Task force eyes fee hikes for revenue

Thursday, July 18, 2002 | 10:53 a.m.

The governor's task force on taxes has moved closer to a vote on some noncontroversial changes to help solve a predicted deficit of $2.5 billion by 2011.

The task force on Wednesday decided it may vote in August on such items as increasing the annual filing fee for the 180,000 Nevada corporations, creating an annual state business license renewal fee and raising the limit of the property tax.

Task force member Mike Sloan, a Mandalay Resort Group executive, said the board should start making decisions instead of just listening to testimony.

The recommendations won't come close to solving the state's deficit but will be a start, committee members agreed. The big issues still will be a possible business profits tax, expanding the sales tax and other major revenue generators.

The committee, whose meeting in Las Vegas was simulcast in Carson City, isn't expected to complete its package of tax suggestions until after the November election.

The task force heard from a loose coalition of business leaders who suggested a plan to increase state revenues immediately and in the long term.

Mary Lau, executive director of the Retail Association of Nevada, said the group favors raising the business activity tax, which is $100 a year on each employee. It could be tied to the Consumer Price Index, she said.

She said there would be an increase in the fees charged by the secretary of state's office to out-of-state corporations.

Randy Robison, state director of the National Federation of Independent Businesses, said a long-term solution would be to expand the sales tax to services. He added that the property tax may have to be raised if the state gets into an additional bind.

The immediate solution would cover $100 million to $120 million, said Reno lawyer Sam McMullen, who headed the group. And the sales tax expansion could raise hundreds of millions of dollars, he said. That would take five years to put in place.

But Sloan said these suggestions don't expand the tax base in Nevada as is required by the document that created the task force. He said the tax on the number of employees will fall on the same businesses, no matter how much they make.

Sloan said big developers such as Del Webb and national banks make big money in Nevada but are based outside the state. They don't have a lot of employees in Nevada, he said.

"They have a responsibility to participate in the state where they are making very big profits," he said.

Ken Lange, a task force member from Las Vegas, said expanding the sales tax to services would be regressive on individual taxpayers. It would be passed along to the individual who is using the service, whether it's a haircut, pool cleaning or an attorney service.

McMullen said businesses would also pay a service tax and that it may not prove to be regressive to the individual. He said it would be up to the individual whether to get a $6 haircut or a $15 cut.

McMullen said the recommendations from the business community were preliminary and would be refined.

Walt Elliot, president of the Nevada AFL-CIO, recommended the committee examine a business tax to solve the state's financial problems. Kendal Stagg of the American Cancer Society suggested raising the cigarette tax.

But the committee agreed it should take its first votes on some of the suggestions made by Carole Vilardo, president of the Nevada Taxpayers Association. They include streamlining the tax collection system and making other changes that could mean an additional $20 million a year.

Vilardo suggested the amount that retailers be reimbursed for collecting the sales and use tax be reduced to 1 percent. That would mean a savings of $7 million a year to the state. Retailers also would be given 20 days to send in their sales and use tax collections, rather than the present 30 days. That would give the state additional time to invest the money.

Vilardo suggested the current annual fee for a corporation for filing its list of officers be raised from $85 to $110, which would generate anywhere from $2.5 million to $5 million. There should an annual state business license renewal fee that might bring in as much as $2.4 million, she said.

Vilardo said it was "not a happy issue" to raise the cap on the property tax that is $3.64 per $100 of assessed valuation. But it's going to have to be done "whether you like it or not," she said.

Governments in 14 counties are at the limit now. If a school or a police station had to be built, other governments would have to reduce their share of the property tax to keep it at the $3.64 limit, she said.

And there is sentiment in some counties for raising the support of schools, Vilardo said. An added one cent on the property tax would generate $5.8 million statewide, she said.

Vilardo also suggested repealing the casino entertainment tax and the boxing and wrestling fee and creating a new "transaction tax" on amusements, admissions and entertainment.

The proposed tax would be on movies, concerts, plays, memberships in health, swimming, tennis and country clubs, fees on recreational lessons or instruction and admissions to nightclubs, cabarets and bars with live music.

A proposed 3.7 percent tax would generate $67 million, the same amount being collected in the casino entertainment tax and boxing fee, she said.

Task Force member Brian Greenspun, president and editor of the Las Vegas Sun, said he wanted to hear more testimony on this proposed change. The group agreed it would examine the tax further before any vote.

The committee also heard from representatives of the state Division of Wildlife, who said they plan to raise their fees by 20 percent to pay for their present programs. Even with that, Division Administrator Terry Crawforth said, the agency needs another $10 million a year. He urged the task force to keep his agency in mind when they make their recommendations.

Kathryn Landreth, chairwoman of the Southern Nevada Mental Health Coalition, and Janelle Kraft, co-chairwoman of the Southern Nevada Regional Planning Coalition's Task Force on Emergency Room Overcrowding, told the task force more money is needed for mental health in Clark County.

Landreth noted a major cutback in mental health funding by the state during the economic downturn in 1992. With inflation, the state is still operating at the 1992 level despite an 81 percent increase in population, she said.

Landreth said hospital emergency rooms and jails are filling up with people with mental problems.