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September 20, 2014

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POLITICAL MEMO:

For now, delay of tax study lets politicians off the hook

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Sam Morris

Rory Reid, the Democratic candidate for governor, says he is working on a budget proposal in a “deliberate, methodical” way.

Steven Horsford

Steven Horsford

Bill Raggio

Bill Raggio

Sheila Leslie

Sheila Leslie

Brian Sandoval

Brian Sandoval

Nevada’s tax structure has been studied ad nauseam over the decades.

Each effort has unfolded in roughly the same way: Lawmakers hire an analytical firm. The firm pokes around and ultimately concludes Nevada relies too much on sales and gaming taxes and must diversify its tax base. Lawmakers then lament the instability of the tax base but do little to alter it, instead enacting incremental changes they hope will be politically palatable.

This time, however, Senate Majority Leader Steven Horsford, D-North Las Vegas, pledged it would be different.

This time, a committee of community “stakeholders” would develop a vision for improving Nevada’s lagging quality-of-life indicators. At the same time, an objective analytical firm would be hired to provide a sound analysis of the state’s wobbling revenue structure and suggest “broad-based” tax solutions to stabilize it.

The analysis and committee work would be done by July 1. Public opinion would be gauged. Lawmakers would build consensus. A bill would be drafted. And when the Legislature convenes in February, it would be on its way to passing meaningful reform that might help prevent the cyclic budget crises it has dealt with.

July 1 has passed with neither a strategy for improving quality-of-life indicators nor a completed tax analysis. In fact, legislative staff is renegotiating a contract with the firm that was hired, Moody’s Analytics, and a divided Vision Stakeholders Committee is at a standstill.

Although the situation poses problems for legislative leadership, it’s also affecting the political realm.

Candidates for state office have a convenient excuse to delay discussing their solutions for the most pressing issue facing lawmakers next year: a looming $3 billion deficit that threatens to eat almost half of the state budget.

“It’s a wonderful bailout for those who could just simply say ‘I’m going to wait for the tax study,’ ” said former state Sen. Randolph Townsend, R-Reno, who has long pushed for a consensus reform of the tax structure.

Legislative Counsel Bureau Director Lorne Malkiewich said last week it’s unlikely both the committee report and tax analysis will be done before the Nov. 2 election. His staff is negotiating a contract extension he hopes won’t cost the state more money.

The deadline for the report and the study would be staggered, and could stretch past November.

Horsford did not return repeated phone calls last week seeking comment on how the blown deadline will affect his plan to push revenue reform in the next legislative session.

Senate Minority Leader Bill Raggio, R-Reno, who balked at the way Horsford crafted legislation calling for the tax analysis and creation of the stakeholder group, said he’s in the dark as well.

“If you know anything at all, you know more than I do,” he told a reporter. “I have not attended any meetings nor am I getting any reports. That was due July 1, but we didn’t get it.”

This delay could provide political cover for candidates, particularly state Senate candidates backed by the Senate Democrats. Had the study come out with recommendations for a broad-based tax increase, those candidates would be forced to take a position. That could be incendiary in a year Democrats are desperately trying to hold on to their slim majority in the Senate.

Assemblywoman Sheila Leslie, D-Reno, who is running for state Senate in a relatively safe Democratic district, said the timeline set for the work demanded by the Legislature was too optimistic. And she said candidates need to discuss their vision for closing the budget hole.

(When pressed for her views, Leslie said she would rescind the sunset on the 2009 tax increase, make some cuts and create a corporate tax on big-box stores.)

“I don’t know that people are hiding,” Leslie said. “During a campaign season, it’s always unpleasant to talk about difficult issues. But in this situation, I don’t think our state can afford to let us avoid talking about the revenue situation.”

Meanwhile, both major candidates for governor dismissed the troubled process.

Democrat Rory Reid had been the most visible candidate avoiding the question of what to do with the budget while deferring to the Vision Stakeholder Committee. He spent the first half of his campaign deflecting the question by saying he would react to whatever that group came out with.

He said last week, however, that he’ll deliver his own proposals for solving the budget crisis. He has already stated that he doesn’t think the state’s tax structure needs fixing.

“I had hoped that the timing would be what was originally anticipated so that I could hear from them,” Reid said. “I also wanted to respect the process. But I’ve made a commitment to provide detail on the budget, and I’m going to do it.”

Reid said he’s still in a “deliberate, methodical” process of developing it.

His Republican opponent, Brian Sandoval, has also been silent on the budget and taxes.

“I am working with many experts and other interested parties on budget issues and ideas,” he said in an e-mailed statement. “Though I am not working with the Vision Stakeholder Group directly, they are an important part of the process and I look forward to their contributions to the public discussion on the budget.”

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