POLITICAL MEMO:

Interests brace for big tax battle

They’ll all be fighting for chairs when the music stops in Carson City

Sunday, Dec. 14, 2008 | 2 a.m.

To hedge cuts, state ponders borrowing (11-27-2008)
Where I Stand: Large businesses should provide for fair share of state’s needs (8-31-2008)
Economists: Casinos would shrug off tax hike (10-14-2007)

Carson City — It was sitting out there like a big hunk of pork, ready to plug part of the state’s $340 million budget hole: a higher room tax.

It would bring in an estimated $125 million a year — albeit the projections were made pre-Strip apocalypse. Voters had already approved advisory questions, granting lawmakers the requisite political cover. And it passes the litmus test for a tax in Nevada — it hits the tourists.

Yet the room tax wasn’t part of the solution offered during Monday’s special session. Instead, according to sources, the gaming industry asked that it be held back, in anticipation that a broad tax increase will be on the table when the Legislature convenes in February.

Industries, interest groups and their lobbyists mostly sat out the special session, waiting for the bigger fight during the regular session.

“Today’s the battle,” one veteran lobbyist said. “The war is in the spring.”

In the meantime, industries are bracing for what seems to be inevitable: There will be a push during 2009 Legislature to raise taxes.

Gaming is not alone in fearing a tax hit, of course. Mining agreed to pay its annual tax bill early in the hope it will build goodwill or give it leverage for the regular session. (Legislators’ eye-rolls signal it won’t, just as the room tax might not spare the gamers.)

The rental car agencies, a favorite tax-pinata because their customers are mostly from out of state, did get hit during the special session. Lawmakers took a bit of their money. But not before the industry stood up and made sure people noticed it was getting taxed.

Given current revenue, the budget cuts for the upcoming fiscal years would have to total 34 percent of what the Legislature approved for 2007 and 2008. Democrats and many Republicans say it’s impossible to cut that much.

That means money will have to come from somewhere.

It’s likely to be a combination of more cuts, raiding local government coffers and new or higher taxes.

Interests affected by those three possibilities will have lobbyists and lawmakers trying to protect them. Public employee unions and local governments are bracing for a fight. There was a protest of about 200 people outside during the special session, clamoring about the effect of more budget cuts on schools and social programs.

But the jockeying over who gets taxed will perhaps be most intense.

The anti-tax contingent likes to ask what industry is doing well enough right now to absorb new taxes. Gaming revenue declined on the Strip in October by a record 26 percent from the same month a year, unemployment continues to rise and Nevada has, by one measure, the worst economy in the nation.

One ranking Democratic lawmaker said no call has gone out to industries asking that they come to the table with suggestions for taxes. But, the legislator said, looking to industries for suggestions is one way to come up with a plan to raise revenue.

That’s what happened in 2003, when Gov. Kenny Guinn was in office. Industries argued and jockeyed over who could afford what tax. Gaming companies came out on the short end, ending up with a higher gaming tax while the broad-based business tax that the industry fought for died.

The gaming industry will argue it cannot afford to pay more, that it’s others’ turn to pay. This time the argument could be more persuasive — a silver lining to those awful gaming numbers.

Whether the room tax will count as their skin in this game remains to be seen.

Discussion: 7 comments so far…

By skisailmtb40

12/14/08 at 8:30 a.m.

Suggest removal

Thank Schwarts. Next time I want an opinion, I'll make it up myself. How about writing facts and leaving your BS Buckley views to yourself.
By jfnance32

12/14/08 at 9:33 a.m.

Suggest removal

Yes, lets raise taxes on struggling businesses.

We obviouly do not have enough laid-off employees. We need more laid-offs and we need more businesses to close their doors.

We got way too many dang businesses. Lets kill off some more. That will surely help with the long term government revenue picture.

Raise the room tax is a big plus, too.

I am sure that nobody gets mad when they see the the hotel bill and see all those added taxes that increase the bill by 20%.

Raising the room tax will help improve the repeat customer factor.
By The_Onion

12/14/08 at 11:46 a.m.

Suggest removal

Maybe we should be looking at SNWA for some revenue. They can spend 80 million on ranches in eastern NV, so surely they can chip in.

Maybe we can actually get mining to pay their fair share by eliminating so many of those "write offs" as some of us call them, tax evasions.

Maybe we can get a broad based business tax that promotes equity instead of relying on regressive tax structures like sales taxes.

Maybe local governments can help share in the pain and help fund some of the services that we have to cut in the state budget.

Maybe we should do everything we can to rebuild and refuel our economy and start creating new industries in energy conservation and renewable production. If we are spending less on energy than we can spend more on services and provide much needed relief to businesses and homeowners. We can create a new tax base with the development of large-scale renewable projects instead of strangling ourselves with more coal plants.
By skisailmtb40

12/14/08 at 12:54 p.m.

Suggest removal

Broad Based Business Tax? Are you stupid? Haven't you read about layoffs lately. WHy do something that will mean more layoffs? You may want to force more families onto welfare... but count me out.
By The_Onion

12/14/08 at 1:25 p.m.

Suggest removal

I'll tell you what, why don't you explain to the consumers that are now jobless how a sales tax increase is going to help them out?

A broad base business tax does not equate to job loss, so I think your comment is way off. See Brian Greenspun's column today.

As for the other ideas I raised, I would like to expand on the energy position. As a state we spend about 8 billion dollars a year on energy that is produced or created out of state. If we keep those dollars in state by purchasing clean, Nevada based energy we will see our state's coffers fill up. The extended taxable base for these plants as well as the job creation will combine with other multipliers to secure a strong financial position for Nevada. Just look at Texas, Alaska, Colorado and Wyoming as examples. Those states have substantial carbon-based fuel positions that have been key to our economic strength as a nation, but our state has an abundance of clean and renewable energy that is enjoying broad based political support. Clean energy is the future. We must seize this opportunity.

The feds want to spend 100's of billions on infrastructure and rebuilding our nation, so I'm sure we could get a pretty large slice of the pie to develop our clean energy resources. If the subsidies are coming, why don't we maximize our portion through the political clout of Reid and Ensign?

One last thought. A tremendous amount of the efficiency projects will occur right here in Las Vegas where we use most of the state's energy. It will take more than a decade to retrofit older buildings and homes in the valley, and this will create 1000's of new jobs in trade skills and administration w/in the private sector. Add to this the number of utility scale photovoltaic and solar thermal projects we could build in Clark and Nye Counties and we are looking at 1000's of additional jobs. Finally, if we set an ambitious goal to install solar panels on every roof in Las Vegas through rent, lease, and purchase options we will create 1000's of more jobs.

There are a number of sources available on the web that describe these programs and there are a number of states that are doing them, including California, Wyoming, Colorado and Texas. Yes, even those fossil fuel states are taking advantage of these clean energy and efficiency markets.
By jfnance32

12/14/08 at 1:30 p.m.

Suggest removal

They should look at SWNA for money and the Convention Authority for money.

I am tired of seeing SWNA ads telling me about their political views on water solutions.
By Nevada_Scandalmonger

12/14/08 at 5:32 p.m.

Suggest removal

Oh, I get it! If Schwartzie doesn't say in every paragraph "Taxes are bad! Taxes are bad!" he's biased.

Glad that's cleared up.