Fiddling on the fringe

By Jon Ralston

Friday, Jan. 16, 2009 | 2 a.m.

“Nevada state government is now experiencing the doldrums from long-misguided policy measures.”

— Nevada Policy Research Institute budget recommendations

“Nevada is at a crossroads.”

— Progressive Leadership Alliance of Nevada budget recommendations

PLAN and NPRI, in the alphabet soup world of advocacy groups, agree on almost nothing, but they concur on one thing: Nevada’s budget must be overhauled.

Their solutions, however, couldn’t be more different and nicely encapsulate the extremes of the tax and cut debate while also illuminating the triumph of right- and left-thinking over pragmatism.

As Gov. Jim Gibbons delivers his budget-gutting speech this week, both groups have submitted their suggestions to a chief executive who no longer is listening. He’s made up his mind — slash public employee payrolls, meld a few agencies, take some money from the locals and go home.

NPRI has different ideas. “It’s time for state policymakers to abandon the idea of increasing taxes to continue funding these failed policy measures,” NPRI’s Geoffrey Lawrence and Patrick R. Gibbons write in the prelude to their cost-cutting/reform measures. “Rather, they should undertake the more difficult task of implementing meaningful structural reforms that will safeguard Nevada’s taxpayers from crises similar to the current budget shortfall in the future.”

Funny, but PLAN also wants structural reform — but of a very different kind. “Courageous and comprehensive changes must be made immediately before Nevada’s current revenue crisis plunges the state into even more economic peril,” the PLAN report states. “The state cannot continue its reliance on income sources that rely on happenstance and fate.”

So what is PLAN’s solution?

More money. A lot more money — $1.26 billion in more money.

The underlying premise of its tax plan is that, as we have heard so many times, the system “is not just broken, it’s also fundamentally unfair, balancing the state budget on the backs of those who can least afford it while shielding some of the state’s biggest, and most profitable, businesses from any meaningful taxation.”

None of PLAN’s ideas are new, although that doesn’t mean some are unworthy of debate. Taxing the mining industry and taxing business profits (while exempting small players) are hoary notions, but worth examining.

Some of PLAN’s proposals, though, are either misguided or pie in the sky. Doubling the state payroll tax, which already has been bandied about in Carson City, seems counterproductive. The tax was a silly idea when it was created, as an alternative to a gross receipts or profits tax. To create more of a disincentive to hire and more of an incentive to fire doesn’t seem helpful now. And it seems punitive to impose the profits tax and double the payroll tax, especially now.

Indeed, the PLAN paper argues against what it later proposes:

“Nevada businesses do pay a payroll tax of 0.63 percent of total wages, but that tax, too, is unfair in that it hits less profitable businesses and large profitable corporations with the same rate.”

So why double it then? This makes sense?

Other ideas — taxing comped meals and increasing room taxes — are either bad policy or already have passed and will be enacted. And PLAN’s coup de grace — a state income tax — not only would take a constitutional change and will never happen, it simply hurts the credibility of the package as a productive resource.

The NPRI suggestions are much more general, often theoretical and unquantifiable. “Fund outputs, not inputs.” Having state workers share savings if they complete contracts on time. And, of course, reforming the state’s pay structure, the business community’s hobbyhorse.

NPRI and its like-minded comrades in arms are not wrong that merit pay and other reforms should be debated instead of having the colloquy stifled by public employee unions. But NPRI goes off the rails in its report by simply repeating conservative shibboleths and often presenting contradictory statements.

For instance, Gibbons and Lawrence state declaratively: “Spending more money on education is not the solution to Nevada’s educational challenges.” Oh? The state languishes in the funding cellar and spending more won’t work? Evidence? None provided.

But just a few paragraphs later, the NPRI folks declare about class-size reduction: “Unfortunately, Nevada does not have an effective method for attracting and retaining high-quality teachers.”

I wonder — radical idea here — if paying them more might help keep and attract them. Crazy, I know.

NPRI has some other meritorious ideas, including more transparency in government, which can only be salutary and which PLAN actually lists as a precept for sound tax policy. But NPRI’s nine-page report is replete with generalities and banalities and few specific policy suggestions.

The specifics that do exist — eliminating the Business and Industry Department, for instance — are based on false premises. “(Business and Industry) exists for the sole purposes of subsidizing specific industries and protecting favored producers from competitions.” So no regulation of businesses?

It’s a manifesto, not as it purports to be, a list of recommendations.

So the NPRI booklet is too thin with proposals and the PLAN book is too thick with ideas. Isn’t that just like a conservative group to provide only the thinnest gruel for government and isn’t it just like the liberal folks to feed the beast as much as it can stuff into its maw?

A harsh diet or a gluttonous feast?

I wonder if there’s a middle ground. Even more, I wonder if the Gang of 63 can find it and garner two-thirds in each house to pass it over Gov. Irrelevant’s veto.

In Business commentator Jon Ralston hosts the news discussion program “Face to Face With Jon Ralston” on Las Vegas ONE and writes columns and a political notebook for the Las Vegas Sun.