Tax panel reaches halfway point

Erin Neff

Tuesday, June 18, 2002 | 9:50 a.m.

A task force studying the state's tax woes has already reached the halfway point of its deliberation, and is now ready to make recommendations about which taxes should be implemented or raised.

"I think we're ready to shift gears," said Ken Lange, executive director of the Nevada State Education Association, and a member of the bipartisan panel appointed by the governor.

The Nevada Task Force on Tax Policy meets Wednesday in the Sawyer State Building with knowledge about the $1 billion shortfall that the state will face in the next eight years.

But the eight committee members have not yet begun to talk seriously about which taxes to impose or raise.

"I would be surprised if we don't now have some discussions headed in that direction," said Guy Hobbs, chairman of the committee. "We're all looking down the road to see who's going to broach the subject and put a proposal out there."

As each panelist seems to wait for another to act, so too, does the business community.

The Las Vegas Chamber of Commerce promised at the end of the 2001 Legislature to bring forth a broad-based business tax proposal for the start of the 2003 session.

However, the chamber is reportedly struggling with a chicken vs. the egg problem. Should the chamber come first with a plan, it risks having trouble selling it to its membership. But, if the panel acts first, the chamber risks facing a larger tax for its members.

Nevada is facing a current $230 million deficit largely because the state's lack of an income tax makes the general fund highly reliant on sales and gaming tax revenues -- two income streams susceptible to downturns in the economy.

The state's budget problems are at their worst during recessions like the current one, but are also exacerbated by the state's rapid growth, which strains infrastructure, schools and health care.

Lange said he believes the panel needs to recommend a "major tax shift" to make the state's revenues more reliable. But, he adds, the current needs will make such a long-term solution only partly successful.

The state currently has a $25 million shortfall in long-term care programs -- a deficit expected to rise to $37 million next year.

If the panel recommends a sweeping business tax, it would require legislative approval, and would take months to implement and actually see revenue.

"We're not going to be able to drop a broad-based business tax on the table Feb. 1 and have money for short-term needs," Lange said.

The question he is most interested in answering is how the state will overcome the immediate needs for funding of existing programs, not to mention any growth or new programs.

"When the governor says we can't buy algebra books, we've got a problem, folks," Lange said.

He was referring to a meeting last week of the Interim Finance Committee at which Gov. Kenny Guinn recommended the panel not fund a $1 million request for eighth grade algebra books in Clark County Schools due to the huge amount of money he has to cut from the budget.

"It's like $20 million here and $30 million there," Guinn said in an interview last week. "Everybody is concerned about Yucca Mountain and medical malpractice -- both for good reason -- but once you cut that much from the general fund, how do you ever get it back?"

The panel was appointed, in part, to answer that question. But, because its recommendations will not be made until after the November elections, Guinn and other state lawmakers have bought themselves some political cover in the committee.

And, no matter what the panel ultimately decides, neither Guinn nor the required two-thirds of state's 63 lawmakers will have to approve.

"The data is there and the model is ready to have proposals to run as hypotheticals," Hobbs said. "We already have the foundation for the recommendations because we have already come to terms with the assumptions and the number we need to fill."