Gibbons’ policy of no fee hikes has some grinding their teeth

Cy Ryan and J. Patrick Coolican

Tuesday, March 13, 2007 | 7:14 a.m.

CARSON CITY - Mixed signals from the governor and his budget office on a range of fiscal issues, and fees in particular, have legislators in both parties frustrated.

Specifically, the governor promised to veto any fee increase imposed by the Legislature, although he has backed off that position slightly.

The fees are often the type assessed on industries to cover the cost of regulation. So, for instance, fees assessed on the gaming industry are used to pay for inspections so that slot machines reach casino floors faster.

Although a relatively small amount of money is at stake in a multibillion-dollar budget, Democrats say the issue is indicative of larger confusion in the budget process on the governor's part. Moreover, they say the governor has at times ignored the advice of industries, who are willing to pay the fee hikes.

Late last month the governor's counsel, Josh Hicks, distributed a memo to agency heads saying that new or increased fees may get Gibbons' approval under certain circumstances.

"Fee increases or assessments that do not fall on individual taxpayers, but are borne by an industry with the consent of that industry may pass muster if there is a strong and substantial justification for the fee or assessment," Hicks wrote.

Hicks said these fee requests would be viewed "on a case by case basis."

At the same time, Gibbons' chief of staff, Mike Dayton, said that all the higher fees sought by agencies have been removed.

"The governor will make exceptions and they must be industry specific and the expenditure must be necessary," Dayton said.

Senate Majority Leader Bill Raggio, R-Reno, said he has not looked at the Hicks memo closely but added the governor will apparently back fees that fall on associations and organizations, but not the general taxpayer.

"But I don't know how it goes. There are some budget issues that are necessary to support the service, but I'm not sure that is clarified and I need to ask him (Gibbons)," Raggio said.

The governor's office already nixed plans by the state health division to boost fees by $7 million over the next two years. The division wanted to hire more inspectors. Gibbons agreed to use general tax money to allow more inspectors of food establishments and radiology businesses. But he opposed any general fund money to hire more inspectors for hospitals and nursing homes.

Assembly Democrats have made it clear that taxpayers shouldn't have to pay for industries to be regulated, while at the same time rejecting any move toward a more lax regulatory environment. They and Senate Democrats say Gibbons' opposition to fees is political, a move to insulate him from conservatives with no tolerance for revenue increases at all, including fee increases.

Assemblyman Morse Arberry, D-Las Vegas and chairman of Ways and Means, said he's still not clear where the administration stands.

"They're new, so we're willing to work with them," he said, although his impatience was evident.

One of the increased fees removed was for investigations conducted by the state Gaming Control Board on those applying for licenses.

Dayton defended the move, saying that fee hike would have gone to increase salaries of staff in the Control Board by double digits. Gibbons is recommending a 2 percent increase this July and 4 percent next July for all state workers. But about $3 million exists in the Control Goard's budget to give extra raises to some of its employees, above other state workers.

What's odd about the decision to remove the fees is that the industry supported the increase.

Bill Bible, executive director of the Nevada Gaming Association, said, "We indicated we would support the fees, the same as we have in the past."

The industry would back the fee increase for investigations to make sure there is no slowdown in the work being done by the board that regulates the gaming business.

The no-fee policy will mean that plans by the state parks division to increase fees for marriage at the scenic Valley of Fire won't be approved. The division wanted to boost the fee from $15 to $200 to charge the wedding chapels that arrange these ceremonies.

The parks division estimated there will be 1,000 marriages at the park in each of the next two years and the money raised would allow two new employees to be hired.

Also, proposed fee increases by the mortgage lending division and the postsecondary education program have been taken out of the budget, Andrew Clinger, the budget director, said.