Columnist Jon Ralston: Guinn’s speech to state should address surplus

Friday, Jan. 21, 2005 | 6:05 a.m.

Jon Ralston hosts the news discussion program Face to Face on Las Vegas ONE and publishes the Ralston Report. He can be reached at (702) 870-7997 or at ralston@vegas.com.

WEEKEND EDITION

January 22 - 23, 2005

This is the State of the State address that I believe Gov. Kenny Guinn should deliver on Monday:

Fellow Nevadans, I come before you tonight for the last time. But let me say that I am no lame duck. There are those out there who think I will hobble away into obscurity, that I will be -- what would be the best word? -- irrelevant. (Pause for laughter.)

But I am not irrelevant and I am going to show you why tonight.

Let me first say to you, my fellow Nevadans, something that you rarely hear from politicians: I was wrong.

I was wrong two years ago to propose a billion-dollar tax increase, the largest in the state's history, without fully explaining to the people of the great state of Nevada why I did so. I was wrong in not fighting harder for it, in not holding some of you legislators in this room tonight accountable for your actions. And this is the hardest one of all, my friends -- I was wrong a few weeks ago to propose giving some of the surplus back in the form of that motor vehicle fee rebate. There is, as you will hear, a better way.

I know the media are salivating that I am saying this. They will call me a flip-flopper, a waffler. So be it. But the future of this state, what I do here in my final two years is more important to me than any mistakes I have made, any verbal passes hurled at me by the Monday morning quarterbacks.

And these mistakes can be corrected. And they can be corrected without raising taxes on the public. (Pause for standing ovation.)

When I told you two years ago we needed that money, I meant it. And we did -- most of it just to break even and keep up with increasing enrollments and caseloads. No one could have predicted we would now have hundreds of millions of dollars in extra money -- it is testament to our tourism industry and our booming economy that continues to defy even the best forecasters.

So now we are flush and the question is what to do about it. Most people in this state I have heard from since I announced the rebate say they would rather see any money they receive be invested in education or some other worthwhile program. It has been heartening to see that most Nevadans believe in investing in the future rather than sprinkling money around that won't make much difference.

But I have decided to give people a choice. And I have decided that the auto fees are not the best method to return money to the taxpayers. It's not just that none of the extra money came from there -- it's almost all in gaming and sales taxes. It's that there is a more equitable way.

So, fellow Nevadans, I am tonight announcing a $200 per adult rebate from the state. Some have urged me to means test this program. But I have another idea -- there will be an opportunity for you to endorse the check back to the state and tell us what program you would like to see it help. For many, the $200 may be meaningful. But for those who don't need it or believe it is better used elsewhere, I hope you will reinvest in a state government that is working much more efficiently than some of my conservative friends believe.

So what about the rest of the surplus? As your governor, and former private sector CEO, I believe that a business must reinvest when it can. And in a state where we rank so low in education funding and achievement, I will put the bulk of the surplus into education this year, including a beginning to the most important program we can offer to improve our system -- full-day kindergarten. This is the gateway to the schools system and we must make it meaningful. Not a couple of hours of coloring in books, but putting kids on the path to reading. And in the future, I am asking for a trigger mechanism whereby all surplus funds are immediately deposited in the school fund, unless two-thirds of the Legislature agrees to put it elsewhere.

But this money will go to the school districts with strings attached. I am building on the bipartisan education accountability program passed a few sessions ago and demanding that merit pay for teachers be instituted. It's not just that we need to attract more teachers to Nevada; we need to keep the good ones and weed out the bad ones. (Pause for Republicans to applaud and for 911 call for teachers union and some Democrats.).

We have to do something else, too, and we must do it together and do it right this time. We must fix what the Legislature passed and I signed in 2003. That tax package was an abomination. You know it and I know it. By the end of that second special session, you all wanted to go home -- and, frankly, I didn't want you here, either.

But this surplus gives us an opportunity, an opportunity that rarely comes in politics -- a chance for a do-over, a chance to show the people of Nevada that we can acknowledge errors and fix them.

So tonight I propose repealing the entire tax increase of 2003 with one exception: We will retain the increases in the gaming tax. The industry is doing spectacularly well and can afford it. But the rest of that tax concoction made little sense when you passed it and I should not have signed it.

But the question is what do we do about the revenue the taxes generated? We cannot simply say that this gaming and sales tax ride will always be effortless. We need to make sure we have a third way. So instead of passing a dozen little taxes, let's keep it simple. To make up for the shortfall that will be created in critical areas by the repeal of that tax package, I propose a net profits tax on businesses. I listened and heard the opposition to a gross receipts tax but this addresses most of those.

The Las Vegas Chamber of Commerce has been celebrating what happened last session for two years. But that group sold out small businesses in this state, businesses I tried to protect and will protect again with certain exemptions and low rates at the bottom.

Finally, tonight, I must talk about the issue on the minds of many Nevadans -- property tax relief. This is a serious problem but we must not act hastily. We need to provide relief for those who need it -- those on fixed incomes, especially. So I propose expanding the economic hardship law already in state law. Beyond that, I will propose a 6 percent cap but with a sunset for 2007 so we can re-evaluate the consequences.

People who know me know I do not like confrontation, that I prefer to build consensus. And I will work with you and I will listen this time. I respect your ideas and perspectives and if you have better ideas for the surplus, such as for tsunami relief or a land purchase for affordable housing, I will listen.

But on some things here, I will not compromise. I will not hesitate to use my veto pen if necessary. Know this: If full-day kindergarten in some form is not in the final budget package, I will veto the budget. If my plan to create a trigger or future surpluses to fund education is not in the final package, I will veto it. And if a corporate profits tax that protects small businesses but ensures developers and others pay into the state treasury is not in my budget, I will veto it.

We must have the debate over what kind of state we want to be. You may not agree with my vision, but let's see yours and have the argument during the next 120 days. Yes, that's 120 days and no more.

I have learned many things in my six years as governor. But I know my friend, Mike O'Callaghan, is looking down, and he would be angry if I did not stand up and fight. I should have two years ago. I will now.

Thank you and good night.

archive