Gibbons seems to be backsliding on pledge to not raise taxes

By David McGrath Schwartz

Saturday, Feb. 13, 2010 | 2 a.m.

For all his promises to not raise taxes — and he considers fees as taxes — Gov. Jim Gibbons seems to be proposing just that as a way to solve the state’s budget crisis.

Among groups targeted by increases in fees and other charges in Gibbons’ plan to address the state’s revenue shortfall are poor parents of children insured by the state, inmates and disabled veterans.

In his State of the State speech Monday, Gibbons said: “In this tough economy, we cannot ask our citizens to pay new taxes. They have nothing left to give. We cannot ask our businesses to pay more taxes. Many of them are struggling just to stay open ... I reaffirm my word to you tonight: As long as I serve as your governor, I will not raise taxes.”

Gibbons was asked by reporters after the speech whether he would consider raising fees to fill the $881 million deficit, as some legislators have suggested. He said he would not, citing his belief that “fees are taxes.”

The governor’s remarks indicate he either has a more nuanced interpretation of the revenue increases in his plan or isn’t aware of everything his administration has proposed.

The proposed increases, which the Legislature will consider during a special session this month, include:

• Higher fees for restaurants to fully cover the cost of health inspections. This would raise $550,000.

• An increase in the health insurance premiums paid by 12,000 poor families whose children are insured through Nevada Check Up. The proposal would increase fees from $25 to $75 per quarter for some families, and $80 to $180 for others, depending on income. This would raise $1 million.

• Raising by 8 percent the rates paid by veterans and their families at the nursing home for veterans in Boulder City. This increase was approved by Gibbons and the other two members of the Board of Examiners on Tuesday. It is expected to raise $350,000.

• Higher fees for birth and death certificates. Health and Human Services Director Mike Willden told a legislative committee this week that the state could raise about $368,000 by increasing the cost per certificate from $13 to $20.

• A one-time charge to prison inmates based on the electronic devices they own.

In 2007, soon after Gibbons took office, his general counsel issued a memo to department heads clarifying the governor’s stance on fees. “New fees would run afoul of the governor’s policy,” then-general counsel Josh Hicks wrote.

So what has changed, other than the state’s vast deficit?

Lynn Hettrick, Gibbons’ deputy chief of staff, said no new memo or order has gone out to departments. “The governor is against fee increases,” he said.

Hettrick said some of the increases can be attributed to department heads, who submitted lists of cuts and other savings equaling 10 percent of operating costs.

“The governor has looked at the list of cuts, but he has not gone down to reading every word and every cut,” Hettrick said. “There are 86 pages.”

Dan Burns, Gibbons’ spokesman, attempted to clarify the governor’s position on taxes and fees.

“If the group that pays the fee agrees to pay the fee, and the group that pays the fee gets the advantage of the fee, then the governor won’t stand in the way,” Burns said.

He offered the higher rates at the veterans home as an example: Veterans groups turned out to support the increase, noting that it would preserve the home’s standard of care.

Gibbons was elected in 2006 on the promise that he wouldn’t raise taxes. To much fanfare, he also signed the Taxpayer Protection Pledge during that campaign, and has seemingly staked his re-election to the claim that he has kept that promise.

But Nevada’s keeper of the oath, Chuck Muth, president of the conservative group Citizen Outreach, said there’s no exemption to the pledge if affected groups voluntarily agree to fee increases.

“Usually they’re agreeing with a gun to their head,” he said.

Muth said the restaurant inspection fee increase would clearly violate the pledge. But it’s less clear for the health insurance premium increase. He compared it to a college tuition increase, which Muth said does not violate the pledge.

“You have the option of not going to college. You have the option of not opting into the health care program,” Muth said. “It’s not a mandatory fee.”

Muth criticized Gibbons last year for including a hotel room tax increase in the budget he submitted to the Legislature. Gibbons defended the move, saying voters in Clark and Washoe counties had approved the increase in an advisory ballot question. In a move that critics described as an attempt to have it both ways, Gibbons allowed the room tax increase to become law without his signature.

Burns said the increased costs of children’s health insurance premiums “are neither fees nor taxes.”

“It’s an example of a product that has simply become more expensive for the state, and the raise in premiums is just an increase in cost, for something that costs the state more money,” he said.

This parsing over whether a fee is a tax, and what fee increases are acceptable to conservative constituencies misses the larger point, said Eric Herzik, professor of political science at UNR.

Even Gibbons doesn’t think state government is so bloated that you can cut $881 million from its budget, he said.

“This is splitting hairs. No new taxes, but these fees are OK? It shows that his no-new-tax pledge can’t get you there.”

The $418 million in cuts and revenue increases that the governor’s staff have proposed will address less than half of the deficit. To cut the entire $881 million would equal close to 20 percent of state spending, something that neither Gibbons nor his staff has proposed.

Instead, Gibbons and lawmakers are looking at ways to raise revenue, from raiding local government funds collected for public work projects to using cameras to find and ticket uninsured motorists and unregistered vehicles, which the administration predicts could raise $100 million.

Herzik characterized the camera-enforcement proposal as “using an intrusive regulatory regime not to boost compliance — usually the goal of regulation — but as a way to generate money.

“This isn’t about noninsured drivers. This is about making money off a government regulation. It’s the very thing conservatives go ballistic over ... It shows that the magnitude of cuts he’s faced with is just going to be politically unpalatable.”

After his speech Monday, Gibbons was asked why he did not propose more cuts to operating expenses.

He responded by accusing a reporter of not understanding the budget. “You would take the budget, 54 percent of which is education, and throw it out the window,” he told the reporter.

Asked then why he had called the state budget bloated in his speech, Gibbons said he had been referring to prior budgets, not this one.