Las Vegas Sun

January 30, 2015

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Budget and reality

Governor’s rhetoric falls short by failing to deal with all of the options

In an effort to rally support for his budget-cutting plan, Gov. Brian Sandoval on Tuesday said the government should “function like Nevada’s families live.”

Comparing government to family has been a key theme for Sandoval as he talks about the budget. In both his State of the State speech and his televised speech Tuesday, he talked about the “Nevada family” gathering to discuss the budget. It’s a folksy analogy, like a family gathered around the dinner table to discuss balancing the checkbook.

It’s a vivid picture, but as an analogy it’s simplistic and faulty. This and other analogies being used by Republicans give the public an incomplete view of the budget. They ignore the consequences of the draconian cuts Sandoval has proposed and bypass all of the options available to the state.

Sandoval, like his predecessor Jim Gibbons, has suggested that a family that experiences a loss of income would simply tighten its belt and hunker down. This might work if someone’s pay is cut by 3 percent and decides to eat out less often, but what if it’s significantly larger? A family would look for ways to replace the lost income. Family members who aren’t working might seek employment. Someone might take a second job or look for work with a higher-paying salary. There’s also the option of going back to school to train for another career.

The state government’s situation is like a family that sees its income dramatically slashed and its savings drained. Nevada’s budget deficit is more than $2 billion. The governor’s response is to ignore what families would do and instead make massive budget cuts.

Republicans like to say the state has a spending problem, and they often use another analogy, saying government should operate more like a business. Sandoval on Tuesday called for “changing the way we do business.”

That’s another poor analogy. Government and business exist for different reasons and have different purposes. But government can take some lessons from business and operate more efficiently, so what would a business do if its revenue fails to cover its costs? The CEO would be negligent if he limited his options. The budget would likely be cut, but core services would be retained. A smart chief executive would consider all options, including looking at ways to increase revenue.

Some conservatives have suggested lowering certain tax rates but widening the tax base to businesses that currently don’t pay. But that might create a “new” tax and thus fall under Sandoval’s tax prohibition.

Sandoval says raising taxes would hurt the “fragile economy,” and he is particularly protective of business. In his speech Tuesday, he said businesses shouldn’t have to choose between hiring someone or “paying Carson City’s bills.” That’s a false choice. Many businesses are hiring and still paying their taxes.

And the taxes paid by many out-of-state companies operating here are nominal compared with what they pay in other states. Nevada consumers don’t see a benefit from that. It’s not as if prices here are lower than in other states as a result. Those companies could certainly afford to pay their fair share from the profits they siphon out of Nevada.

But don’t waste your breath telling that to the governor. In the past few months, Sandoval has said that some businesses have held off making a decision about whether to move to Nevada because of the potential that the Legislature might raise taxes.

But Wednesday, he announced that an Urban Outfitters distribution center would be built in Reno, which he said will bring hundreds of jobs to the state. So much for businesses waiting to make a decision until after the Legislature

If taxes are all a business cares about, why isn’t Nevada booming economically? Nevada has one of the lowest tax rates in the nation and is considered one of the most business-friendly states. Businesses consider more than taxes, and they see that Nevada hasn’t invested in education and other vital services the way other states have. Any business looking for a well-educated workforce will likely look elsewhere.

If Nevada wants to attract businesses and keep them, it has to invest in education. Businesses make investments in things that will pay a return, and a well-educated public has been shown to have a positive effect on a state’s economy.

The bottom line is that the anti-tax rhetoric used to support gutting state services doesn’t fly because it’s not realistic. Smart families and businesses don’t paint themselves into corners — they face reality and deal with it. Sandoval and the Republicans should start doing the same.

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  1. His family is living high on the hog courtesy of the taxpayers, free mansion, free medical insurance, free car , free air travel, etc.

    He is just a cardboard cut out propped up by a handful of law firms and think tanks. The simpleton talking points of "no new taxes" have been heard before.

  2. The economy was broken in the first place by con schemes in real estate and banking due to deregulation, not Government spending. Economic failure comes as a LACK of regulation, not because of it. Warehouse jobs buy Hoover blankets, not houses.

  3. This paper has to get over and find something else to whine about. The Governor ran and was elected by a majority of voters on a no tax platform. He has kept his word.

    Why no ask for a change what the leadership over at the legislature is doing about all of this (other than whining). Don't the Dems have a majority?

    This paper continues to dumb down the issues and ignore that the fact the legislative process. Why not write an editorial calling for Horsford to shut up and act?

  4. Jeff--sure it matters what he ran on. He ran as a Republican and won on the no tax platform.

    This paper and its readers seem to think that because he is doing what he said he would do and not behaving as a democrat is something awful and sinful. This is your liberal drone. If you find it morally bankrupt, you can't be helped.

