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November 27, 2014

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MEMO FROM CARSON CITY:

Elite group met secretly to discuss budget, taxes

Image

Justin M. Bowen

Gov. Brian Sandoval addresses the Las Vegas Chamber of Commerce Wednesday, January 26, 2011 at a luncheon held at the Four Seasons Hotel in Las Vegas.

Sandoval Speaks to Chamber

Gov. Brian Sandoval addresses the Las Vegas Chamber of Commerce at a luncheon at the Four Seasons Hotel in Las Vegas on Wednesday, Jan. 26, 2011. Launch slideshow »
John Oceguera

John Oceguera

Steven Horsford

Steven Horsford

Gov. Brian Sandoval’s suspicion that business leaders and Democrats have been secretly meeting to hatch a plan to raise taxes turns out to be true.

The Sun has confirmed that state Senate Majority Leader Steven Horsford, D-North Las Vegas, and Assembly Speaker John Oceguera, D-Las Vegas, met repeatedly last year with a group of about 10 business executives described as “captains of industry” to come up with ways to reform government and identify what taxes could be raised to address the state budget deficit, which some estimates put at $2 billion.

It’s unknown whether they met in a “Bat Cave,” as Sandoval told a friendly Las Vegas Chamber of Commerce crowd Wednesday.

The governor was calling out his critics, after Democratic leadership spent most of the week pummeling his budget and its cuts to schools, higher education and services to the needy. Democrats have for months said they don’t believe cuts alone can balance the budget without undue harm to state government and the services it funds.

Sandoval, who ran on a pledge not to raise taxes, told his critics that if they didn’t like his budget, they should place their cards “face up” and reveal their plan.

But Democratic leaders said it was too early for them to talk about raising taxes — at least publicly.

Privately, there has apparently been plenty of talk.

Many of the business leaders who met with Democratic leadership would only discuss the group on the condition of anonymity because the meetings were to be confidential. The group included, among others: Keith Smith, president and CEO of Boyd Gaming; Marybel Batjer, Caesars Entertainment’s vice president of public policy and communications; Billy Vassiliadis of R&R Partners; Tim Crowley, president of the Nevada Mining Association; and Steve Hill, past chairman of the Las Vegas Chamber of Commerce and, interestingly, also head of Sandoval’s economic development transition team.

“The majority leader and speaker wanted to know where we’re coming from ahead of this session,” Hill said. “The chamber wants to be part of the solution.”

Hill said at Horsford and Oceguera’s request the group met about 10 times over the better part of a year and discussed a variety of issues — consolidation of some state agencies and services, other government and education reforms and taxes that could potentially be raised.

Two taxes emerged as the most palatable, according to several members:

• a sales tax on services to reduce the sales tax on tangible goods: Currently, only tangible goods, except for most groceries, are subject to a sales tax. Services — from hair cuts to accounting and lobbying — are not taxed even though the economy has become progressively more service-based.

• a Texas-style “franchise fee” on businesses to replace the payroll tax: In Texas, the tax is based on annual revenue and exempts companies with revenue below $300,000. The group had not determined a similar number for a Nevada franchise fee. Such taxes are sometimes compared with a modified gross receipts tax, the tax former Republican Gov. Kenny Guinn proposed in 2003 and the Legislature rejected. Hill said the chamber, a leading opponent of the tax in 2003, still opposes a gross receipts tax, but views the franchise fee favorably.

The group made no formal agreement on a tax plan, members said.

“The implication that there is ... some grand plan that has been agreed upon is, in my mind, an inaccurate depiction of any of those conversations,” Hill said.

Crowley said the group was “kicking the tires” on such ideas.

Following Sandoval’s State of the State address and unveiling of his budget Monday, the Legislature began holding hearings on the governor’s plan. The Las Vegas Chamber of Commerce, the Nevada Mining Association and Nevada Resort Association — the largest gaming group — said they’re still assessing the budget. But all expressed immediate concerns about the level of cuts, particularly to education.

Sandoval’s budget includes cuts of 9 percent to school districts and 17.66 percent to higher education.

