Thursday, July 10, 2003 | 11:33 a.m.
CARSON CITY -- Two key tax plans by Democrats are dead, Senate Majority Leader Bill Raggio, R-Reno, said, adding that the Legislature must look for other solutions to balance the budget and end the deadlock.
But Democratic leaders said Wednesday that Raggio's comments are premature. "I'm not sure that's accurate," said Assembly Speaker Richard Perkins, D-Henderson, when informed of Raggio's statements.
Raggio has called together Democratic and Republican leaders for another negotiation session for Friday to put together a tax plan that can achieve a two-thirds vote that has eluded lawmakers in one regular and two special sessions of the Legislature.
Raggio's meeting schedule could be altered since the Nevada Supreme Court will rule today on the petition by Gov. Kenny Guinn. Guinn has asked the court to find that the Legislature violated its constitutional duties by not passing a balanced budget and money for schools by July 1, the start of the new fiscal year. The governor has asked the court to require the lawmakers to comply with the Constitution.
The court was scheduled to hold a special session in Carson City this afternoon to announce its decision in a rare ruling from the bench. The justices were permitting coverage by television and still photographers.
The court had said it would act expeditiously and the final written arguments were filed shortly before 5 p.m. Wednesday.
In talking about the tax plan, Raggio said, "It's fairly obvious now that anything with gross receipts or net profits is not going to get a two-thirds vote. So we have to move on."
But Assembly Majority Leader Barbara Buckley, D-Las Vegas, said, "All tax packages are still alive."
She said she is working on a franchise tax to be imposed on business, based on the sliding scale of their gross receipts.
She said it would be a "small tax" that is tiered. For instance, she said a business that did $1 million a year would pay $1,000 to $1,500 in taxes.
Asked about Raggio's comment, Senate Minority Leader Dina Titus, D-Las Vegas, said, "I would not go that far" that the two business taxes can't be passed. "They're (the GOP) short 13 votes on the payroll. We're one vote short on the business tax."
Assembly Minority Leader Lynn Hettrick, R-Gardnerville, this morning agreed with Raggio's statement. Fifteen members of his caucus oppose any profits or gross receipts tax. And that leaves the supporters one vote shy in the 42-member House. But they support a plan for an employer to pay a tax based on wages of a worker.
Before the Friday meeting, Democrats want some assurance that the GOP Assembly will negotiate in good faith this time. "Hopefully if we meet, and we make a deal, it's a deal that can be kept" said Perkins.
Assembly Minority Leader Dina Titus, D-Las Vegas, said she was going to start the meeting by asking if the GOP Assembly leaders were there to reach a compromise. "John Marvel and (Lynn) Hettrick were not dealing fairly. Last Saturday, they sat through a full day and did not raise objection and they had no intention of getting it passed.
"That's disingenuous," Titus said.
The comments by Perkins and Titus referred to a leadership meeting last Saturday in which lawmakers emerged, suggesting a compromise calling for a 2.5 percent net profits tax and that employers pay a 0.8 percent tax on the first $21,500 of wages.
Less than 24 hours later, the GOP had rejected that proposal. Hettrick and Assemblyman Marvel, R-Battle Mountain were both in that meeting. Marvel said he listened and never made any commitment. Hettrick said he laid out the plan for his GOP caucus and they did not like it. He said if he was asked, he told the members he did not support the plan.
Hettrick said today he did not make commitment at the meeting to support the compromise. He said he told the other leaders he would submit it to his members. And he said he will do the same thing if agreement is reached Friday.
At the meeting last Saturday, Hettrick said he argued for more reductions in the budget and a different tax plan.
Democrats said Hettrick is working on a new version of the payroll tax, taking the cap off of the base wage that is now $21,500. They said that would mean the employer would pay the percentage tax on the full salary of a worker.
Perkins and Titus said that version of a payroll tax would hurt a worker's chances of getting a raise. The business, if it gave employees a pay boost, would be paying more taxes. "That means people won't be able to get a raise," Titus said.
But Hettrick said he has suggested that this proposal "ought to be explored." He said he is not proposing this now but wanted to examine how it might work.
But Titus said, "I want to be sure any tax package doesn't put the burden on Nevada tax payers as opposed to big out-of-state corporations that are not paying their shares."
Buckley said a payroll tax would hurt small business, such as restaurants that are labor intensive. He said Nevada is a service industry and the payroll tax has a potential to do serious harm to tourism businesses.
Raggio said the components of a tax plan must be achieved before there is talk about how much to shave the $4.9 billion budget. After the negotiating session last Saturday, leaders said they have hit on an $803 million tax increase, needed to balance the budget.
But Hettrick said his troops might go for a $763 million tax increase, not the $803 million.
The $4.9 billion budget needs more than $860 million in new taxes to balance the spending program for the coming two years.
Attorney General Brian Sandoval, representing Guinn in the Supreme Court suit, and Brenda Erdoes, chief attorney for the Legislature, filed the final answers with the Supreme Court Wednesday to the petition by 20 Republicans that the court order the Legislature to reopen the entire budget and to perform other duties.
Sandoval said the governor opposes sending back the entire 2003-2005 back to the Legislature so the GOP Assembly could try to make reductions. He said, "to return the entire budget to the legislature after the new fiscal year has already begun could paralyze state government, placing thousands of state employees out of work if the Legislature were to repeal the 2003-2005 budget that became effective July 1, 2003."
Guinn said he met with Assemblyman Hettrick on June 26 and offered to return the budget to the Legislature. But Hettrick, according to the governor, indicated he did not want the budget return.
The legal brief filed by Sandoval, said Hettrick mentioned 10-12 potential budget reductions that total $167 million but did not provide the list to the governor.
Sandoval rejected the Republican claim that if the appropriation bill requires increased taxes, it must also be passed by a two-thirds vote. He said the Republicans are asking the court to re-write the Constitutions which requires the super majority vote on bills for new or increased taxes.
Erdoes, representing the full Legislature, said the Constitution requires appropriations bills to be passed by a simple majority of the Legislature and tax measures must be approved by at least two-thirds of each house.
Erdoes said the court "must not usurp the constitutional powers of the Legislature to make appropriations and policy decisions concerning the budget."
Regardless of the Supreme Court's announcement today, the vocal Culinary Union will organize a rally downtown Friday outside the Bank of America building to protest the legislative impasse.
Pilar Weiss of Culinary's local 226 said the rally is designed to pressure the 15 Assembly Republicans to support a broad-based business tax -- the type that would apply to companies like Bank of America.
About 200 people, including other union representatives like firefighters, public safety workers, teachers and nurses, are expected to take part.
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