New budget negotiations unsuccessful

Saturday, July 12, 2003 | 4:18 a.m.

CARSON CITY -- Negotiations between leaders of the Legislature broke off Friday in an unsuccessful effort to reach a compromise tax plan and the lawmakers will resume their special session this weekend and Monday.

"It's pretty grim," said Senate Minority Leader Dina Titus, D-Las Vegas after several hours of talks between Democrats and Republicans in the Senate and Assembly.

Senate Majority Leader Bill Raggio, R-Reno, said he would try to continue the negotiations in an attempt to gain agreement so the Legislature could adjourn early next week.

"The major differences again are the insistance on some gross receipts or some net profits tax by the Democrats," Raggio said. "I have suggested we look at other alternatives to those."

He did not elaborate.

The deadlock is between the Democrats who favor a broad-based business tax and the Republicans who support a payroll tax in which the employer pays a percentage on the first $21,500 of wages of a worker.

"The crux is the desire to have a specific tax," Assembly Minority Leader Lynn Hettrick, R-Gardnerville, said.

Assembly Speaker Richard Perkins, D-Henderson, said both houses have supported a broad-based business tax. Titus said a net profits tax on business failed by only one vote in the Senate when a two-thirds majority was required.

Assembly Majority Leader Barbara Buckley, D-Las Vegas, said the Republicans during the closed-door meeting, suggested raising the sales tax. But she said Nevadans feel they are now paying enough taxes and want big business to contribute.

Perkins said he doesn't want to see a sales tax or a property tax to hit the average Nevadan. He said a franchise tax on business is a fair tax.

Hettrick said Republicans offered a combination of taxes, including a sales tax on professional services, but his caucus held firm against a gross receipts tax or anything he calls "an income tax on business."

"We tried everything under the sun and it was a no," he said.

He said he thought he could get votes for a $759 million increase in taxes with a limited sales tax on professional services, a payroll tax, and a low increase in sales tax.

He also said that no one is arguing over increases in the "sin" taxes and other minor fees.

Under the Assembly Democratic plan, there would be a sliding scale tax imposed on the gross receipts of a business. For instance those who took in less than $200,000 in a quarter would not pay anything. But those that earned $100 million or more would pay $30,000 a quarter.

Buckley said the proposal is being revised to make sure small business is not hit.

Along with the franchise tax, Democrats would support the payroll tax at a rate of 0.6 percent or lower on wages.

Sen. Randolph Townsend, R-Reno, said he likes the payroll tax but it should be uncapped. Otherwise the percentage fee would be assessed against all wages.

That mean those companies that pay high wages would pay more per employee. "That's the way it should be," he said.

The Friday session drew 16 lawmakers -- 11 Republicans and five Democrats.

The Assembly convenes Sunday and the Senate Monday.

Perkins said he was undecided what will happen. With Democrats holding a 23-19 majority, they can push through their plan and send it to the Senate.

There has been a deadlock until the Nevada Supreme Court ruled that a two-thirds majority was not needed in both houses to pass a tax bill to finance education.

The Senate has already passed Senate Bill 6 that called for a payroll tax and a 3 percent net profits tax on financial institutions. But the Assembly Democrats have amended their plan for a franchise tax into SB6 and could pass it Sunday.

That would set up a conference committee.

Both sides expressed hope they could reach agreement early next week.