Wednesday, March 26, 2003 | 11:26 a.m.
CARSON CITY -- A slimmed-down tax plan affecting cigarettes and liquor is emerging in the Senate as lawmakers make efforts to help the state get through the fiscal year that ends June 30.
Sen. Ann O'Connell, R-Las Vegas, said the new proposal will be presented to the Senate Taxation Committee on Thursday.
It could bring about the first vote in the ongoing and long-winded tax debate that has dominated this legislative session.
Sen. Mike McGinness, R-Fallon, said there has been some movement recently in the committee that he chairs. He said speeches last week by Senate Majority Leader Bill Raggio, R-Reno, and Senate Assistant Majority Leader Ray Rawson, R-Las Vegas, might have helped some lawmakers fine-tune their opinions.
Raggio urged the committee to take action, and Rawson said the state needs an additional $50 million this year.
Meetings have been held behind closed doors by some key senators. O'Connell, considered a leader in the Senate, said the proposal being discussed would raise $16 million to $17 million additional money this fiscal year.
Those taxes would be permanent, not temporary, O'Connell said Tuesday.
But the proposal could face stiff opposition. Sen. Sandra Tiffany, R-Henderson, said she does not think there are enough votes on the committee to pass any interim tax.
"Leadership will make sure this is played out correctly," Tiffany said. "They don't want this to come down as an embarrassment. We don't want the governor to be embarrassed. We're not through with our discussion yet."
In January, Gov. Kenny Guinn called for the cigarette tax to be raised from 35 cents a pack to $1.05 a pack; liquor taxes to be increased by 89 percent; the business activity tax boosted from $100 to $300 per employee; and the tax on restricted slot machines increased by 33 percent -- all effective on April 1.
Michael Hillerby, assistant chief of staff for Guinn, said that would raise about $74 million for the rest of this fiscal year if it were effective April 1.
"The ball is in their court," he said, referring to the legislators.
Guinn said Tuesday that there are signs the economy in Southern Nevada is starting to feel the impact of the war in Iraq. He said hotels are beginning to cut their room rates and that there is talk of layoffs. If that happens, he said, the state's expenses could go up as it takes care of people without jobs.
If the state's tax collections are down from predicted levels, it could spell trouble, Guinn said.
"There will be Draconian cuts in K-12 (education), the university and the state government," he said.
Some members of the Senate Taxation Committee, however, are dead set against implementing taxes to get the state through the remainder of the fiscal year.
Sen. Joe Neal, D-North Las Vegas, said he won't vote for any tax proposal unless it includes a substantial hike in the tax on casinos.
Tiffany said she opposes any temporary tax. She noted the Legislature approved taking $135 million out of the state's "rainy day" fund to help the state pay its bills for the next three months.
She said there should be a cash balance in the fund of $105 million as of June 30 that the state could use.
Budget officials say they need that $105 million to pay bills as they come in.
Tiffany conceded that taxes will have to be raised for the next two fiscal years, but not for the next 90 days, she said.
She said that governors before Guinn made deeper cuts and "government kept going." Guinn last year ordered 3 percent reductions in the budgets of state agencies, with public school funding exempt.
Tiffany said that parts of the governor's budget should be cut. She accused Clark County School District officials of using "scare tactics" in saying that music, athletics and other programs are in danger unless taxes are raised.
Tiffany said 90 percent of the district's budget is in salaries.
She suggested the Clark County School District look at its "bloated" administration, its transportation staff and other areas rather than taking aim at student programs.
"My constituents feel that we're in war, the stock market has dropped, we're cinching our belts on our budgets, so (the state) can do it (too)," Tiffany said.
Meanwhile the Senate Taxation Committee heard testimony Tuesday about increasing the real property transfer tax. When a property is sold in Clark County, a tax of $1.25 is imposed on each $500 of the value of the property.
Senate Bill 385 would raise that to $2.25 in Clark County and from 65 cents to $1.65 in the rest of the counties. It would raise an estimated $23 million a year.
But Realtors urged the defeat of the bill, saying it would hurt home sales, particularly first-time buyers. Penny Mayer, who says she has the oldest real estate firm in Northern Nevada, said the tax increase would unfairly target one industry.
The committee did not take action on the bill.
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