Chamber will support tax hike with other reforms

By J. Patrick Coolican

Monday, Jan. 26, 2009 | 11:15 a.m.

The Las Vegas Chamber of Commerce, one of the state’s most powerful interest groups, unveiled a legislative agenda this morning that suggested the possibility of a grand bargain: Fiscal reforms that will lead to long-term savings in the state budget in exchange for a tax increase in the upcoming legislative session, which begins next week.

State government faces a $2.3 billion hole. Gov. Jim Gibbons, a first-term Republican, released a proposed budget that would close the hole with a 6 percent pay cut for state workers and teachers and a 36 percent cut to higher education. That proposal has been widely derided by Democratic legislators, higher education chancellor Jim Rogers, the teachers union, and some Republicans.

The chamber said it could support a tax increase, but only if the Legislature acts on the following items:

-- Cuts in the public employee retirement system for new employees. The current system faces a $6.3 billion unfunded liability.

-- Similar cuts in retiree benefits, including eliminating a health care subsidy for new employees and eliminating the subsidy for current employees when they reach Medicare eligibility. That system faces a $4 billion unfunded liability.

-- Work to reduce local government salaries. The chamber advocates making the collective bargaining negotiating process more transparent, meaning making some of the proceedings public so voters can weigh in before contracts are signed. The chamber also proposes changing the collective bargaining law to give local government more leverage in the negotiations, which are currently dominated by binding arbitration that favors government unions.

-- Create a “rainy day” fund for K-12 education.

-- Reform the existing Budget Stabilization Fund to help mitigate against future downturns.

Chamber government affairs chairman Hugh Anderson said the business lobby would be willing to participate in a conversation about a tax increase, but only if their proposals were passed in some form.

Steve Hill, chairman of the board of the chamber, said the group is opposed to Gibbons’ proposals on teacher and state worker pay cuts and the deep cuts to higher education.

Chamber officials said they’ve received positive feedback from Democratic legislators on their proposals.

Democrats control both houses of the Legislature. Any tax increase will require two-thirds majority of both houses. They control the Assembly with a two-thirds majority, but would need two Republican votes in the Senate for a tax increase. The chamber could be a crucial help in lobbying Republicans.