Short-term tax plan snubbed

Erin Neff

Tuesday, April 1, 2003 | 11:11 a.m.

CARSON CITY -- Despite attempts to rally support for Gov. Kenny Guinn's short-term tax plan, lawmakers abandoned the idea Monday without even bringing the matter for a vote.

Neither the Assembly nor the Senate taxation committee met individually for a vote after a joint session to hear another presentation of doom and gloom financial scenarios from the governor's staff.

Guinn had asked for $74 million in short-term taxes, to take effect today and expire June 30, in order to bring in enough money to balance the books at the end of the fiscal year on June 30.

But since lawmakers had already approved the transfer of $135 million from the state's so-called rainy day fund, and part of the tax money was designed to pay back a portion of the transfer, few votes could be found for the plan.

"It was unlikely there was any support for it," Assembly Taxation Committee Chairman David Parks, D-Las Vegas, said after the committees adjourned without even considering a vote.

Perry Comeaux, Guinn's director of administration, made one last effort to win legislative support for the plan by showing scenarios of ending fund balances with and without the tax revenue.

Assemblyman David Goldwater, D-Las Vegas, asked Comeaux why he didn't take comfort from the rainy day fund money as a cushion to offset potential downturn in revenue at the end of the fiscal year.

Comeaux said he was concerned that the lack of the additional tax revenue in this fiscal year would have its biggest effects in future fiscal years as more money is needed to balance the budget.

He also warned: "You're counting on us being very lucky and I certainly hope we are."

Comeaux said he believed the war with Iraq, which could result in terrorist attacks against the United States, could have a similar impact on Nevada's economy as did the events Sept. 11, 2001.

State revenues fell 3.2 percent in the quarter following Sept. 11, 2001, largely because of a significant downturn in gaming tax. Sales tax revenue for the period was flat because a loss in tourist-based sales was offset by an increase in new car sales as a result of zero percent financing.

"Chances are good that if there was that same kind of reaction to our economy, the decrease to our revenue would be more severe than it was after Sept. 11," Comeaux said.

The short-term tax plan would have raised taxes on cigarettes, liquor, business licenses and slot route operators.

Throughout the day, legislative leaders met with Guinn's staff, parties huddled in caucus and lawmakers considered the pros and cons of the short-term tax hike with a $1 billion increase looming.

Most legislators have said they only want to vote once on taxes.

But their decision not to act Monday is not necessarily an indication the governor's long-term tax plan or other proposals are dead, officials said.

In fact, the thrust of private negotiations this week in the Legislative Building is still the hallmark of Guinn's long-term tax proposal -- the gross receipts tax on business.

The Legislature reaches the halfway point of the session Thursday with many lawmakers still opposed to two of the main taxes Guinn has proposed -- the gross receipts tax and the tax on admissions and amusement.

The gaming industry, which is pushing the one quarter of one percent tax on business gross receipts over $450,000, has begun ramping up its discussions with legislative leaders.

The Culinary Union, which also backs the broad-based business tax, plans to rally at the Legislature next Wednesday and present a petition signed by 10,000 people supporting the gross receipts tax.