“We’re certainly concerned about the impact of the cuts,” Hill said. But “the governor certainly is right that it’s a very difficult time to raise taxes on anyone.”

The business leaders have not met since December. Members and lobbyists close to the group said the election, which saw Republicans make gains in the state Senate and Assembly and gave Sandoval something of a mandate, drastically reduced their odds of passing a tax increase. The retirement this month of longtime state Sen. Bill Raggio, R-Reno, further diminished their chances.

“I don’t know how the Legislature gets (a tax increase) through given the election results,” one member said.

Another lobbyist with knowledge of the group’s discussions said any tax proposal the group favored is unlikely to pass. “If it’s not dead, it’s on life support,” he said.

Republican legislators, however, have been mostly quiet on Sandoval’s budget in committee meetings.

The 2011 Legislature begins its 120-day session Feb. 7.

Oceguera and Horsford downplayed the significance of the group’s work.

“We’ve had lots of meetings with business leaders, formally and informally,” Oceguera said. He noted that lawmakers were listening to constituents on Saturday at hearings in Las Vegas and Reno.

But another member said “thousands of hours” were spent gathering data, examining the state’s finances and discussing potential tax increases.

Oceguera said the Legislature will go through a deliberative process and make more cuts, long-term reforms, develop an economic development strategy and “vision for the future.”

“Once we do all those things, we’ll see what the number is,” he said. To talk about taxes now, he said, “I think you’re taking a big leap.”

Click to enlarge photo

Gov. Brian Sandoval makes his first State of the State address before a joint session of the Nevada Legislature as Assembly Speaker-elect John Oceguera, D-Las Vegas, background, looks on, in Carson City on Monday, Jan. 24, 2011.

Horsford said last week that Sandoval’s budget cuts disproportionately affect lower- and middle-class Nevadans. But he, too, said it was early to talk about taxes. In a statement Friday, he added, “Any ideas that protect middle-class families, our kids, and our businesses should be considered ... That’s why I actively reach out to people from all across Nevada.”

The meetings with business leaders make sense from a certain perspective. High-ranking Nevadans who care about the state want to be on the same page, working from the same information.

Horsford and Oceguera need the support of such business leaders to have even a faint hope of raising taxes, which requires support of a two-thirds majority in both houses. (That would require three Republican senators and two Republican assemblymen, if Democratic leadership can hold all their members — which is also far from a sure thing.)

But with Sandoval obliquely accusing the opposition of clandestine meetings, the revelation of the elite group of business leaders also strikes a blow to Democratic legislators’ claims of transparency and openness about their intentions.

Indeed, Democratic leadership’s comments on taxes last week are reminiscent of the 2009 Legislature.

During that session, leaders opposed Gov. Jim Gibbons’ budget but waited until the final days of the session to introduce a tax increase. As late as April they still publicly said they did not know whether a tax increase would be necessary even though they had been working on a tax plan for months.

The justification for this strategy goes back to 2003, when Guinn announced before the legislative session that he would pursue a gross receipts tax and then watched as opposition mounted to his tax bill, leading to a notoriously contentious session.

(Ironically, Guinn’s leading advisers are advising Sandoval.)

Democratic leadership, moderate Republicans and many of the state’s largest businesses have said they believe that raising taxes is necessary to preserve state services, particularly schools and higher education.

The business leaders who met with Horsford and Oceguera forwarded a list of recommended consolidation ideas to Sandoval’s transition team, according to a source close to the administration. They never forwarded any recommendations on taxes.

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  1. There is lot of talk about businesses not wanting tax increases. Well, nobody wants them but think about it - when schools have huge classes and the universities raise fees so anyone with sense (and dollars and cents) goes elsewhere, and when there are riots in the streets - well see how many businesses come here then!

  2. I agree with the vegasbike. The headline using the term "secret" is misleading. Private meetings is probably a better term.

    People meet and talk about stuff all the time. It is a good thing that discussions and negotiations take place in private. The fact that the Sun was not invited constitutes good decision-making and not a secret.

  3. Sounds like a lot of political grandstanding, pushing and pulling, to tax or not to tax, to cut more budgets, blah blah blah blah.

