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twitterMore evidence of a broken tax system
Friday, Nov. 13, 2009 | 2 a.m.
“Virtually every state had to make tough decisions this year about where to cut and how to raise additional revenues, including through taxes or fees. But in some states, lawmakers punted the responsibility — either by asking their voters or governors to make the call, or by relying heavily on borrowing or accounting methods that put off harder decisions until later.”
— Pew Center on the States ”fiscal peril” report
Sound like anyone we know?
The Pew report, though thorough and insightful, breaks no new ground for those familiar with Nevada’s financial cataclysm. But in naming the state as one of nine besides California on the brink of a fiscal cliff, and by showing it understands the economic and political ingredients of this recipe for disaster, the nonprofit reinforces just how daunting and depressing the situation is in Nevada.
The study ranked Nevada in the middle of the pack among the 10 states, tied with Oregon as fifth most in peril. The measurements were: change in revenue, size of budget gap, change in unemployment rate, foreclosure rate, supermajority requirement for taxes and fiscal management. (The report
is online at lasvegassun.com/pewreport.)
Despite the bleak assessment of Nevada, I think the Pew folks actually were too generous because they alluded only to the two largest problems: a narrow tax base and an even narrower political leadership.
There is no better encapsulation of the former problem than this section:
“Nevada is one of five states without a personal or corporate income tax, leaving state government to rely largely on the tax dollars it collects from now-shrinking gaming and sales to finance most services. Among those services, public education and long-term health care will continue to vex policymakers because much of the growth in Nevada’s population during the past 20 years was driven by people under 6 and over 65.
“Increases in the cost of corrections, Medicaid and public employee pension plans also are challenging. The Legislature has diverted unprecedented amounts of local government revenue to balance the state budget ...”
This thin tax base has been miraculously unearthed, like some lost ark and with concomitant wonder, by every study to date and will be again by the incipient Complete Waste of Time interim endeavor. The Pew report mentioned the dependence on gaming and sales, but no state is captive to the whims of other state economies as Nevada — if the tourists don’t come, or come and don’t spend much money, the state budget is in a shambles. And if the housing boom is busted and commercial real estate is moribund, construction that fuels the sales tax revenue is nonexistent. This is unsustainable — as a looming $2 billion to $3 billion hole come 2011 attests.
The Simplistic Party will say the debate is designed to reach one conclusion: raising taxes. It’s not. It’s about a spirited colloquy about whether the unquestionably narrow tax base can sustain the state, even for basic service levels, and whether it needs to be expanded out of necessity or to enhance service levels.
That brings us to the other determinative factor mentioned but not counted in the score by the Pew analysts — and that is the enduring lack of political will, aka leadership. The line about relying on “borrowing or accounting methods” is a euphemism for the transparent gimmickry — e.g., one-time stimulus cash and sunsetted taxes — adopted by lawmakers and generally rubber-stamped (and occasionally vetoed) by governors who have the same goal as the Gang of 63: Live to abdicate responsibility another day.
“Putting off harder decisions until later” ought to be emblazoned on the Legislative Building. And later never comes.
I have not heard one of the no-new-taxes-ever-never-whatsoever crowd present a detailed plan for how to deal with the short- and long-term budget crises — just saying “no” is easier, and more appealing to benighted voters. Nor have I heard one lawmaker or gubernatorial contender present any plan to deal with the crises in a thoughtful way — worse, most will use the Last-Great-Really-We-Mean-It-This-Time tax study as cover for not taking a position.
Neither side can assert the moral high ground until it presents details — not that morality has ever played a large role in Carson City. And, as I have argued for years, it doesn’t have to be — and shouldn’t be — done all at once.
It’s a two-step process. First, fix the system without raising taxes by broadening the tax structure but reducing noisome fees. (Anyone register a car lately?) Then, rigorously debate what services and at what levels government should be funding and tax accordingly. The action should be swift, the discussion robust.
Sound like anyone we know?
I didn’t think so.
Discussion: 26 comments so far…
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Jon's says its a It's a two-step process. First, fix the system without raising taxes by broadening the tax structure but reducing noisome fees. Then, rigorously debate what services and at what levels government should be funding and tax accordingly."
And therein lies the debate - if you do not have enough money do you stop spending first or tax more first.
Jon says tax first
Nevada tried that in the last Democratic run session. They got millions from Obama and increase a broad range of taxes by $1.2 billion.
And they spent every dime on union worker wage and benefit packages and many other unnecessary goodies.
Jon belives that they would stop at "fix the system without raising taxes by broadening the tax structure." Jon is smoking something.
Stop spending first then we can talk.
