Tuesday, June 10, 2003 | 11:15 a.m.
CARSON CITY -- The Senate was set to return to its special session at noon today with an $860 million tax package hanging on decisions by Sen. Mark Amodei, R-Carson City, and Sen. Maggie Carlton, D-Las Vegas.
Either Amodei or Carlton could provide the one additional vote that Senate Majority Leader Bill Raggio, R-Reno, needs to pass a tax plan. To try to win one or both of those votes, Raggio is now pushing for an amendment to cap the amount of profits that can be considered, and Amodei said this morning that he may have helped develop a package that can win approval.
On Saturday the Senate, by a 13-8 vote, failed to reach the required two-thirds majority to pass a tax plan that includes a 3 percent net profits tax.
Raggio thought he had 14 votes for the plan Saturday but Amodei switched his vote on the floor after expressing concerns about the need for a limit on the net profits tax. Amodei said it would produce millions more than the state needed and hit some businesses too hard.
Raggio said he worked Monday with Amodei to develop a plan that Amodei could vote for. Amodei said this morning that he is now leaning toward a payroll tax instead of a net profits tax that is in Senate Bill 4, the tax package.
He said several plans will probably be discussed today in the GOP caucus.
The payroll tax had been considered before and discarded. But Amodei said this is a stable revenue producer and could raise $130 million a year. It would allow the present $100 a year per employee tax to be eliminated, he said.
Businesses now pay a premium on the first $21,500 of a worker's wages to an unemployment compensation fund. Amodei said a tax of 1 percent or 1.25 percent could yield enough money, with the other taxes, to finance the $860 million two-year shortfall.
"The employment base is more stable," he said. Nobody knows how much the net profits tax would produce and it would provide millions of dollars more than necessary, he said.
And it fluctuates, he said. For instance, he referred to Utah where the net profits tax revenue dropped by more than $50 million in a year.
If the net profits tax is adopted, he suggested that the proposed rate of 3 percent could be reduced to three-quarters of 1 percent or 1 percent. He said also that a gross revenue tax, also considered and discarded, could be pegged at 0.10 percent, instead of 0.25 percent to produce the collections needed.
He said nine votes are needed from the GOP side and five from the Democrats to get the necessary 14 votes.
Amodei also said there "is no way in hell" that an increase in the cigarette tax will produce $100 million in extra revenue in the second year of the biennium. The tax would rise 25 cents a pack the first year and 15 cents the second year. He said people will shop the Internet to buy their cigarettes at a cheaper price.
But he said he had no problem with the 89 percent increase in the liquor tax. That equates to a penny a bottle of beer, he said.
The tax bills in the Senate and Assembly create a net profits and an entertainment tax. They both raise gaming, liquor and cigarette taxes. They both contain a real estate transfer tax plus other levies.
Carlton, the lone Democrat who voted against the tax plan Saturday, is the other senator who might change her vote if the net profits tax is capped.
Carlton is a shop steward for the Culinary Union and a waitress at Treasure Island, and she objected to the high amount gaming would pay under the plan. In addition to the net profits tax, the Senate's plan includes a 10 percent live entertainment tax, 1 percent state room tax and a 0.50 percent gaming tax increase.
All three of those would impact gaming heavily -- the reason Sen. Joe Neal, D-North Las Vegas, actually voted for the tax proposal Saturday despite its lack of a larger increase in the gross gaming tax.
Even if Amodei or Carlton can be accommodated to provide the 14th vote in the Senate, the tax bill faces uncertainty in the Assembly.
The Democrats, who hold the majority, prefer a higher net profits tax and a 5 percent tax on banks, which is not included in the Senate's bill. But any tweaking of that plan might erode support from the four Republicans who have pledged they can support $860 million in new taxes.
Part of the Democrats' strategy continues to be to have the Assembly vote on a Senate bill.
Assembly Speaker Richard Perkins, D-Henderson, said a bill originating in the Republican-held Senate will be easier for Assembly Republicans to swallow.
"I think it will show that the Republicans in the Senate support the number," Perkins said.
Several rural Assembly Republicans, including Pete Goicoechea, R-Eureka, Tom Grady, R-Yerington, and Rod Sherer, R-Pahrump, have privately said they might be able to support a tax plan that was approved by rural Republicans in the Senate.
Sen. Dean Rhoads, R-Tuscarora, voted for the tax plan Saturday, but Sen. Mike McGinness, R-Fallon, did not.