    And while all these fat cat politicians are giving blowhard speeches and trying to villify each other's sides, WE, the people of Nevada, are out here strangling on our own puke.

    These political hacks in Nevada need to start listening to people in these town hall meetings being conducted. If they actually paid attention, they'd realize the people out here seem to be more interested in what goes on...more than these political types who are desperately trying to hold onto their jobs and striving to hit some kind of moral high ground to keep their voters.

    Whatever happens, I know one thing for sure.

    The next elections will be catastrophic.

    Need to throw everyone out. Start over again.

    They work for us. We don't work for them.

  4. When our dear Governor has a private meeting with the greedy business leaders to plot the destruction of Nevada it is alright. Let somebody else meet without Gods (Sandoval) approval then that is a plot.

    It is good to know that some of our legislators realize that something needs to be done rather than cut the State of Nevada to death. It sounds like some business leaders do not have their heads up their ---. It is funny to watch legislators on TV, they are unwilling to say anything about the "T" word. Any additional cost to business and the taxpayer will be a tax, even if you call it a fee, revenue increase, or cost increase it will still be a tax increase. Money that goes to the state is a TAX. They are willing to push the expense of doing business off to the counties and cities and let them be responsible for hiking fees, cost and revenue increases on to the taxpayers. Our Governor has some good ideas and I would like to see some of them incorporated (reduction of duplication of services)but he cannot continue to gut the state.

    The legislature has dropped the ball the last two sessions, now it is time to pick up the ball and run. If they fail this time the state could be on the verge of collapse.

    I think what the legislators do not realize is that most level headed citizens realize that something has to be done and are willing to bare the cost. After all I enjoy being able to drive down nice paved highways, being able to call fire or police if the situation arises. I like sending my kids to nice schools. These are just some of the things our taxes pay for and if it cost a little more I am willing to pay for it.

    This last Bush tax extension the federal government passed through saved me $13.60 a paycheck if it would reduce some of the debt and put people back to work they should have kept it. This did nothing except increase the national debt (by the Republicant earmarks that were attached)and put Social Security (which Republicants would like to eliminate because they do not want to pay back the taxpayers money they spent recklessly) into further debt.

  5. Meanwhile, Sandogibbons met secretly with his own group about running for governor while sitting as a federal judge, then joined a law firm with major lobbying business before the state, and HE is being critical? Apparently, he doesn't just want to gut Nevada; he doesn't mind being a complete hypocrite as he does so.

  6. The business elite is responsible for the mess the state is in. The foxes that have butchered the hen house are now getting together in a secret star chamber to talk about restocking the hen house. (so they can raid it again) This violates the open meeting law and a law suit should be filed immediately.

    Let's see, get US Steel, Standard Oil, Penn Central Railroad, RCA, etc. together to to talk about the "future economy?" The new ideas (that are in a dorm room, a garage, or a "hole in the wall incubator" office) are what is needed, not the status quo hacks who want to bail their bacon out of the fire.

    It is not surprising that Governor Brian Somoza would meet with fat cat aristocrats after his obscene "inaugural ball" that was an affront to all struggling Nevadan.

  7. Once again the headlines of The Sun puts a biased spin on their headlining article. The comments made on this article are spot on. When season legislative veterans like Horsford and Oceguera, with a history of working on behalf of their constituents, meet with local businesses to discuss measures to improve our economy, I trust their judgement. They're concerns reflect the voices of the people who were present at the town halls in Las Vegas and Carson City yesterday. Shame on The Sun for trying to paint this as anything other than our TRUSTED legislature doing their job to find a way out of this states financial troubles and I applaude the businesses that attended this meeting. Assumingly, these companies that attended felt the need to contribute to the solutions our state needs to get us out of the financial ditch. Unlike my freshmen representative, (Michael Roberson, whose tired mantra of "no new taxes" contributes no constuctive solution to this states recovery. Joyce Woodhouse, it's times like this that your levelheadedness is sorely missed!) its good to see these legislators taking steps in a new direction, where the businesses of the community will contribute to the welfare of our economic recovery. Thank you, John and Steven for thinking outside the box, and thank you to the companies that were willing to meet with them, for what, I assume, is your concern for the people of Nevada and our great states economic recovery.

