Jon rALSTON:

Gibbons can’t even explain his stand against taxes

Sunday, April 26, 2009 | 2 a.m.

My guess is you have forgotten about SAGE — and it’s not a word you have heard used too often during the first two-thirds of Session ’09.

It’s been awhile since the Spending and Government Efficiency panel has made any news — last we heard it was plagiarizing and then radicalizing the Las Vegas Chamber of Commerce’s public benefits reform plan. To give SAGE its due, the group has been engaging in a systematic and detailed exploration of the various areas of state government spending, with 11 task forces sequentially due to provide recommendations starting next month.

SAGE actually met Thursday — and no one much noticed. The agenda was full, but it is the first item that interests me today: “Address by Gov. Jim Gibbons.”

The Man Formerly Known as Governor created SAGE — one of the few potentially smart moves he has made — and he came not to take its temperature but to provide what he usually adds to substantive, sober endeavors: Ø.

Those who were there say he was “awful” and “embarrassing” in his 20-minute address, with his usual inchoate and incoherent remarks. But that is not news — you hardly need another recitation of how the man supposed to be leading the state has virtually no followers.

But from what I understand from sources who were there, after his exhortation to the group to “do the right thing” and to perform a Copperfield-like trick of improving services while cutting spending, Ø directly addressed (for the first time I have heard) the incipient tax plan being bandied about in private legislative meetings. That hardly visionary idea, which has been around since the session’s first day, is to double the Modified Business Tax (a payroll tax levied at a minuscule .62 percent) and impose a sunset-laden, small increase in the sales tax.

The Man Formerly Known as Governor told the SAGE members “that doubling the MBT and increasing sales will destroy business,” said one person in the room, an account I have verified. (And he repeated the comments in his latest faux podcast.)

Ø provided no evidence for this assertion — that a doubling of a tax that even the chamber folks have whispered is acceptable and a slight, time-limited boost in the sales tax would decimate the economy.

This assertion came less than 24 hours after a broad spectrum of business leaders met with legislative leaders and told them they understand a tax increase may be necessary and that the vehicle they were considering was not cuing any dirges. Indeed, the nearly two dozen business types — leaders in industries from gaming to construction to real estate to health care to mining — generally told lawmakers they believed the administration budget was unsupportable and that $600 million to $800 million in tax increases would be necessary.

Let’s be clear here, folks: This was no flock of liberals with their hearts bleeding; indeed, these generally are conservative business people whose only hemorrhaging is from their bottom lines.

What does Gibbons know that they don’t know? That’s easy: Ø.

These also generally are people who supported the Republican incumbent when he ran in 2006. You would think some of them might want to visit their man and tell him to either shut up or think before he speaks. I think it’s likely some have done one or the other and The Man Formerly Known as Governor’s deafness to anything but unvarnished sycophancy resulted in Thursday’s performance.

Then it got worse.

Steve Greathouse, a SAGE member and former chairman of the Nevada Resort Association, asked the man without the plan why major retailers such as Wal-Mart and Best Buy and banks such as Wells Fargo have the same pricing structures in other states where they actually pay taxes. His answer?

“He really couldn’t answer Steve’s question — couldn’t even dodge it well,” said one person in the room. Offered another: “He answered some gibberish about renewable energy and not going to the well again. A sixth grader could debate him and win.”

The premise behind Greathouse’s question is that major businesses here could, even in these tough times, afford a tiny corporate profits tax — indeed, there are so few corporate profits that they wouldn’t have to pay much until the economy turned around. Most other states have either a profits tax or a gross receipts levy of some kind.

But in Nevada, lawmakers seem content to double a tiny payroll tax and increase sales taxes and the man across the courtyard declares such a feeble effort would destroy business.

This would be comic if it weren’t so pathetic. It certainly isn’t sage.

Jon Ralston hosts the news discussion program “Face to Face With Jon Ralston” on Las Vegas ONE and publishes the daily e-mail newsletter “RalstonFlash.com.” His column for the Las Vegas Sun appears Sunday, Wednesday and Friday.

