Nevada gov prepares court petition to force XGR tax action

Monday, June 30, 2003 | 9:29 a.m.

CARSON CITY, Nev.- Gov. Kenny Guinn said he'll immediately seek Nevada Supreme Court intervention if state lawmakers fail to deliver by midnight Monday a tax plan that would balance the state's record $5 billion budget.

The Republican governor, who supports an $860 million-plus tax package, said he remains hopeful that a compromise can be reached in the state Assembly - but if that doesn't occur "I am prepared to take action" on Tuesday.

Guinn said he's been working with Attorney General Brian Sandoval on a court petition that would argue legislators have a constitutional duty to approve adequate public school funding by Tuesday, the start of the next fiscal year.

The K-12 school funding has been delayed because of the stalemate over higher taxes needed to support the schools. Lawmakers are now in their second special session on taxes since June 2, when their regular 120-day session ended.

Senate Majority Leader Bill Raggio, R-Reno, and Senate Minority Leader Dina Titus, D-Las Vegas, both urged the Assembly on Monday to end its impasse on taxes, saying court intervention would be a dangerous precedent.

A court petition to force legislative action "ought to be the last resort," said Raggio, adding, "Litigation takes strange turns and usually nobody wins."

Assembly Republicans have balked at endorsing what would be the biggest tax increase in Nevada history. Raggio, insisting he wasn't "pointing figures," said Nevada voters may have approved a two-thirds' majority vote on taxes - but didn't want "a minority to be able to say, 'It's our way or no way.'"

Titus said the two-thirds' majority requirement on taxes, approved in 1991, "really created the tyranny of the minority." She added court intervention would continue a weakening of the Legislature's role in state government, and that would be "such a shame ... because we really do represent the people."

"There's a growing realization about the impact of not resolving this," said Assembly Majority Leader Barbara Buckley, D-Las Vegas, adding, "Leaving this to a judge is an abdication of our responsibilities and a foolish move, and should be avoided at all costs."

Assembly Speaker Richard Perkins, D-Henderson, said Monday that negotiators had made "significant progress" in trying to reach a compromise, and talks between the anti-tax Republicans and pro-tax Democrats in the lower house would continue throughout the day.

Assembly Minority Leader Lynn Hettrick, R-Gardnerville, agreed there has been some movement in closed-door talks. A few days ago, he said the odds of the state Supreme Court having to resolve the tax dispute were 60-40. Now he's down to 50-50.

"Nobody's jumping and agreeing to anything," Hettrick said. "But at least they're talking about making things happen ... I would say there is progress."

But if legislators don't compromise by late Monday, they'll start the next fiscal year in violation of a constitutional requirement that the state budget for next year be balanced by adequate revenue.

While there are enough revenues from the current tax structure for general government operations, the same isn't true for Nevada's K-12 public school system.

Assembly Democrats are pushing an $864 million tax increase that includes major levies on business and higher "sin" taxes on cigarettes and liquor. Hettrick has been pushing for about $150 million less than that. Some other Republican caucus members might settle for a smaller reduction, possibly about $90 million.

Ways to accomplish part of the reduction could involve use of a "trigger" mechanism to let legislators release welfare funds during the coming two-year budget cycle only if clearly needed. That way, some of the proposed new taxes could be lowered or left out of the emerging Assembly plan.

One tax that some of the Republicans don't want is a business franchise tax that's in the current plan - a tax package that already has failed twice by just one vote to win Assembly approval by a mandatory two-thirds' majority.

The votes were one short of the 28 needed. All 23 Assembly Democrats and four Republicans favor the plan, while 15 other Republicans are blocking its approval in the lower house.

"We are one vote short of passing a tax package that taxes big business, banking and gaming to fund education," Perkins said, adding that the Democrats' goal is to impose "a fair and equitable broad-based business tax that requires big corporations to pay their fair share."

While a two-thirds' majority vote is needed to approve higher taxes, only a simple majority is needed to pass the state budget. The budget approval occurred during the lawmakers' regular 120-day session that ended June 2.

Since then, Guinn has called two special sessions to resolve the tax dispute.

The Assembly's two failed votes were on a revised version of an $873 million tax boost plan that won approval on a 15-5 vote last Thursday in the Senate. The Assembly's amendments reduced the tax increase to $864 million.

The Senate's tax plan includes a 1 percent payroll tax and a bank franchise levy, higher room taxes and casino levies, and increased "sin" taxes on cigarettes and liquor. Their plan also imposes a cap on how much the state budget can grow in the future.

The Assembly cut the payroll tax to 0.6 percent, kept the bank franchise levy and added a franchise tax on other businesses, revised the "sin" taxes and scrapped the room tax and the cap on budget growth.

The Assembly and Senate agreed on a 0.5 percent tax increase on Nevada casinos and a 10 percent live entertainment tax, and were close on a real estate transfer tax.

----

http://www.leg.state.nv.us/