  8. mred,

    There is NO open meeting law when it comes to business people of this state getting together and discussing the state.

    You really should think before posting.

  9. "But Democratic leaders said it was too early for them to talk about raising taxes -- at least publicly."

    That pretty much tells you what you need to know.

    The word Democrat and Tax go together. Our cities, states and country don't have a low tax problem, they have a high spending problem.

    The real challenge is to find something that isn't already taxed... at least once.

  10. Saying "no new taxes" plays well with the public as a sound byte. The reality is with the depth of the deficit we cannot simply cut our way out of this. It is financially impossible.

    After reading some of the reactions to this meeting, I understand why it was held privately. Nobody wants to raise taxes, but it is incredibly naive to believe that cutting alone will get us out of this mess.

  11. Mining is one of the big ticket items that could help significantly.

    The other is a state lottery. Yes, a lottery impacts the poor more than anyone else, but we already do that here in Nevada. Given how close to California our population centers are many play that state's lottery, taking money out of Nevada.

    I see little downside to either proposal, and several side benefits.

  12. It seems that the Chamber of Commerce dined at the sumptuous Four Seasons on a menu of Liver of Eviscerated College Student as the appetizer, a salad garnished with lardons of Elementary School Teacher, a main course of Skewered County Programs and desert was Flaming Baked Nevada. Flaming Baked Nevada is made by covering an Adobe Brick with sweet fluffy meringue and setting a flame. You really cant digest it but it looks pretty burning. And the funny thing was THEY DIDN'T HAVE TO PAY FOR IT. We will.

  13. Tax Mining, Casinos - they're willing to pay almost 40% in Macau, but less than 7% in Nevada. Start a State lottery. Start a Progressive State Income Tax while reducing Fees impaction the Poor, Retired and Middle Class. There are many Billionaires in Las Vegas that should contribute more than their occasional "token" civic donations. Low Taxes, a lack of Regulations and Real Estate Speculation have gotten this state where? Education, Business diversification and Planning have been nothing but slogans over 40 years.
    Sandoval is proposing doing the same thing over and over and expecting different results. His Political ambition is to be Senator, He is not a Leader.

  14. Raising or eliminating the mining tax cap would take four years as correctly pointed out above. But it is possible to change the deductions in the legislature. In the meantime, it's never too early to start building support for a ballot initiative.

  15. Nevada should seriously look into starting a state bank based on North Dakota's model before doing anything. If North Dakota can prosper . . . think what Nevada could do.

  16. Government officials are at the meeting and they are using government money to get there.

    Are you giving me legal advice veagaslee? I didn't realize I hired your as my attorney.

    The Republican oligarchs are meeting to take over the country and buy the next election:

    http://www.kpsplocal2.com/Content/Featur...

  17. A 20% surtax on Gold mine profits over $1000 an ounce. Gold mines are not paying their share.

  18. To all those folks that maintain higher taxes are the only way; that 40% seems better than 7%... That feel they don't pay enough...

    You're more than welcome to get out your checkbook and stroke a check.

    The big liberal lie (hypocrisy) is that they always want to tax the rich (except themselves), tax the rest of us (except themselves).

    Ask Harry Reid, Barrack Obama, Nancy Pelosi, John Kerry or any of the other wealthy Democrats who constantly call for taxing the rich; when was the last time any of them called their accountant, tax attorney, etc. and said:

    I'm not paying my fair share. I'm instructing you to NOT TAKE ADVANTAGE of every tax loophole, dodge, deduction or means to lower my tax liability. In fact I want to voluntarily increase my payments to the state and federal revenue offices. And I don't want a refund.

    But in fact, they WILL take advantage of every opportunity to pay less, reduce their tax liability and pay well the firm that reduces their payments to the lowest possible payment.

    Some will cheat and lie as we have seen. I.e. Charlie Rangle to name just one.