I'm sure with the stripper mobile they will RAISE something. Just wait till Garth Brooks starts his shows here, money will pour in like Niagra Falls.
Nevada is a microcosm of the federal government. Sen. Reid passed laws that created the waste, fraud and abuse of the federal government.
Nevada is doing the same. They have passed laws creating waste, fraud and abuse by state, local and city governments.
For example, LVMPD practices the 24 hour rule. If a child abuser is not arrested within 24 hours of the crime, he is not arrested. DA Roger refuses to prosecute him because he was not arrested. The victim, then, is court ordered back into the care of the abuser. Clark County's children's abuse and neglect is outrageously high even though the population of Clark County children is significantly decreasing.
This waste, fraud and abuse was brought to Governor Guinn's attention by the United States August 2006 after numerous Las Vegans complained to the U.S. about Las Vegas' law enforcement practices. State of Nevada did nothing.
Without a sense of urgency, in 2008, State of Nevada began recording Clark County's children's deaths due to abuse and neglect. By mid 2009, deaths were up over 200%. If extrapolated, the deaths will near 300% by the end of the year.
These are preventable deaths. The sense of non-urgency by State of Nevada leadership regarding this matter is costing the State of Nevada millions daily. Damages are in the billions. YOUR RIGHT! 702-787-0002
Explain something. This is a "right to work" state. Yet some mysterious panel up in Carson City sets a "prevailing wage" each year that is almost identical to the Union wage. As in overpaid Union wages. Texas is a "right to work" state. It does not have a mysterious panel telling contractors what to pay their employees. I.E. you can pay the Union wages, or you don't. If you want "skilled Union craftsmen", fine, use them. If you want hard working non-union help, fine. Obviously, even in Texas, the Unions have control over public works projects, since the Unions are everywhere in public work, like fire ants. But private work? No wonder Nevada is in the tank, and Texas is rolling along with tons of work.
Save your pennies, overpaid craftsmen, it's going to be a long couple of years. "Honey, is the UHaul here yet?"
It is amazing that Nevada's tax system was satisfactory for so many years. But then, the entire country seemed to be purring along with its tax revenue. That is until our politicians, both state and federal, decided that government should be everything to everyone. And this was before government employees were allowed to "unionize". Through the years government responsibility for maintaining the infrastructure has been eroded by the increasing cost of wages and benefits for its employees. It isn't only Nevada. New Jersey has over $1 billion in unfunded employee pension benefits. And, California? Let's not even go there. Sadly, it is human nature (for many) to spend every last penny of revenue, be it politicians or our own personal income. Therein lies the problem. Instead of creating a "rainy day fund", if a politician sees a nickel he has to find a cause to fund. Regardless of how insignificant or irrelevant, he pursues his goal. This then requires more government bureaucracy that balloons into a program that cannot be eliminated. After all, it's helping someone. And those employees managing that program are now more union represented employees demanding higher pay and benefits. Say what you will about unions, they are a form of socialism. Everyone is paid the same for their service. There is no opportunity to reward an employee for being outstanding. You cannot pay a not so stellar employee less. This is fine with the average person. That is until the employer has been tapped for all he is worth and finally closes shop. But this only happens to the private employer. Government simply raises your/our taxes to satisfy the hungry beast.
.
..
...I've been looking at the first ten pages of that shocking "Transparent Nevada" report and do not see any police salaries. Anyone out there with an answer...???
...Far above Cayuga's waters...
..
.
Taxation is theft; "systems" employing theft through taxation rightfully deserve to fail.
Criminalize taxation and government monopolies while allowing the private sector to compete for services currently offered by government -- a deserving capitalistic approach as opposed to the socialist/communistic failed approaches repeatedly emphasized by your "broken" theme as confirmed by history.
"We cannot solve today's problems with the same level of thinking that incubates social parasites and criminals." -- Harley
: {
"We cannot solve today's problems with the same level of thinking that incubates in the minds of the anti-tax brigade that ruins er...runs things here in Nevada, starting at the top with Gov'ner Gym Gibbons."
gmag
The taxpayer is the biggest patsy-sucker in the universe.
If you don't believe it, review the Frontline episode entitled "The Great American Bailout" released 10/22/1991 which focuses upon the 1991 S&L bailout-scandal and government cover-up.
Note the comments made by William Seedman former FDIC chairman during the episode.
: }
"The Simplistic Party will say the debate is designed to reach one conclusion: raising taxes. It's not. It's about a spirited colloquy about whether the unquestionably narrow tax base can sustain the state, even for basic service levels, and whether it needs to be expanded out of necessity or to enhance service levels."