Discussion: 13 comments so far…

By Patrick_R_Gibbons

4/26/09 at 8:48 a.m.

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Jon,

In 2005-07 we increased the budget 42%
07-09 the budget was increased 9.7%
Now to "maintain services" they want a 17% increase.

http://npri.org/publications/legislature...

Its not hard to see what they are really trying to do is maintain the explosive growth in government spending.

The real question is about whether all this is necessary and whether or not they're actually spending the resources they have wisely.
By Patrick_R_Gibbons

4/26/09 at 8:57 a.m.

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Mr Greenhouses question "why major retailers such as Wal-Mart and Best Buy and banks such as Wells Fargo have the same pricing structures in other states where they actually pay taxes[?]" is a really bad question.

Economic is more than one-dimension. Wal-Mart may (he offers no real proof btw) charge the same price in two different states because of many reasons

1) Retail agreement with manufacturer. Video games, for example, are priced the same across the country because of this.

2) The individual markets themselves may be similar.

3) Labor costs, capital costs, operating costs are similar.

4) Willingness to pay. Nevada is a wealthy state. So what, Wal-Mart makes a high profit, soon other stores will flock to Nevada, bringing goods and jobs, in order to get a piece of that profit only to bring prices back down again.

Any combination of those things, and more, could account for similar prices. None of that means that raising taxes on these corporations won't result in fewer jobs or lower wages. In fact, very likely that if profits are reduced in Nevada they will invest less here, create fewer jobs, build fewer stores, and as they remain they offer lower wages than they otherwise would.
By DouglasDemocrat

4/26/09 at 9:12 a.m.

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I'm sick of this.

Someone needs to man up and do the right thing. If services are cut, people will leave. If taxes are raised, people will leave. No matter what, people will leave.

Someone's going to have to take it in the shorts. And unfortunately, neither the Governor or the Legislature want to own responsibility for whatever half-baked proposal comes through.

Gibbons' budget is unworkable by any standard (except Patrick's apparently), and to stand here and claim that only cutting spending will solve the problem is short-sighted at best and idiotic at worst.
By Patrick_R_Gibbons

4/26/09 at 9:18 a.m.

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Doug,

When Nevada spends $8-9 billion in a year with 2.7 million residents you have to wonder what on earth are we blowing the money on... Without real accountability, merit pay, competitive bidding for services, or any incentive to be efficient there will be no efficiency - simply put, we're directing resources to be spent on ineffective policies.

Its not how much we spend its how wisely we spend what we have.
By DouglasDemocrat

4/26/09 at 10:09 a.m.

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"When Nevada spends $8-9 billion in a year with 2.7 million residents you have to wonder what on earth are we blowing the money on..."

Costs have gone up. Look at the transportation budget - the cost of liquid asphalt (used in slurry seal and other road repair work) has more than doubled since the '05 budget year. For a state that relies primarily on the highway system, that's a lot of asphalt. Similarly, concrete costs have also risen significantly.

And competitive bidding was what screwed up the Galena Bridge project up North - the company that got the contract seriously underbid, then once started work costs ballooned until they were essentially fired from the project and a new crew was brought in.

And how do you expect state workers to be efficient when many of them are already doing the work of two people, or three? We have the highest ratio of residents to state employees in the country, and it shows.

But fine, gut the budget. And when people leave because the state is barely functional, don't say I didn't warn you.
By renomuse

4/26/09 at 6:57 p.m.

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I'm sick of the usual CONservative crap posted on these site comment areas. Jeezus. Most of you idiots only know philosophical argument and not reality.
By Patrick_R_Gibbons

4/26/09 at 9:43 p.m.

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When organizations are efficient if the costs go up they innovate ways to reduce costs and or look for alternatives. Government does not do this because there is no incentive to do this. They get money regardless of whether or not they actually provide a quality service.

