third meeting, the Nevada Task Force on Tax Policy on Wednesday arrived at the number, which was haggled over by a few committee members, and for the first time, discussed finding bold ways to make up the difference.

"The Legislature has not asked us to look at tweaking," said Mandalay Resorts executive Mike Sloan amid some bickering about long-range shortfall projections and the state's ability to compensate for some external unknowns. "The tax base needs to be broadened. I think our days of tweaking are over."

The task force, appointed by the governor, is charged with finding ways to come up with new tax plans to overcome the state's predicted shortfalls. The proposals will go to Gov. Kenny Guinn in preparation for the 2003 Legislature.

Sloan and task force member Brian Greenspun, the president and editor of the Las Vegas Sun, both questioned the value of identifying a specific shortfall by using current information only.

"We have this thing looming over us that hasn't been included in the numbers," Greenspun said to the increasing likelihood that Yucca Mountain will be approved as the nation's nuclear waste dump.

If the dump comes to Nevada and a recent Clark County study on the economic impact proves correct, Greenspun said, the state's shortfall in the next eight years could reach $3 or $4 billion.

With that in mind, Greenspun and Sloan began suggesting possible solutions the committee's technical working group could examine to make up the lacking revenue.

"We have to have big ideas," Greenspun said. "I don't mean big taxes. I mean big ideas."

Greenspun asked the committee's technical working group to determine how much revenue could be collected if the state's property taxes were raised to their constitutional-allowed maximum. Sloan then suggested the working group examine splitting the property tax roll between what residents pay and businesses pay.

Sloan suggested the working group analyze how much revenue broadening the sales tax and eliminating certain tax exemptions could produce.

He also mentioned how other states tax commercial rentals and wanted information on how much revenue would come in if a 1 percent gross receipt tax was placed on mining and insurance -- the two biggest industries outside of gaming, which already has a 6.25 percent gross receipts tax.

The task force also wrestled with what the deficit will be considering it's a longterm projection subject to several variables.

"It's the best we can do to get a mark on where we think we could be," Committee Chairman Guy Hobbs said, defending the $250 million annual deficit estimate arrived at by the task force's technical subcommittee.

Task force member Ken Lange, executive director of the Nevada State Education Association, worried about picking a base number before the committee is presented information about the state's growing education and long-term care needs.

"We really haven't laid out the whole problem," Lange said. "To me this feels a little premature."

Sloan agreed, saying his own industry does not even know what impact Indian gaming in California, for example, will have on Nevada revenue.

"To me, I may as well take a dart like they sometimes do in the Wall Street Journal with stock pickers and chimpanzees seeing who is better," Sloan said.

After essentially agreeing on the baseline gap, the committee spent part of the afternoon hearing how that gap could easily widen.

State Schools Superintendent Jack McLaughlin presented charts and statistics from a number of sources showing Nevada children lagging behind their counterparts in other states. Those numbers came amid news that Clark County schools will have a $10 million shortfall and Washoe County schools will have an $8 million shortfall to start next year.

With up to 90 percent of local district budgets already spent on personnel, McLaughlin said, there is little room to cut.

"How long can they keep cannibalizing?" he asked, while showing a slide of program and service cuts.

From 1999 through 2002, McLaughlin said, the Clark County School District has cut $74 million. Even if additional revenue is collected for schools, he said, the district still would be unable to make up that $74 million.

The task force's next meeting, scheduled for March in Carson City, will be almost exclusively about education.