Guinn says legislators who resist taxes will pay price

Thursday, Jan. 9, 2003 | 11:05 a.m.

State legislators who don't vote for new taxes to solve Nevada's $704 million deficit will have a hard time getting re-elected, Gov. Kenny Guinn predicted Wednesday.

During a news conference, Guinn said the $704 million is needed just to keep government services at their present level. He also indicated he will ask for more money from the 2003 Legislature for other enhancements.

Guinn declined to say how much he will seek in new taxes or what they would be imposed on.

"Those who vote against any increase for revenues to meet this ($704 million) obligation here will have a more difficult time getting elected than those who vote for it because business people can't afford to have our schools in disarray," Guinn said.

"They can't afford the Clark County School District to shut down because (the district) would have to cut $220 million out of their budget. They just cut $100 million out."

Guinn estimates the state will need $311 million just to pay for enrollment increases in the school districts, and more than two-thirds of that is needed in Clark County.

Before the election, some legislators opposed any new taxes and suggested the state cut waste and fat in the budget. Many veteran lawmakers said there was a need for new taxes but questioned how much. "I'm hoping the people no longer say, 'You don't need any more money,' " Guinn said. "I don't know how anybody could say that that had a heart."

Senate Majority Leader Bill Raggio, R-Reno, supported the governor's call for new revenue Wednesday, saying there is little room for additional cuts.

"We have cut spending down to the bone," Raggio said. "We haven't filled positions. We've frozen positions. We have waiting lists for services in mental health, mental retardation, Medicaid, and enrollment is increasing in education at all levels."

Raggio, who has been chairman of the Senate Finance Committee in all but one session since 1987, said he sees the 2003 session as a test of all lawmakers.

"We can't just patch and fill in every session," Raggio said. "We have to do some long-range planning beyond this session and the coming biennium."

Sen. Ann O'Connell, R-Las Vegas, said she was pleased to hear Guinn apparently settle on a number for the deficit.

"Is ($704 million) the final number?"she asked. "It's a moving target."

"I hope that number is solid now because $704 million is a lot better than $1.4 billion," O'Connell said.

One of Guinn's key advisers, lobbyist Pete Ernaut, had suggested that Guinn would seek as much as $1.4 billion in new revenue. He has since publicly backed off those comments and has apologized to the Guinn administration.

O'Connell said she still believes there are "smarter things" lawmakers can do than raise taxes. She said five restaurants that have closed in her district as proof that lawmakers cannot increase the tax burden on the business community.

"We have got to look at some of these programs and we have got to start implementing things to save us money like electronic transfer of payments," O'Connell said.

Guinn said anyone who disagrees with his figures has an obligation to step forward with proof that there are easy ways to cut government.

"I've asked every legislator," Guinn said. "I've asked the (Las Vegas Chamber of Commerce) and they gave us a half-filled cup and went away." Guinn was referring to a proposal from business groups, led by Nevada Manufacturing Association director Ray Bacon, that would raise $364 million from the business community over the next two years.

Some legislators, including Assemblyman Don Gustavson, R-Sun Valley, campaigned on the notion that Nevada has a spending problem, not a tax problem.

"I can't change their minds," Guinn said. "To me they're irrelevant. A person who says that doesn't want to help out.

"We will never get a vote from them. If they don't want to see this, they become irrelevant."

Assembly Majority Leader Barbara Buckley, D-Las Vegas, said she was happy to see Guinn talking tough to some in his party.

"We have a huge deficit," Buckley said. "We're in crisis. We're in trouble and certainly no matter what we do to cut and save we're still going to have a gaping, gaping deficit."

Assembly Speaker Richard Perkins, D-Henderson, said he thinks "the governor's being the governor."

"He's taking the chief executive office seriously and it certainly sounds like he's trying to get the attention of individuals who don't see the real crisis facing Nevada," he said.

Guinn said he does not need every legislator to vote for new taxes -- just two-thirds of the 63 members, or 28 in the Assembly and 14 in the Senate.

The Assembly is controlled by Democrats 23-19 and the Senate is controlled by Republicans 12-9.

Guinn said suggestions, like O'Connell's, to eliminate the state printing office and car pool may end up costing more if private industry were to provide those services.

Some members of the public have suggested that the casino industry be tapped to take care the shortfall in state tax revenue. But Guinn said gaming is "stepping up to the plate."

The Governor's Task Force on Tax Policy has recommended a one-quarter of one percent tax on business gross receipts over $350,000. The casinos have agreed to pay that on their non-gaming business which now accounts for 50 percent of its gross income.

The gaming industry has also agreed to a one-quarter of a percent hike in the gross gaming tax, which currently stands at 6.25 percent.

The governor said that would result in a huge increase for gaming. The industry estimates it will mean $14 million in new taxes. Guinn declined Wednesday to say whether he is calling for the gross receipts tax. Guinn did hint Wednesday that some of the current budget deficit would be made up by siphoning $100 million out of the state's $136 million "rainy day fund."

The governor said he will offer a plan to restore the money to the emergency account, probably in phases.

Sun reporter

Erin Neff contributed to this article.

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