Guinn: Tax structure will present funding problems

Wednesday, July 23, 2003 | 9:55 a.m.

CARSON CITY -- Gov. Kenny Guinn said he was glad to sign a record tax increase Tuesday because it allows school districts -- particularly Clark County -- to hire teachers.

But he also said the new tax structure is "not as broad-based" as he would have liked and he warned that it is likely to leave Nevada struggling with funding dilemmas for years to come.

One main difference between Senate Bill 8 and Guinn's proposal to raise nearly $1 billion in new taxes is that the bill, which is expected to raise $836 million in new taxes, relies upon a payroll tax instead of the gross receipts tax on businesses that Guinn and his task force recommended.

But Guinn said he won't be suggesting switching to another business tax in 2005 when the Legislature meets again.

"In the next biennium in which I will prepare the budget for, I will not be making that effort" to revive the gross receipts tax, said Guinn.

"We need to have a couple of years to really try this out to find out where we are and what it is doing to us before we start trying to change," he said. "If it brings on some tougher times for us, then we have to face those difficult times."

He estimated there will be a $200 million shortage in 2005 because one-time money was put into continuing programs. His administration will be keeping many of the vacant positions in state government frozen and looking for other ways to conserve.

"I don't want to go through this again," he said, referring to the extended debate over the tax package.

But he also cautioned that revenues projected for the new and increased taxes are just projections.

"It may or may not produce itself," he said. If there is extra revenue, his administration can't spend it. But "if it under-produces, we have to make it up," he said.

Guinn said his one disappointment was that his tax plan never got a hearing before a legislative committee. But he said any time a record-setting tax plan can be passed in "tough times," it cannot be considered a defeat.

Guinn estimated that 85 percent of his budget survived and cited as the biggest victories getting money to hire more teachers to handle an increase in students, and increasing the numbers on the programs of insurance for seniors and children of the working poor.

Included in the tax bill signed by Guinn was a 45-cent per-pack increase in the tax on cigarettes, a 75 percent hike in taxes on liquor, the payroll tax to be paid by employers, a banking tax, a real estate transfer levy, a new tax on live entertainment and increased taxes on gaming.

Guinn recommended that schoolteachers, state workers and university faculty make good use of the pay raises they will be getting because it probably will be a long time before they get another raise. But the Legislature complicated the state's fiscal problems by allocating money for a 2 percent pay raise for teachers, state workers and university professors in July 2004. Guinn didn't have any money in his budget for these raises.

"If we had the money, I would have liked to (give raises) because it's going to be a long spell before state employees, school district employees and university people get another raise," Guinn said.

It will be "six to eight years without a doubt," before the state has money for raises.