Time is the enemy in tax struggle

Erin Neff

Wednesday, May 14, 2003 | 11:58 a.m.

CARSON CITY -- The urgency of the Legislature's final 20 days forced intense caucus meetings by Republicans Tuesday amid the realization that if lawmakers cannot agree to something by this weekend, there will have to be a special session.

The Senate and Assembly Republicans held a one-hour caucus in the early afternoon, during which Sen. Majority Leader Bill Raggio, R-Reno, deflecting criticism from within, assured his party that the gross receipts tax is "dead in its current form," according to four people who attended the session.

Raggio also has been meeting as part of a baker's dozen of legislative leaders trying to draft a tax bill that can win approval in both houses. That group was expected to meet privately again today.

The gross receipts tax, which would collect one-quarter of 1 percent of business' revenue over $450,000, is a key part of Gov. Kenny Guinn's plan to raise $700 million in new revenue, but the tax has run up against stiff opposition among Republicans, who control the Senate.

Even Assembly Speaker Richard Perkins, D-Henderson, has said the tax may need to be changed before it can be adopted. But time to do so is running out.

Because of the complex nature of the different taxes envisioned and the 200 pages that the governor's bill and a similar bill proposed by the Task Force on Tax Policy, legislative lawyers need at least 10 days to draft a new bill that reflects the compromises.

If the baker's dozen of lawmakers in the core group can't send a tax bill for drafting within about a week, the Legislature will be unable to adjourn at midnight on June 2, sources said.

The state's fiscal year ends June 30. If tax and budget plans are not in place by then, the state could shut down.

Some legislators also worry that spending taxpayer money on a special session devised to raise hundreds of millions of dollars in taxes would be political suicide.

While 90 percent of the budgets are completed, some -- including the controversial Distributive School Account -- will not be finished until Saturday.

Both the Senate and Assembly plan floor sessions Saturday with leaders hoping to also begin sending elements of a final tax plan to bill drafters.

The problem on this, the 101st legislative day, is that nobody has settled on which taxes will be used to fund the more than $1 billion in spending some legislative committees have already approved.

Those involved in the negotiations say lawmakers have no appetite for a proposed amusement tax or for a proposed 15-cent property tax hike.

Lawmakers have already expressed concern about Gov. Kenny Guinn's proposed tripling of both the cigarette and business activity taxes, and support seems only possible for doubling each of those taxes.

All of those moves would reduce potential revenue from the governor's plan by more than $300 million, requiring lawmakers to find an alternate source of funding or find the cuts to balance the budget.

Meanwhile the caucus' Assembly Republicans couldn't agree even on how much money should be raised with new taxes.

Guinn did not call for the gross receipts tax taking effect in the next two fiscal years, but he did want this Legislature to approve the new levy on business for future years.

And while Raggio assured his caucus the tax would not be applied as proposed -- a quarter of one percent on gross receipts over $450,000 -- sources say Raggio is working with Speaker Richard Perkins, D-Henderson, on an alternative plan that might win political support.

Sources familiar with the talks say the two are discussing a total revenue plan with its own threshold cap.

"It's not going to be gross receipts, but it will have many of the similar elements and at the end of the day it will be a broad-based business tax," a non-elected legislative source said.

Regardless of which taxes are chosen, many Assembly Republicans are still concerned about the total budget number, and held a separate private caucus late Tuesday afternoon to discuss their options.

Some say they cannot agree to fund anything over $900 million. For others, the number drops to $600 million.

But a tax plan cannot pass the Democratic-controlled Assembly without at least five Republicans joining with the Democrats -- that is, if all 23 Democrats agree to the plan.

In the Senate, where Republicans hold a 13-8 margin, just eight votes against a plan will be enough to kill it.

Although neither Raggio nor Perkins want a special session, some Assembly Republicans have suggested it is in their best interest to force one by blocking a tax increase.

Individually lawmakers express several concerns.

Those who are not among the 13 lawmakers in the core group worry that they will be forced to approve something without much input. And they worry that any tax they do authorize will cause them to lose their next election.

At the same time, several pro-tax events are planned in the coming days. Thursday is human resources day -- with activities planned to highlight the need for more funding of human resources.

Teachers plan to launch an ad campaign in support of more funding for education. It is to include threats to work against lawmakers who don't approve new taxes for education.