I call your bluff and raise you.
Sure it is not just another "Let's raise taxes" scam of which people like Ralston scream at the top of lungs everyday unless it hits their boss's bank account. (God forbid that the Greenspuns have to pay taxes on their Vegas.com enterprise when they re-sell hotel rooms.)
Yeah right.....They are going to lower taxes in other areas and broaden the tax base by creating new taxes in other areas. It is going is going to net out to zero dollars in overall tax revenue increases.
Yeah.....who really believes that.
Rather than hear these out-and-out lies I would like to see another imaginery conversation piece by Ralston in his little play child world.
This matter shouts to the need to rein in on the cost of state and local government. Personnel costs have been allowed to run completely out-of-control.
I have seen lip service, but no leadership, directed at diversifying Nevada's economy. One more new casino concept is not the answer.
Nevadans have been complacent too long, not looking ahead to the changing economy and circumstances we now face.
We have the worst schools, worst safety net for children at risk, and a crumbing transportation infrastructure (poorly maintained roads and highways). You get what you pay for. You bemoan the "overpaid" state workers, who are taking forced furloughs and layoffs, while you complain about the increased waiting time at state offices.We also have the fewest state workers per capita of any state, so our state workers are forced to work more overtime increasing their pay. State revenues have not kept pace with population or inflation for twenty years and the legislature has done nothing but cut for all that time. Nevadans get what they pay for. Lowest taxes, lowest and worst services and infrastructure, which will further limit the ability of the state to recover from the recession.
Jon Ralston for governor.
What "No new taxes" and "tax cuts" really means is that governments have to borrow money to cover the deficits. What people do not really consider is that interest has to be paid on what is borrowed for many years. The total amount paid in interest can be many times the amount of the original amount borrowed. Therefore, it is more economical to raise taxes by the amount of the interest paid on the loans, thereby saving taxpayer dollars over the long run. The politicians that pledge "no new taxes" or a "tax cut" is just using blackmail extortion to get your vote. Those that get the tax cuts are usually the richest, not the middle and lower classes.
Nevada. Consistantly biting off it's nose to spite it's face.
Get a grip folks! Nevada has always had a razor thin tax base leading to minimal state staffing, the worst education system, the lowest public support of services to the poor, etc. That tax base is also very fragile by design, relying on gaming and tourist dollars so as to keep locals off the hook. Somewhere long ago someone decided that's exacttly what Nevadans want -- they're simply getting what they paid for. But it's fair to ask the question again, is that really what we want? Our current spending levels are trivial by most state's standards, as is the vaunted waste and abuse. But that spending came about because a majority of Nevadans told our elected representatives we wanted those programs and services. Spending commitments, like our tax scheme, reflect our priorities as voters. The equation is currently broken.
CAR REGISTRATION WENT UP 52% IN ONE YEAR!!!!
Most folks do not understand the fundamental structure of government finances. Taxation is an end product of the government debt cycle. Bonds are the primary financial/debt instruments of government. The 'tax base' is used (among other assets) as collateral for the issued bonds (debt). Tax monies are used to pay the interest and the principle of the bonds.
http://personal.fidelity.com/products/fi...
http://bonds.suite101.com/article.cfm/ho...
The issuer of a municipal bond receives a cash payment at the time of issuance in exchange for a promise to repay the investors who provide the cash payment (the bond holder) over time.
Municipal bonds are one of several ways states, cities and counties can issue debt.
The municipal bond market was affected by the subprime mortgage crisis. During the crisis, monoline insurers that insured municipal bonds incurred heavy losses on the collateralized debt obligations (CDOs) and other structured financial products that they also insured. Consequently, the credit ratings of these monoline insurers were called into question, and the prices of municipal bonds fell.
http://en.wikipedia.org/wiki/Municipal_b...
Right now the local municipal agencies are scrambling to maintain their 'bond ratings' by paying higher and higher interest and 'insurance rates' on existing bonds. Therefore services are being cut drastically to pay the 'debt service' and 'expenses' on new and previously issued bonds. Taxation has little to do with public services and everything to do with maintaining the bond ratings and payments. Government entitles go bankrupt when they default on their bonds.
This is why local governments are scrambling to start new public projects in the face of a devastated economy. They have to be able to issue new bonds in order to keep the ponzi scheme rolling along. Issue debt (bonds) now and get the cash and not worry about where the money will come from in the future. HIGHER TAXES LESS SERVICES
If you want to discuss reducing taxation we have to address the issues of debt and debt service.