    Raising taxes doesn't affect the rich because they can afford to employ strategies that avoid higher taxes. They hire firms to do it for them. The truth is that higher income taxes only affect the middle class and higher use taxes only punish the poor. Higher gas, sales and other such taxes are regressive and only hurt the lower income folks. You think someone who can afford a million dollar home and a 100K car is hurt by those? Not likely.

    The great liberal lie, the great liberal hypocrisy is that higher taxes by the rich help and are fair. The truth is that in general, they don't pay them.

    But you do.

  19. Secretly? Come on, LV Sun, you know better than that. Shame on you.

  20. Those that can afford $600/bottle for vodka, asking for Shared Sacrifice is too great a request, they give us jobs and industry - let them be!!

    -Brian Sandoval

  21. IF THERE ARE SO MANY PEOPLE IN FAVOR OF RAISING TAXES AND INCREASING SPENDING, WHY MUST WE RAISE TAXES? It seems to me all these people will simply make Donations to the Government to support the programs they like.

    Lets start with schools. All parents of enrolled students who are able will donate at least $30 per month per student. Those who aren't so able can donate a lesser amount. How ever much they raise will be the budget the schools have to spend.

    IT IS TIME FOR PARENTS TO FEEL THE COST-BENEFIT RELATIONSHIP OF THEIR EDUCATION DOLLARS.

  22. Thomas Pearl....the universities raise fees so anyone with sense (and dollars and cents) goes elsewhere.... what you are telling me is the higher education system does not provide enough quality to justify it's $4,000 per year tuition !!

    Thomas Pearl, You are not the first to say this. Our education system is substandard and the very low tuition accurately reflects its value and quality.

    Tuitions must be raised before the leaders at the University will see how poor their quality is.

  23. @Rick Korbel - I think education should be everyone's responsibility. Doesn't matter if you have kids or not, or whether they're still home or not(personally, mine are grown and gone). Our state will be only successful if the people we raise to staff the businesses, start the businesses, and take leadership positions are qualified to do so.

  24. For all those who support tax increases...

    LEAD THE WAY AND MAKE DONATIONS TO THE SCHOOLS AND PROGRAMS IN WHICH YOU SUPPORT !!!

    I know many parents with kids enrolled in Clark County Schools can afford at least $30 per month per child and many more can afford $15 per month per child.

    Stop complaining and write the check. That is showing leadership!!

  25. John Oceguera looks like a serial killer.

  26. Steven Horsford looks like a poster boy for Keds sneakers.

  27. Raising taxes is the easiest solution for politicians, however, this is not the case in this very bad economy of Nevada. First of all governments at all levels need to be reduced in size, by removing multiple departments, bureaucracies and inefficiencies. In addition, unions of public workers need to be eliminated, by a general vote of the public if necessary; a reduction in pensions and an additional reduction in salaries, especially for the those paid above the salary of the governor, $141,000, should also take place before any attempt at increasing taxes on a population with a 14%+ unemployment rate.

  28. taxing services is going to get passed right back to the consumer. get ready for a 30 dollar oil change plus tax , 20 dollar haircut plus tax............these small businesses have small profit margins already . just another tax on hardworking citizens .

  29. All the Democrats know is tax, tax, tax. To claim that the budget can't be balanced by cuts without raising taxes shows what the liberal mind-set is. If the budget is cut ENOUGH, the balance will occur. The problem is that the Dems in the Legislature don't want to cut the budget that much. It's pretty simple. As an example, let's say that I had a job making really good money. While my income was high I went and bought a new car, a new refrigerator and a new living room set, all financed. Then my wages got cut in half. Would I not sell these items to bring my budget in line? Pretty simple.

  30. To Brass (Dale Swanson): Good post! You aptly illustrate how easy it is for the politicians to spend SOMEONE ELSE'S MONEY. On numerous occasions I have suggested that the "more tax crowd" start sending weekly checks from their personal bank accounts to the Nevada Treasury. But, I doubt they have. They just want to TAX SOMEONE ELSE. And, yes, what about Charlie Rangel? He still has his job?! Why isn't he in jail for tax evasion? You or I would be.