Gov. Kenny Guinn has met with the potential swing Assembly Republican voters but has consistently said he will not re-open the authorizations act approved on the last day of the regular session and already signed into law.
"When you total the vote from both houses, the appropriations bill was approved by 71 percent of legislators," Guinn said. "I don't know how they think they're going to change the minds of 71 percent of their colleagues."
That is why some Assembly Republicans are looking to the Senate for leadership on taxes. The Senate voted 20-0-1, with one absence, for the appropriations act.
Democrats are in charge in the Assembly where the party split is 23-19.
Assembly Democrats said they believe an ongoing stalemate over taxes will be broken only through public pressure.
A majority of Assembly Republicans want to re-open the budget already approved by 71 percent of the Legislature and signed into law by the governor because they said additional cuts to the budget will reduce the amount of needed revenue.
But as lawmakers return for the sixth working day in the special session, Democrats said rising costs and increased acrimony may actually break the impasse.
"How much longer are they going to hold out?" Assembly Majority Leader Barbara Buckley, D-Las Vegas, said. "They're dragging this out and the people back in our districts are sick of us.
"They elected us to get our work done in 120 days and the longer this goes, the more people are going to point blame," Buckley said.
Assembly Minority Leader Lynn Hettrick, R-Gardnerville, has repeatedly said: "It takes two sides for an impasse," but he also says none of the 15 members of his caucus who oppose the tax plan are likely to budge.
The Assembly's $866 million tax bill also lost in the Assembly Saturday on a party-line vote with Democrats supporting and only four Assembly Republicans joining them.
Hettrick said he met with three GOP senators Monday trying to reach some consensus. He said the three senators agreed to look at some new concepts but did not give their approval to any changes.
If 15 GOP members hang together in the Assembly, the GOP would be able to block any tax bill. "Then the negotiations could open" on reducing the spending side of the state budget, Hettrick said.
In the special session, lawmakers are only able to consider the tax plan, nearly $2 billion in funding for K-12 education contained in two bills, the Distributive School Account and a class-size reduction program.
Assembly Democrats want to tie the tax package to the school aid bill, to force the GOP to vote for it. The Republicans say they will vote for school aid but it must be separated. After that the GOP members say they will consider a tax package.
Assemblyman Bob Beers, R-Las Vegas, said he believes Republicans can make $400 million in cuts -- not to the education bills but in the appropriations measure.
"That's $400 million less in taxes that would be required," Beers said.
Beers, Hettrick, and John Marvel, R-Battle Mountain, and Walter Andonov, R-Henderson, all serve on the Assembly's Ways and Means Committee which has been meeting since January to examine the budget.
Democrats note that all four of those Republicans who are no votes for taxes did not offer significant cuts in the state's budget during that process.
Two other Republicans on the committee, Dawn Gibbons, R-Reno, and Josh Griffin, R-Henderson, have pledged support for an $860 million tax plan.
Jason Geddes, R-Reno, and Joe Hardy, R-Boulder City, are the other two Assembly Republicans supporting tax increases.
Those four Republicans continue to be lobbied by both Democrats -- to ensure they are still yes votes -- and by their caucus, which is trying to bring them back into the fold.
Meanwhile, the state's leading business interests continue to lobby on opposite sides. The Las Vegas Chamber of Commerce-led Business Representative Group is more favorable to the Senate version of the tax plan because it hits gaming harder.
The Nevada Resort Association, which successfully lobbied Carlton into the no column last week, is continuing to lobby senators against and to lobby Assembly members in support of making changes to any Senate plan adopted.
The deep division that remained between the two sides on Monday were all too apparent when Sen. Dina Titus, D-Las Vegas, and Beers squared off during an appearance on "Face to Face With Jon Ralston" on Las Vegas ONE (Cox Cable channels 1 and 39).
Beers said the proposed tax increase has "nothing to do with education." Instead, he said, the tax increase "is about adding 900 bureaucrats" to the state government.
But Titus countered that the proposed tax increase and education funding are linked.
"We put it together because it belongs together," Titus said.
Titus said Beers and other legislators standing in the way of the tax compromise are steering the government toward a shutdown, "like the Newt Gingrich train wreck."
Beers said the Legislature is set to act on an "outrageous" spending increase based on incorrect assumptions.
Titus said, "Nevada operates on a shoestring." But with problems fueled by the high rate of growth over the last 10 years, "at some point you gotta to face up to what the problems are."
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