If you want a better picture of the financial conditions of 'government' entities have a look at the CAFR reports..then you may understand why the local and state governments are in serious trouble.
http://controller.nv.gov/CAFR_Download_P...
http://www.accessclarkcounty.com/depts/c...
http://www.lasvegasnevada.gov/TextOnly/P...
http://www.cityofhenderson.com/finance/c...
http://www.cityofnorthlasvegas.com/Depar...
http://search.snwa.com/snwa_query.html?q...
To mrxroc8--Excellent post! More people should post with facts such as yours. This is a challenge to the wingnuts to start posting with factual opinions rather than lying and using personal attacks on other bloggers, or are they just too mentally lazy to type in a few words and make a few clicks?
tax the Internet and talk radio and tea bag protesters
Anyone care to explain how mounting public debt imposed by government upon its citizens can be serviced by the unemployed, homeless and bankrupted?
America's total debt is currently $57 TRILLION and soaring, that's $186,717 per man, woman and child.
Esteemed Economist Ludwig von Mises stated the endgame brought on by reckless expansion of credit (debt): "There is no means of avoiding the final collapse of a boom brought about by credit (debt) expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit (debt) expansion, or later as a final and total catastrophe of the currency system involved."
"I place economy (saving) among the first and most important virtues,and debt as the greatest of dangers to be feared." - Thomas Jefferson
"He who goes borrowing, goes sorrowing." - Benjamin Franklin
"We hear sad complaints sometimes of merciless creditors; whilst the acts of merciless debtors are passed over in silence." - William Frend, 1817
"The decline of great powers is caused by simple economic over extension."
The Rise and Fall of the Great Powers, by Paul Kennedy
"Growing domestic and international debt
has created the conditions for global economic and financial crises."
Bank for International Settlements June 2005
"The US spends tomorrow's money today.
That's why we have this financial crisis.
We Chinese spend today's money tomorrow."
Cheng Siwei, vice-chairman, China's Standing Committee 2009
"No generation has a right to contract debts greater than can be paid off during the course of its own existence."
- George Washington to James Madison 1789
http://mwhodges.home.att.net/nat-debt/de...
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two choices remain for local and state government in light of todays economy; raise taxes or cut overhead. theres no in-between.
"Increases in the cost of corrections"- How about the cost cuts to corrections that they implemented in the Phoenix area? Tent camps and PB and Jelly sandwiches ought to bring down costs a bit.
"Medicaid"- Any med student that gets any type of financial aid needs to payback by working in low-income clinics for a couple of years. Keep people that are not in emergency situations out of the ER rooms and we decrease costs right away. What % of medicaid ends up going to care for illegals? I really don't know but figure it ought to be asked.
"and public employee pension plans also are challenging."- Funny how John seems to skip right past commenting on this at all. Much easier to go after the R's to change the tax base. (which of course will lay the groundwork for making it easier to continually raise taxes in the future)
Nobody in the private sector is given a pension anymore. Why is just a given that you get one if you work for the government? In the past you made less salary in government so you had to have the benefits to get anyone worth anything to work for you. That just isn't true anymore. Start fire, police etc at 35k per year w/o pensions and you will still have 1000's show up at each hiring fair.
"The Legislature has diverted unprecedented amounts of local government revenue to balance the state budget."- This was/is a joke and the leadership of the legislature should all lose their jobs over it. (by the way, why didn't John go after Buckley or Horsford about this? Oh yeah according to John its all the Gov's fault)
keep cleaning your weapon's people.because if it does not get any better in this state.People will turn into animal mode.And they won't be going to the goverment looking for food(ETC)see the goverment alway's thinks rising taxes will cover their asses when their greed get's too much too handle.so they make the people of nevada,who have no money to begin with.pay for it.Beside's Mr Goodman,don't waste anymore time relecting the rest.
Did you know the States spend BILLIONS & BILLIONS on released felons, homeless, veterans, domestic violence escapees, crime victims, for WORTHLESS "LIFE SKILLS" & "Anger Management" nonsense and when finished with the classes THE CAN'T FIND A LIVING-WAGE JOB because THEY STILL HAVE NO SKILLS! No job means BILLIONS & BILLIONS in food stamps, welfare housing, crime/drugs, jail/prison, Medicaid, kids dropping out.
REAL HOUSING, REAL TRAINING, and REAL JOBS are all people need!
No MORE "FIXING PEOPLE" VIA "CASE MANAGEMENT" & "GROUP THERAPY" INSANITY!
it is time to go after the ones who created the mess and i am talking about those who do not pay taxes. they are the biggest burden to this state and pay nothing, time to tax all levels of income. paying taxes is what made this country and you are going to run out of the rich's man money, it is time to tax all citizens to pay for this states woes.