Lots of tax plans exist, but no easy choices

Erin Neff

Friday, March 21, 2003 | 6 a.m.

WEEKEND EDITION: March 23, 2003

CARSON CITY -- With three major tax plans having emerged in the Legislature and more expected to be introduced tomorrow, the Legislature's debate will be similar to that of a buffet line.

Not everything is going to fit on one plate.

Gov. Kenny Guinn and the Nevada Task Force on Tax Policy each have tax proposals that use a variety of the same taxes, including two new ones, but at different rates. Sens. Mark Amodei, R-Carson City, and Terry Care, D-Las Vegas, have a proposal that raises about the same amount of revenue, but with a much different variety of taxes.

"I don't think you're going to get that much agreement to get any single one of those to pass," said Assembly Minority Leader Lynn Hettrick, R-Gardnerville, and a member of the Taxation Committee. "I think it's going to take a buffet." The bills propose raising about $1 billion to solve the state's upcoming deficit and they each use different taxes at different rates, implementation times and exemptions.

Lawmakers are deeply divided over which taxes should be a part of the overall solution to Nevada's $704 million shortfall, with many opposed to the signature piece of the task force's plan -- a gross receipts tax on business.

No consensus has been reached on anything, and with two-thirds majority required for any tax increase, the final buffet plate will likely contain foods that anti-tax representatives won't digest and selections that cause heartburn for everyone else.

No one is yet sure which bill will emerge as the official platter. The Senate and Assembly Taxation committees plan separate hearings on almost everything, creating two buffet lines in the process.

"It is going to be a carefully weighted decision," said Assemblyman Bernie Anderson, D-Sparks, also a Taxation member. "It will be a picking and choosing, and I haven't closed my mind entirely although some taxes seem unlikely."

The members of the Assembly and Senate taxation committees all have different ideas about which taxes should be selected, which ones rejected, and which new proposals might arise.

The governor's plan is highlighted by increases to cigarette, liquor, property, business license, gaming and slot route taxes, and includes new levies on business gross receipts over $450,000 and a 7.25 percent tax on admissions and amusements.

The task force has the exact same taxes, although that plan would have a 6.2 percent levy on amusements and would enact the gross receipts tax a year earlier than the governor. The proposal would have a threshold for the gross receipts tax of $300,000 for implementation. The task force also proposes doubling the cigarette tax, while Guinn wants to triple it. Care and Amodei don't use the gross receipts tax at all, replacing it with a service tax on services $50 or above, a higher increase in the gaming tax, a 2 percent increase in the per-night room tax and hikes in cigarette, liquor, property and business licenses.

"Ours is just out there with all the others," Care said. "You're going to see people floating proposals all over the building now."

Assemblywoman Dawn Gibbons, R-Reno, said she cannot support the gross receipts tax, the amusement tax or the property tax increases proposed. She also said she thought Care and Amodei's service tax was problematic because she does not think it will raise that much money and might be easy to get around.

"You could have a massage of just one part of the body that would cost less than $50, and another for less than $50, so that they can avoid paying it," said Gibbons, a Taxation member. She said she supports a flat tax on business, and would propose it to raise the same amount of money Guinn hopes to get from the gross receipts tax.

"That way businesses know what the tax will be and can build it into profit margins," Gibbons said.

Some of the tax debate will be about power and process more than it is about raising revenue.

Sens. Ann O'Connell, R-Las Vegas, Barbara Cegavske, R-Las Vegas, and Sandra Tiffany, R-Henderson, have expressed concerns about all taxes, and all appear very unlikely to support any major tax bill. Yet each co-sponsored the Care-Amodei tax proposal when it was introduced last week. "The statement we were making was that this is the third branch of government and we can handle any kind of problem handed us," O'Connell said.

Tiffany added: "This is in our hands, in our process." Hettrick is expected to see his tax proposal introduced in committee tomorrow. While he does propose increasing some taxes, much of his proposal focuses on cutting government services and programs.

"I won't vote for the gross receipts tax, and I detest the amount of the governor's overall package," Hettrick said.

While most lawmakers aren't discussing individual taxes, the gross receipts is the exception they are willing to openly loathe. The proposal is the meat most protein seekers say the state needs, and the one the vegetarian business community won't swallow.

Assemblywoman Peggy Pierce, D-Las Vegas, said that she has not yet decided which taxes she will support, but was pleased recently when her caucus leader, Assembly Speaker Richard Perkins, reiterated his support for a broad-based business tax.

"A broad-based business tax has to be considered before any tax solely on citizens," said Pierce, a member of the Assembly Taxation Committee.

Assemblyman Josh Griffin, R-Henderson, and also a Taxation Committee member, said he also thinks lawmakers will pick and choose from a host of proposals.

"I don't care for the amount of new taxes in some of the bills," Griffin said. "Nothing is ruled out, but some of the things as written, I wouldn't support."

Sen. Bob Coffin, D-Las Vegas, serves on both the Senate Finance and Taxation committees, and said he has seen the need in Finance to raise more revenue in Taxation. "Some of them are going to morph," Coffin said of the taxes. "Some of them aren't proved and we don't know for sure how much any of these taxes is really going to raise." Coffin said he believe lawmakers would "equally hate" all tax proposals, but will ultimately "hold their noses and vote for one."

Assembly Taxation Committee Chairman David Parks, D-Las Vegas, said he has not yet gotten any consensus from his committee members on any proposal.

"One of the things I'm trying to do is lay everything out," Parks said.

Assemblyman Tom Grady, R-Yerington, who serves on the committee, said that is precisely how he wants to select the taxes needed as part of an overall proposal.

"We ought to take all of them, lay them down on the table, and pick and choose where we can spread the hurt without targeting any one individual business or group," Grady said.

Assemblyman David Goldwater, D-Las Vegas, has proposed a tax exemption to give car owners a break on the tax they pay when registering their vehicles.

"I think that might make it easier for some of my colleagues to support increasing other taxes," said Goldwater, also a Taxation Committee member.

Anderson said he viewed the options lawmakers have as a "smorgasbord."

"Like it or not, we have to come up with a more realistic tax policy to fund education and transportation and senior health care," Anderson said.

"The problem is that in difficult economic times and uncertainty of the overall economy, it's very hard to craft."

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