I seriously doubt they are doing the work of two people. For one, government workers generally recieve pay that is unrelated to their skill or effort. It is also difficult to terminate bad government employees. There is also no reward for government employees or agencies saving money, and no need to even try, since there is no competition to provide those services.

Ren, this is more than philosophy, its proven. Take monopolies in the private sector, do you believe they are good, do they provide high quality services, the best price, or even the best wages or working conditions for their employees? Government often has the same characteristics of a monopoly. So if you disagree with the "philosophy" above then you must logically believe that monopolies in the private sector are "good"
By Future

4/27/09 at 6:07 a.m.

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Until the unions in the Nevada public pig trough want to pay nice like the UAW must now do - why would the private sector have any incentive to increase taxes in a depression $2-3 billion.

What we are doing is just redistributing wealth from private to public employees.

And the public employees already make 40% more and have job protection.

- Where is the Democratic lawmakers spending plan?

- Where is the Democratic lawmakers taxing plan?
By darkhorse

4/27/09 at 7:59 a.m.

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Is this your first Rodeo? Gibbons and Future. I have seen Sessions form Bryan, Miller and Guinn. This happens every year and your puppet seems to forget he was in the Assembly at one time. Everything happens at the end and your whining and complaining shows how incompetent Jimbo is and his staff. Just 20 months to go with this clown. I wonder if the Gov has started building his house in Elko? Or will Dawn get that too.
By in_sider

4/27/09 at 9:54 a.m.

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Patrick, you really want to help bring efficiency to government move to California, New York, Massachussetts, Florida or any number of other states that actually have "big government" problems. Being a libertarian watchdog in a libertarian state is like like a blind man teaching other blind people to read.

You want to learn about Nevada's tax situation go to a non-biased source like the Tax Foundation:

http://www.taxfoundation.org/research/to...

Nevada has ranked in the bottom 3 in tax burden since 1977 and currently rank 49th out of 50 states for tax burden. It is also the lowest it has been since 1977 (6.6% - it was 7.9% in 1977).

http://www.taxfoundation.org/research/sh...

http://www.taxfoundation.org/files/sr163...

So with what you call massive increases, of which you do not account for population growth nor the increased strain on existing services, we actually have seen a dramtic decrease in tax burden? How is that?

Please leave Nevada and go to another state where your perspective might be of use.

What really gets me is that you and your cohorts at NPRI aren't doing it for the greater good of fiscal conservatism; you are doing the bidding of a man that hates Nevada and the people who live here, Sheldon Adelson.
By lewd-and-lascivious

4/27/09 at 10:59 p.m.

Comment removed by staff.
By Harley

4/28/09 at 1:11 p.m.

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What's there to explain?

Our leader's message is very clear, those that desire to give more of their wealth and income to government can do so voluntarily without being told/forced by mandates.

Deep spending cuts are merely a part of economic re-pricing and fiscally purdent.

Game, seg. 4 of link below:

Phil Ruffin to Jon Ralston: "It would be a terrible time to raise taxes."

Phil Ruffin to Jon Ralston: "We pay plenty of taxes, we pay a lot of taxes!"

Phil Ruffin to Jon Ralston: "They (Government) could always cut-back their spending!"

Phil Ruffin to Jon Ralston: "They (Government) give a budget to a certain department and if they don't meet that budget they cut it back, so they make sure they meet that budget and exceed that budget, so they can ask for more next year. It's just kinda like a circle, it's not a good thing, they need to cut it back."

http://www.lasvegassun.com/news/2009/apr...
By Vegas1961

4/29/09 at 1:42 a.m.

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What to Tax? What to Tax? What to Tax? Here is the solution, Governor Gibbons! TAX LIPSTICK! Think about it! Women will not go without Lipstick! Women love Lipstick. I don't care what it costs. There are hundreds of cosmetic companies and they ALL sell Lipstick! How many colors can there be? There are probably 100 or 500 or even 1000 different shades! I have at least 6 different shades. It is a vital part of our lives! We will NOT give up Lipstick! Women could save the state!