Foot dragging on tax plan appears the astute course

By David McGrath Schwartz

Sunday, May 17, 2009 | 2 a.m.

Legislators’ strategy has from the beginning been to play hide the ball on taxes.

For months they have privately acknowledged that tax increases would be necessary to spare the state debilitating budget cuts.

Yet only recently did they say so publicly. And only last week did they unveil pieces of a tax plan.

(In addition to the previously revealed increase in a business payroll tax, they are higher annual vehicle registration fees; doubling of the business filing fee, from $100 to $200; and an increase in the sales tax of between a quarter-cent and a full cent.) (Related story: Plan would increase sales tax, vehicle registration)

A lack of transparency? Little public input? Perhaps.

But as a legislative strategy, it’s working.

Given the late day and compressed time line — only 15 days remain until the constitutionally mandated close of the session — it appears to be too late for serious opposition to gather and stop the plan. So say lobbyists and lawmakers from both sides of the aisle.

“It’s significantly harder for special interests to make major changes to the tax plan at this point,” said Mike Hillerby, former chief of staff for ex-Gov. Kenny Guinn. “They secured support from major business groups before rolling out their plan. The issue now is between lawmakers to change it. That’s the only way to derail it.”

Referring to the Legislature’s Democratic leadership, Republican lobbyist Robert Uithoven said: “They may have won.”

“They wanted to hide it while they paraded a constant stream of their core constituencies in front of committees, who begged them for a tax increase,” he said.

The strategy is drawn from lessons learned during the last major tax fight in the Nevada Legislature, in 2003.

During that session, Guinn and supporters of a gross receipts tax on business went to great lengths to detail the proposal and push for it early in the session.

Business interests had plenty of time to pick it apart. Eventually, an $836 million tax increased passed, but only after a marathon battle and without a gross receipts tax.

“The fight from six years ago is still fresh in everyone’s mind,” said one lobbyist speaking on condition of anonymity. “No one wants to lead with their chin.”

Speaker Barbara Buckley, D-Las Vegas, was cognizant of that as she laid out a deliberate — and ultimately unreliable — timetable on taxes and spending.

At a January news conference, Buckley and Senate Majority Leader Steven Horsford, D-Las Vegas, said lawmakers would have a spending plan by April 1. That wasn’t accomplished until Tuesday.

She originally promised they would unveil a tax plan by early May. Only now are lawmakers at that critical point, leaving little room for error.

Through a series of committee votes — almost all unanimous — Republican and Democratic legislators have agreed on a spending plan. The bipartisan votes deflate arguments by the state’s most conservative elements that additional tax revenue isn’t needed.

But the plan could still blow up. Republican legislators complained Saturday that while they are negotiating changes in pension and health benefits for public workers, Democrats have passed a bill that would give state workers collective bargaining on some noneconomic benefits.

“We’re trying to bring the fiscal horse back in the barn, and they’re trying to kick the doors open and stampede out the back door,” said Sen. Warren Hardy, R-Las Vegas. “There are ‘no’ votes in our caucus for taxes without serious reforms.”

Still there is, so far, no organized opposition to the tax increases.

At the first public meeting on the tax plan, Thursday evening, middle-aged men in expensive suits, representing the titans of Nevada industry, told lawmakers they were at the table to talk about taxes.

The opposition role was relegated to a clique of anti-tax throwback lobbyists. One opponent — a California lobbyist representing a national small business group — was literally booed from the testimony table.

The late timing means bold changes in the state’s tax structure, which many believe is too reliant on gaming and sales taxes, are unlikely. Assemblywoman Kathy McClain, D-Las Vegas and chairwoman of the Assembly Taxation Committee, said she was frustrated there won’t be enough time to fix the tax structure.

“All we’re doing here is a Band-Aid,” she said. “Hopefully we’ll have an interim study and make a real fix in 2011.”

Some raised questions about the details of the proposals, but there was still no opposition.

“Those who want to take close to a billion dollars out of the weakened, tattered economy may have won,” Uithoven said. “But it’s not over yet.”