It’s about making new money for Nevada, splitting it differently, or both

By Joe Schoenmann

Wednesday, Sept. 24, 2008 | 2 a.m.

With Barbara Buckley’s Monday morning sneak-peak at her push to free the state budget from its feast or famine roulette wheel, weeks of behind-the-scenes maneuvering by state lawmakers began to come to light.

Underlying it all is the question of who would have to lose to the house, the statehouse that is.

It will be largely up to the public, Buckley, the assembly majority leader, said.

“During the recent round of painful budget cuts, some of the best ideas we received came from state workers, teachers, school district representatives and just plain citizens,” she said.

“We’re in a crisis right now. I could get discouraged and go home, or I could look at this as a rare opportunity to make things better.”

Apparently, other lawmakers are taking the same stance. Suggestions are starting to come out of the woodwork, and four months before the start of the next legislative session, battle lines are being drawn.

There is even a major difference between Buckley and her Democratic counterpart in the state Senate, Minority Leader Steven Horsford. They say it’s not the reason they are conducting separate sets of public forums on the state’s budget problems, however.

Horsford has said he will not favor any kind of tax during a bad economy. Buckley has said everything needs to be on the table.

That word, “everything,” is a call to arms for Clark County officials because they know it means this could be the beginning of a process to force local governments to rely more upon sales tax revenue so that the state can rely more on the stable income of property taxes. Right now, the system is reversed, leaving the state going from boom to bust whenever the sales tax revenue drops.

The switch appears to have a good chance of being pushed by the most influential member of the Legislature — Senate Majority Leader Bill Raggio, R-Reno. In the upcoming session, one of the ideas expected to gain some traction is Raggio’s request for a study of the allocation of funding between state and local governments.

Buckley, too, says that a state budget that relies more on property taxes and less on sales taxes would help limit the state’s “boom and bust” cycle.

Guy Hobbs, a former Clark County financial director and chairman of the previous governor’s Task Force on Tax Policy, says the idea is “one of the most important” the state could ever consider.

“If people aren’t paying attention, they should,” he warned. “If that ever came to be, there could be drastic changes in local services.”

Raggio “is probably going to come after Clark County’s money, but he’s long wanted to take from local governments,” said Clark County Commissioner Chris Giunchigliani, a former assemblywoman.

She said when she served in Carson City, “we all thought Clark County was living the high life, that they had ‘more money than God.’ ”

Now as a commissioner, Giunchigliani attributes the county’s fiscal health to careful planning, constant fine tuning of its budget, and staffing levels that are lower than they were 10 years ago.

Jeff Fontaine, director of the Nevada Association of Counties, said he knows it’s a difficult time for the state, “but the counties don’t have money lying around. They have the same problems as the state.”

And Virginia Valentine, Clark County manager, said, “Making local governments’ budgets more volatile doesn’t change much,” she said.

There are plenty of other oxen that the Legislature could gore.

Buckley and others have talked of eliminating tax exemptions, for example.

In 1999, the Legislative Counsel Bureau looked at the many tax-exempt properties, products and entities throughout the state, which take up pages and pages in Nevada Revised Statutes.

Food, prescription drugs and eyeglasses, manufactured homes and numerous other items are exempt from sales taxes. Property tax exemptions exist for governmental property, churches, mines and pollution control facilities.

Based on figures from that 10-year-old report, eliminating all tax exemptions would have left Nevada $688.2 million richer.

Federal law makes some of those exemptions off limits, however, such as those for governmental properties and churches. But there are plenty of others that are fair game.

Then there are cases where Nevada doesn’t impose taxes, such as a sales tax on gasoline, like other states. But Nevada makes up for it by imposing a much higher “excise tax” on fuel.

Other money saving or money-raising ideas have been considered and reconsidered by the state for decades. Some were part of “the Hobbs committee” report of five years ago. One, in the back of the massive report, was a suggested tax on services. Anything that doesn’t result in a purchase of tangible goods is not taxable in Nevada. That’s everything from massages and video rentals to the labor charges levied by mechanics and lawyers.

In 2003, the Hobbs’ committee calculated that a tax on services — all services — would result in about $1.5 billion in annual revenue to the state general fund.

The real amount would be less, because an across-the-board service tax would never see the light of day, but even after carving out exemptions, the amount in 2008 could be vastly larger “because technology has led us to being more of a service-dominated society,” Hobbs noted.

Sen. Bob Beers, R-Las Vegas, vice chairman of the Senate Finance Committee, is among those who don’t think a service tax would do much good, however.

“The problem is the economy has slowed down, so expanding taxation to other areas of the economy will still fail if your goal is seeking ways to avoid tax revenue falling short of projections.”

Sen. Bob Coffin, D-Las Vegas, is proposing a surcharge on various taxes, not including sales taxes, that would be rebated once the economy shapes up. Similar systems have been set up in other states, said Dino DiCianno, executive director of the Nevada Department of Taxation.

“They have triggers in place once you meet the budgetary requirement to provide rebates or refunds,” he said. “On its face it seems simple, but it could have some serious administrative difficulties.”

The one thing everyone agrees on is that there is no silver bullet, no quick fix.

“It’s going to take people with vision, people who aren’t afraid to talk about something that’s painful to talk about,” Hobbs said. “But it has to be done. For the state’s sake.”