State’s tax battle goes to next level

Thursday, Nov. 14, 2002 | 11:09 a.m.

Now that a task force has issued a comprehensive proposal of new and increased state taxes, the political wrangling is about to officially begin over Nevada's attempt to fix its ailing general fund budget.

Even before the eight-member Governor's Task Force on Tax Policy in Nevada approved its final recommendations Wednesday in Las Vegas, special interests proclaimed that they were willing to pay no more than their fair share. Some politicians also expressed reservations about the proposals.

But the rhetoric is expected to intensify on all sides of the tax debate now that the task force report is headed to Gov. Kenny Guinn and the state's Legislative Counsel Bureau. They'll be handed official copies of the report on Friday.

Some groups aren't waiting, however. Culinary Union Local 226, which has 45,000 local members, was scheduled today to unveil a television advertising campaign to trumpet the need for a new broad-based state business tax to support local schools. And the Las Vegas Chamber of Commerce, which has more than 6,800 members, was to have conducted a noon forum today with task force members to discuss the tax proposals.

All eyes will now turn to Guinn, who has until mid-January to submit his proposed budget for the next biennium to the Nevada Legislature. He has already said that his budget may include all or part of the business, entertainment, property and sin taxes that have been recommended by the task force.

"In fairness to the work and research that has been done, we want to take the time to read and analyze the report," Guinn spokesman Greg Bortolin said Wednesday. "The governor will not comment specifically on the report. But the governor has been open as to his feeling that we do have a revenue shortfall.

"We've cut. We've frozen 1,500 positions. He privatized SIIS (the State Industrial Insurance System) so he's taken a large number of positions out of state government. He's done all those steps and we're still falling short of meeting the needs of the people."

Bortolin said it probably won't be until sometime next month before Guinn reveals his position on the tax recommendations, even though the governor has said he has had a "favorable" impression of the task force proposals. But Bortolin said the governor has already begun the spade work necessary to convince lawmakers that something must be done to fix projected deficits in the state's general fund, which supports such programs as education, welfare and prisons.

"The governor knows he has to make his case to the Legislature," Bortolin said.

The state faces a projected general fund deficit of $327 million in the fiscal year that begins on July 1. The cumulative deficit is expected to reach $4.56 billion by fiscal 2010. But the task force recommendations are projected to raise at least $4.52 billion over that time span if all are approved by Guinn and the Legislature.

The task force, made up of business leaders and special interest representatives who were appointed by Guinn and state lawmakers, included among its unanimous recommendations:

Except for the gross receipts tax, the taxes would take effect on July 1 if approved.

Some local residents told the task force at the Grant Sawyer State Office Building that they were unhappy with the recommendations. Knight Allen complained that some of the proposals violated the principle that taxes should never be raised on the necessities of life.

He said the gross receipts tax "never should have been proposed, much less adopted."

Another resident, James White, suggested that the task force also could have looked at ways to reduce taxes. He opined that taxpayers' money is "grossly misused."

"Increasing taxes is always a short-term fix and a long-term disaster," he said.

Assorted business representatives have already said they would lobby aggressively against the gross receipts tax and some politicians have said they doubt it would pass, even though it would raise more money than any other tax proposal.

But one by one, task force members defended their proposals.

Task force member Mike Sloan, senior vice president of Mandalay Resort Group, argued that Nevada's growth is what is driving the need for new revenue. Sloan was a leading advocate of the gross receipts tax, stating that many businesses that have headquarters elsewhere have not been paying their fair share in this state.

"Whether people want to admit it or not Nevadans are among the lowest taxed citizens in the nation," Sloan said.

Fellow task force member Kenneth Lange, executive director of the Nevada State Education Association, spoke of the need to improve funding for schools and to help people who cannot help themselves.

"We've done our job as a task force but unfortunately, while we've been meeting, the problem has grown larger," Lange said. "It's up to our leadership now, the governor and the Legislature, to rise to the challenge."

Las Vegas attorney Eva Garcia-Mendoza, another task force member, also made a passionate plea for increased state funding to help struggling immigrants become productive citizens.

Other task force members included chairman Guy Hobbs, a former chief financial officer for Clark County who is managing partner of the Las Vegas consulting firm Hobbs, Ong & Associates; Brian Greenspun, president and editor of the Las Vegas Sun; Luther Mack Jr., owner of McDonald's restaurants in Reno and Sparks; Nancy Wong, vice president of North Las Vegas engineering firm Arcata Associates Inc.; and Russ Fields, president of the Nevada Mining Association.

Hobbs said after the final meeting that he plans to spend the next several weeks meeting with business leaders around the state -- and possibly lawmakers as well -- to help explain the massive report that exceeds 1,000 pages.

He predicted that the anticipated wrangling over the task force proposals will be "turbo charged" compared to the discussions that have already occurred.

"This definitely moves into a political process from here on in," Hobbs said. "I expect a repeat of this process times five up there in Carson City."

The Las Vegas Chamber of Commerce forum today was to have featured participation from Hobbs, Sloan, Wong and Las Vegas economic analyst Jeremy Aguero of Applied Analysis, who served as a task force consultant. The chamber recently completed a survey of its members regarding possible business taxes but has not yet stated its position on the task force recommendations.

But the Culinary Union, which is planning today to begin airing 30-second television ads, is touting a broad-based business tax to pay for education. Culinary political director Glen Arnodo said that gaming, which supplies jobs to union workers, is shouldering an unfair load of the tax burden while many banks, retail and construction companies are escaping their fair share of taxes.

"There's no other way in our opinion to deal with the budget crisis," Arnodo said. "A broad-based business tax has to be the cornerstone of any tax policy. The only way to change our schools, which are near the bottom in terms of funding per pupil, is to have a broad-based business tax where everyone pays their fair share."

Arnodo estimated that about 38,000 children of Culinary members attend Clark County public schools, making up about 15 percent of the school district population.

"These kids deserve a good education," he said. "We've seen figures that put us 41st to 45th in per pupil funding and that was during the boom times."