Las Vegas Sun

November 20, 2014

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Guinn issues challenge in ‘our hour of need’

CARSON CITY -- Gov. Kenny Guinn had no sooner finished asking for cooperation in raising $1 billion in new taxes Monday night in his State of the State address than the war of words over a future business tax proposal took center stage.

Guinn's 40-minute speech Monday night in Carson City was designed as a call to action, a time Nevadans must "choose our path." He said failing to properly fund government was "a choice of political cowardice."

But it is clear that business leaders, taxpayer representatives and, more importantly, the 63 lawmakers, aren't immediately following the governor's lead to raise five existing taxes this year, start a new tax in 2004 and hike property taxes in 2005.

After Guinn's address, business leaders began with a part of the governor's proposal that isn't even a part of his next budget -- a one-quarter of 1 percent tax on the gross receipts of businesses over $450,000. That tax, which the governor wants lawmakers to approve this year, would take effect in 2006.

"I think it's probably laughable that a tax that's created at a low rate and with a high threshold of exemption will stay that way," said Kara Kelley, president and chief executive of the Las Vegas Chamber of Commerce.

The chamber, which at the end of the 2001 session promised to be a part of a fair tax solution, considers the tax "inherently unfair."

During his address, Guinn put pressure on the business community to support his proposals.

"In our hour of need, I know they will honor their commitment to me and this Legislature to invest in the health and safety of our citizens, and the education of our children," Guinn said.

When Guinn announced his gross receipts proposal -- an amended version from the one floated by the Task Force on Tax Policy in Nevada -- there was a smattering of applause from the gallery.

Later, when he asked legislative taxation committees to give full consideration to professional service taxes -- an alternate the chamber has suggested -- there was no applause. From her seat in the gallery, Kelley raised an eyebrow and looked intently at the governor.

Guinn spent a good portion of his speech outlining measures he has taken to rectify the state's grim financial situation and the coming $706 million deficit. Guinn described another 500 frozen positions that he will eliminate permanently from this budget and said there's no more room to cut.

"If I had to build this budget on only our existing revenues, I could not live with myself, and I don't know anyone who could," Guinn said. "The time has come to say, 'enough.' "

From his seat in the chambers, Assemblyman Bob Beers, R-Las Vegas, who has been a recent critic of Guinn's, turned to his wife and daughter and mouthed, "enough."

A moment later Guinn boldly declared: "I refuse to balance this budget on the backs of our children, our senior citizens and the poor. And I will not cut programs such as Nevada Check-Up."

As applause erupted, Assemblyman David Goldwater, D-Las Vegas, turned in his seat to face Beers, shook his head and said, "Oooooohh."

Beers has proposed a re-examination of all "enhancements" in the budget over the past six years. The technical term applies to any program that was added or new in a given year, and includes Nevada Check-Up, a program that provides health insurance to children of the working poor.

"Cutting a program whose sole purpose is to give health care to 25,000 needy children is wrong. No -- it is not wrong, it is heartless," Guinn said.

After the speech Beers said he did not think Guinn was singling him out and said he is not alone in his efforts to re-examine spending.

"There's a large group of us," Beers said.

Beers also said Guinn was not referring to him or other Republicans when he said lawmakers who failed to fund government at its current level were essentially cowards.

"Apparently he was talking to the people in my district," Beers said. "It's only an opinion, he could be wrong."

Other Republicans lined up behind the governor.

"There are so many people that hold onto the notion that we've got to cut and freeze," said Sen. Ray Rawson, R-Las Vegas. "The reality is some taxes are needed. He threw the gauntlet down to those people.

"If they disagree, let them go out and justify it," Rawson said.

Democrats joked that Guinn's tone and statements made him seem more like one of them than of the party-switching state Sen. Ray Shaffer, now R-North Las Vegas.

"Guinn does sound more like a Democrat than a Republican," said Senate Minority Leader Dina Titus, D-Las Vegas. "The Republicans got Ray Shaffer, and we got the governor. It sounds like a good trade to me."

Titus said that while she thought the speech was good, she worries that so much of the governor's proposal is contingent on passing some taxes early to be collecting revenue in April.

"I'm concerned that those taxes, which are the ones that will hit the individual Nevadans the hardest are going to be the kind of Band-Aid thing this Legislature does and we might not get to the others to make it fair," Titus said.

Guinn asked lawmakers to immediately approve increases in the cigarette and liquor taxes and on business license, secretary of state and slot route operator fees. That revenue -- a combined $83 million -- will be needed to balance the current biennium's budget.

Titus's concerns about the proposed taxes to come on line in future years, the amusement tax and gross receipts tax, were not isolated.

Sen. Mark Amodei, R-Carson City, said he thinks it is possible to get two-thirds of the Legislature to approve "sound tax policy." Amodei, who has submitted his own tax proposal, is opposed to the gross receipts tax.

"We need to get the right thing done instead of worrying about personal egos and interest groups," Amodei said.

But the interest groups worked the crowded chambers, with Kelley making the rounds with Chamber Chair Lou Emmert, the chief executive officer of Sprint, and the gaming industry represented by both the Nevada Resort Association and individual casino executives.

Mike Sloan, a senior vice president at Mandalay Resort Group and a member of the Task Force on Tax Policy, said the chamber's opposition to the gross receipts tax is hard to fathom.

"The people who dominate the chamber oppose the tax," Sloan said. "The governor said the tax as he proposed it would exempt more than 60 percent of the businesses in Nevada.

"There's some who have a very different version, principally, those who have theirs and don't want others to have it."

Bill Bible, executive director of the resort association, said the gross tax of 6.25 percent on gaming is 25 times higher than the one proposed on business. The gaming tax would increase to 6.5 percent if the gross receipts is approved, making gaming subject to a higher tax on gaming revenue and the gross receipts tax on its non-gaming revenue.

"I just don't think they want to step forward to pay their responsibility to this government," Bible said.

Assembly Speaker Richard Perkins, D-Henderson, said the lack of applause from lawmakers on tax proposals was not indicative of a lack of support for Guinn.

"I don't think anybody's excited about new taxes," Perkins said.

Perkins also said he did not think the governor's tone was threatening so much as "urgent."

"In essence, he was saying, it's time now," Perkins said.

Carole Vilardo, president of the Nevada Taxpayers Association, said she was not sure if now is the right time to implement so many new taxes.

"My biggest concern is with the gross receipts tax, and secondarily how much you can put forth in new taxes when we're still in a softening economy," Vilardo said.

Guinn's budget would raise $998.3 million in new revenue over the next biennium (fiscal years 2003-04 and 2004-05) and would raise $83.9 million to balance the biennium fiscal year 2003.

In 2004 a 7.3 percent tax on entertainment or amusements would take effect, resulting in $82.5 million that year. The tax applies to things like movie tickets and admission to adult cabarets. Participatory amusements like bowling and golf, and items subject to the state's casino entertainment tax or boxing and wrestling fees, are exempt.

Guinn also proposes a 15-cent increase in the property tax in 2005, generating $99.5 million. The state's cap on property tax -- now at $3.64 per $100 of assessed valuation -- would rise to $3.79 and the state would get all of the revenue from the last 15 cents.

During his speech Guinn also called on lawmakers to change the method of collecting property tax and change the state's constitution to allow homes, commercial businesses and land development to be taxes at different rates.

"For now is the time for courage, and a time for leadership," Guinn said. "The popularity of my proposal is less important to me that the rightness of our course."

Sun reporter

Cy Ryan contributed to this story.

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