Friday, Sept. 6, 2002 | 10:56 a.m.
CARSON CITY -- The "highest priority by far" of the 2003 Legislature will be to develop a plan to raise taxes, Gov. Kenny Guinn said Thursday.
Guinn refused to say what type of new or increased taxes he favors, however.
The governor did say that small-business owners must be protected in any tax plan and that the plan should be implemented over a few years, not all at once.
Guinn said he will meet with state Budget Director Perry Comeaux on Tuesday to review plans by state agencies to reduce their budgets by 3 percent this fiscal year to help balance the budget.
While Guinn declined to get specific on taxes, he referred to a recommendation of his tax task force that appears to favor a one-quarter of one percent tax on gross receipts for business. Gross receipts in Nevada were estimated at $121 billion by the task force.
There's no agreement, Guinn said, on whether the tax should be on gross or net income of a business, or on the amount of exemptions that would protect small-business owners.
Guinn's task force is considering a variety of taxes including increases on cigarettes, liquor and property. It will make its final recommendation by Nov. 15.
"Everybody agrees there is a need for a revenue adjustment," Guinn said. "Somehow or other we are going to raise the revenue. We have no other choice.
"(There) are only four or five areas we can get money from, so let's not fool ourselves," Guinn said. He refused to say what those are. In fact, he told reporters that they all know what they are. He declined to be more specific.
Guinn's plan to keep the state from becoming insolvent is to reduce budgets by 3 percent; eliminate so-called "one-shot" purchases; delay some new programs; and tap the "Rainy Day" fund for $100 million of its $136 million total in February.
Guinn hinted that there may have to be either more reductions or the state will have to take a bigger chunk of the Rainy Day fund. He said the state's economy is not recovering as fast as expected
He called the 3 percent cut "just a starting point."
In 1997 the state had $543 million to spend on new or increased programs, and that dropped to $278 million by 2001. He said he expects only $80 million to $100 million in new money for the next biennium.
But that $80 million to $100 million won't even cover the cost of the growth in school enrollment and the "rollup" costs which include increases for teachers and higher utility costs, he said.
Guinn's budget to the 2003 Legislature will be "extremely ugly," he said, because there won't be any money for enhancements or to cover some of the existing costs. He said he intends to present two budgets -- one based on the present tax collections and a second with higher taxes figured in.
Guinn said there is no fat left to cut in government, in response to those who say government waste should be eliminated. There are fewer employees in state government now than four years ago and the state has grown, he said.
Guinn noted that last year his administration estimated the state would be $800 million short in the next nine years. Now the task force estimates the deficit will be $2.4 billion just to take care the existing programs, he said.
Senate Minority Leader Dina Titus, D-Las Vegas, said there is no question additional tax revenue is need. She said the state is at the bottom of every list on social programs and that the quality of life is declining.
But she said she's opposed to any tax in which business will just pass on to the general public. For instance, she said a tax on services would hit the middle class. And a gross receipts tax on business would be passed on to the public. A tax on net profits might be fairer, she said.
Sen. Joe Neal, D-Las Vegas, who is opposing Guinn in the general election, said he agrees that raising taxes should be the highest priority "but we have a difference on what taxes." Neal said he was opposed to a tax on business on both gross receipts or net profits. On gross receipts, Neal said the business would just pass it on to Nevada residents. And he said businesses have "sharp accountants" who are able to show the "bottom line" or profits is next to zero. Neal said he favors raising the tax on large casinos from 6.25 percent to 10.25 percent. "If the governor is not in favor of that, he's whistling in the wind if he thinks he can do something else."
Assembly Minority Leader Lynn Hettrick, R-Minden, said raising taxes is not his highest priority. He said the state has to evaluate its real needs into the future and ultimately may have to raise taxes.
But Hettrick doesn't buy the argument of the governor that there is a "structural deficit" in the tax system. Every biennium, he said the state has had several hundred million of extra revenue.
He said there's a desire by some, including special interest groups, to spend more. But he said any potential tax should not harm the economic development efforts in Nevada.