Editorial: Tax system out of sync with times

Monday, June 23, 2003 | 8:37 a.m.

Nevada's constitutional requirement that tax increases be passed by a two-thirds majority vote in each house of the Legislature could very well have worked -- in 1960. It's a workable rule, possibly, in stable states. Oklahoma, for example, requires a three-fourths vote on tax measures. But who's moving to Oklahoma? A few people, surely, but not in numbers that generate even a smidgeon of ink in the national press. Nevada, of course, has been noteworthy for more than a decade as the fastest-growing state in the nation, largely owing to its fair weather and expanding gaming industry.

As the Sun's Steve Kanigher reported Sunday, the other states with a two-thirds legislative requirement for all taxes are Arizona, California, Louisiana, South Dakota and Washington. None are facing Nevada's rapid population growth. And none have a tax system so urgently in need of revamping, so hopelessly dependent on just two sources -- retail sales and gaming. In Nevada, the vast majority of state services are operating with a shortage of manpower and equipment when compared to the growing need. Education has been particularly lagging.

In 1994 and 1996, when economic times were good, 70 percent of Nevada's voters approved adding the two-thirds requirement to the state Constitution. The flaws of our tax system are not readily apparent during upswings in the economy, as tourism and sales generate enough state revenue to get by. With revenue streaming in, a two-thirds majority rule sounded reasonable to most voters. The flaw hasn't been obvious until now. With the economy in a two-year dive and showing no hopeful signs, the state fell behind by nearly $1 billion.

Without the two-thirds requirement, the Legislature would have made strides in the 2003 session toward fixing the tax system. Gov. Kenny Guinn's proposal for a much broader-based system, one that requires a proportionate tax levy on businesses aside from gaming, enjoyed majority support. But a minority of legislators during the regular session and a special session were able block Nevada's entree into a new era of responsible growth. Although it would be beneficial to start the process, there can be no immediate change of the two-thirds rule. There could, however, be a change of heart on the part of certain legislators. They will have one more chance, beginning with the start of the second special session on Wednesday, to put the state on a course commensurate with its growth.