Guinn presents short-term plan to boost taxes

Erin Neff

Thursday, Feb. 27, 2003 | 10:57 a.m.

CARSON CITY -- Gov. Kenny Guinn introduced his first tax bill to the Legislature on Wednesday with a key provision to help make it easier for lawmakers to support new and increased taxes.

The proposal aims to raise $80 million with increased taxes on business, slot routes, cigarettes and liquor, but the new twist is it would be in effect only from April 1 to June 30.

It would:

Guinn had initially said increased secretary of state fees would be a part of his tax proposal to make up the current fiscal biennium's deficit. But the $6 million that would generate was not included in package introduced Wednesday because the billing for those fees is already in process.

The proposal introduced Wednesday as duplicative bills, Assembly Bill 204 and Senate Bill 219, requires a two-thirds majority for passage.

The proposal was introduced simultaneously in the state Senate and Assembly, and the expiration date is designed to assuage concerns of some Democrats who had worried that the Legislature might approve the smaller tax increases and never get around to the bigger proposals contained in Guinn's $1 billion plan.

"The sunset keeps it from being a piecemeal approach," said Assembly Speaker Richard Perkins, D-Henderson.

It also makes it a little easier for Republicans to approve the emergency tax increases, according to Sen. Mike McGinness, R-Fallon, and chairman of the Senate Taxation Committee.

"Knowing that it ends will help sell it," McGinness said.

Guinn said the emergency measures are "a stopgap." The proposed taxes are added on to existing levies so the state can garner the income immediately.

Guinn's deputy chief of staff Michael Hillerby said $80 million in emergency taxes are needed in concert with the $100 million expected to be drained from from the state's so-called rainy day fund, the $136 million Fund to Stabilize Government.

"We still have some big bills out there," Hillerby said.

One of those bills, which could cost the state $90 million, will be a supplemental payment to the local school support tax since sales tax revenues have not been enough to cover those expenditures.

Guinn said his plan is ready so "if (the lawmakers see) they need it, they can impose these taxes. ... It's a safeguard to the state."

State Treasurer Brian Krolicki told lawmakers last week that the state will have no cash flow come June 30.

Senate Majority Leader Bill Raggio, R-Reno, stopped short of saying whether he would support the emergency tax increases, but did say budget cuts and layoffs would result if the increases are not approved.

"I've been very protective of our stabilization fund," Raggio said. "I think this is the kind of situation where the only other alternative to taxes would be very severe."

Raggio said the remaining $36 million in the so-called rainy day fund should not be tapped if revenues fall even shorter before June 30.

"You could have another catastrophe that could do serious damage to the state," Raggio said.

Senate Minority Leader Dina Titus, D-Las Vegas, had a slightly different take.

"Why don't we tap the rainy-day fund and wait for a catastrophe to raise taxes?" Titus said.

The state will be about $300 million short in revenue for the biennium that ends June 30, according to state Economic Forum projections. Guinn made about $200 million in cuts.

Shortly after Guinn's bill was introduced simultaneously in the Assembly and Senate, the Nevada Taxpayers Association sent out a legislative alert via e-mail in bright red type.

"There has been so much discussion about the need for the rainy-day fund and then supplanting it, when are we going to see that bill?" asked Carole Vilardo, president of the taxpayers group. "That money is there right now."

Some lawmakers expressed the same argument.

"Right now it's a pure definition of, 'It's raining,' " said Assembly Assistant Minority Leader Josh Griffin, R-Henderson.

Assembly Majority Leader Barbara Buckley, D-Las Vegas, added: "Generally speaking, I believe we should use our rainy-day fund and not do an emergency tax increase."

But Assembly Taxation Committee Chairman David Parks, D-Las Vegas, said he believed both the new taxes and tapping the rainy-day fund would be needed.

"The question is, do we do it for $100 million, or some number less than $100 million," Parks said.

And Assembly Minority Leader Lynn Hettrick, R-Gardnerville, said that while he would prefer just taking the money from the rainy-day fund, he thinks the state's ending fund balance might run the risk of dipping below the required 5 percent.

"That may be a part of why this was brought to us in the way it is," Hettrick said.

Guinn said Wednesday he wants the state to have the emergency tax revenue as back-up in case revenues continue to fall in coming months and the outstanding bills come in higher than expected.

"If they don't approve these four taxes, at least I'm on record saying this is how we could make sure we had the money to balance the budget," Guinn said. "We either have to spend that ($80 million) or we don't."

Guinn's larger tax bill, expected to be unveiled next week, will include increases on property, business and gaming taxes and new taxes on amusements and business gross receipts. That proposal will also reprise the four taxes introduced Wednesday.

Assemblyman Bob Beers, R-Las Vegas, said he thought the state needs to re-examine spending for the coming biennium. He also said he thought the $80 million in taxes generated for one quarter might be enough to get the state through the next biennium's shortfall. On an annualized basis those four taxes would generate an estimated $640 million.

The governor's $1 billion plan is designed to fill the projected 2004-2005 deficit of $704 million and cover roughly $208 million in enhancements contained in Guinn's budget.

The enhancements include such things as $24 million for full-day kindergarten at at-risk schools and $10 million to expand prescription programs for seniors and health insurance programs for the children of the working poor.

"As long as we've got stuff like the Henderson State College and the UNLV Dental School in the budget, (raising additional taxes is) a hard sell to my constituents," Beers said.

McGinness and Parks said they hoped to have joint hearings on the tax bill next Tuesday.