    I also think the people who write and read this paper better remember that there is a legislature. They and they alone have the authority to tax and spend. Period. That is a factual statement, which you and this paper conveniently overlook.

    The democrats control this. The leadership should get the votes necessary to pass this stuff. The public is best served by competent leadership from both parties and the legislature and the executive. I think we see competence day in and day out from the executive (don't accept my opinion, read some of Mr. Ralston's recent columns).

  5. Both major candidates (Sandoval and Reid) made "no new tax" proposals part of their campaigns, so it is certainly true that Sandoval did not win because of that stance. I'll let others opine about what differences between the candidates were the primary reasons for electing Gov. Sandoval, but there was no difference on that issue:

    I believe that there can be plenty of plans for increasing state revenue that do not include taxes, but neither party has been promoting any serious economic expansion. Furthermore, the above editorial is correct in noting that the governor proposes cutting education (while increasing funding for welfare). That position is not a classically Republican one, but I think he has been forced into it by his insistence on no "new" taxes and his failure to offer any plans that expand the state economy or help to diversify it.

  6. Your article is fundamentally flawed in the exact same way that you say the Republican's analogy is. The state has to tighten its belt when its budget is cut just like families, but unlike them it cannot seek extraordinary amounts of new income in a short period of time.

    The State has the responsibility of government. It has a responsibility not to be tyrannical, especially in times of hardship. Any drastic tax increases that causes segments of the population to pay for other segments is the definition of selective tyranny.

    The State cannot pick up a second job or have two members of the family working. It takes its revenue from the people, ostensibly for the good of the people. A tyrannical state is one that the people no longer trust and one that does not have the people's interest in mind. Raising taxes fosters resentment and mistrust among the majority of the populace and promotes for the minority's rights at the expense of the majority. A person's money is best spent at home, where they have control over it.

    If the State wants more income then its best track would be to increase revenues by attracting new business and improving the economic climate, not by financially burdening its already suffering citizens.

  7. Mr. Greenspun, Nevada does not have the lowest tax rates in the nation.

    We have one of the lowest residential tax collection per capita as a percentage of GDP.

    That is very different than lowest tax rates.

    Please learn the difference.

  8. Firstly, in order for Nevada to recover economically, the other states in the USA must be recovering to spend those tourist/traveler dollars here. We have to look at the BIG PICTURE and then focus on the smaller state picture on financial recovery. Our nation is in an economic crisis and it is SLOWLY creeping towards recovery.

    The fact of the matter lies with Nevada having over 30 years of STATE LEGISLATURE KICK THE CAN DOWN THE ROAD POLITICS, that has come to a crossroads. We must NOW deal with it. We must put the pressure upon our STATE REPRESENTATIVES TO DO THEIR JOBS!

    Balance needs to be found in creating a positive tax revenue stream that everyone can live with. For too long, the mining, gaming/resort, and big box stores, have NOT been taxed that is in parity (say the average being taxed in all the other 49 states of the USA). How hard can this be? This type of reform is a NO-BRAINER.....unless you RELY on those industries for supporting your campaigns! Come on Nevadans, let's make our Nevada State Legislators ACCOUNTABLE AND TRANSPARENT in this dialog and or conversation here.

    BE a responsible Nevadan, contact your Nevada Representative via email, telephone, USA Mail, or by visiting their field office, and voice your concerns and expectations of them. Thank you!

  9. Mr. Greenspun,

    Why don't you save your newspaper by raising the price from free to $2 an issue?

    After all raising revenues is the only way to save a business right?

    Instead of trying to cut costs, discover more efficient ways of doing business or making people happy, why don't you raise room rates at your casinos by 29 percent.

    After all, raising rates is exactly how you save a business when people have less money to spend....

  10. Families and businesses increase their income by providing goods and services to others who PAY for them. If their goods and services were not of value nobody woud give up their money.

    Government currently doesn't have such self correcting systems in place. Once a tax is levied it never gets repealed and the people stuck paying don't have any choice but to pay.

    If you want to see the value of government services like Education, give people school vouchers and requre them to pay a small fee per child monthly.

  11. Turri:

    The platform is only a minor detail to get elected. You know that and we know that. An elected official is beholden to those who "helped" him or her get the "message" across, which later simply gets tossed along with the detritus of election.

    The true test of leadership is to find the right direction and steer the ship into that direction, whether or not that direction is popular.

  12. You know what the funny thing about all this is? A lot of you are forgetting the 2010 election altogether. Sandoval AND Reid ran on a no new taxes platform. To say that Nevadans elected Sandoval because of his no new taxes pledge is simply false.

    Also, if Nevadans preferred this all-cut no-revenue position, then why did we elect Democratic majorities in both houses of the Legislature? Simply put, Nevadans want compromise. Democrats are willing to do that, Republicans are not.