Journalists predict tough 2011 legislative session for business

By Richard N. Velotta (contact), In Business reporter

Fri, Jul 3, 2009 (3 a.m.)

If you thought the 2009 legislative session was rough, wait until you see what’s in store for 2011.

“There’s no doubt 2011 is going to be challenging,” said North Las Vegas Chamber of Commerce executive director Sharon Powers after her group got a recap of the recently concluded 2009 session by two Las Vegas journalists who covered it.

J. Patrick Coolican of the Las Vegas Sun and Molly Ball of the Las Vegas Review-Journal said in a chamber lunch at Texas Station that several factors point to 2011 being as rough as 2009. The Sun is a sister publication of In Business Las Vegas.

“I think 2009 will be remembered for lawmakers kicking the can down the road,” Ball said.

Because lawmakers voted to sunset most of the tax provisions enacted this year, the same money battles that were fought in the 2009 session could be revisited the next time lawmakers convene.

The only difference is that a new cast of characters will be involved.

Term limits will prevent 17 lawmakers from returning to their offices — one of the largest turnovers ever. In addition, there could be leadership shake-ups with Gov. Jim Gibbons likely getting a primary challenge from within his own party as well as opposition from Democrats.

“There are seeds of tumultuous, significant change,” Coolican said. “There could be considerable rethinking about public policy.”

Considering the deep hole in which the economy has put state government coffers, the journalists felt the business community fared relatively well, dodging any enormous tax increases while most services were kept in check.

The main components of the $781 million revenue increase were a 0.54 percentage point payroll tax increase, a 0.35 percentage point sales tax increase and the doubling of business licensing fees.

The payroll tax, collected by the Nevada Taxation Department, is assessed on companies, not employees. For example, if a company has a payroll of $500,000 after deducting expenses for health insurance, it would pay 0.5 percent — or $1,250 — on the first $250,000 and 1.17 percent on the rest, or an additional $2,925, for a total of $4,175 to the state.

“Business did OK despite being a little fretful about what was going to happen,” Coolican said.

He attributed that to the presence of Senate Republican mainstays such as Sen. Bill Raggio, R-Reno, who would only tolerate increases in existing taxes and no new taxes, and the sunsetting provision that would return rates to their original levels in 2011.

Ball said there were few surprises in the way the tax scenario unfolded because the business community couldn’t afford a major hit, yet no one wanted the massive cuts to education proposed by Gibbons.

The governor’s performance and his apparent irrelevance, the journalists acknowledged, may have been the hallmark of the session.

“I talked to a number of legislators who said they’d never seen a governor so disengaged from the process,” Coolican said.

Although the journalists believe the business community did all right, Powers thinks business got a disproportionate share of the pain. She said because the state was put in a position that it had no recourse but to increase revenue, the business community was forced to pay more. The payroll tax increase, she said, would be a disincentive for companies to grow.

The North Las Vegas Chamber also has been an advocate for reforming the Nevada Public Employees’ Retirement System and didn’t get all the changes it wanted when lawmakers made modifications.

Under the changes implemented in PERS, employees would have to work longer to receive benefits they currently get.

Although the governor’s Spending and Government Efficiency Commission recommended what the chamber advocated — that all state employees be subject to modifications that required them to pay more for their benefits — the legislation approved will apply to new employees beginning next year.