Lawmakers, governor debate whether to extend taxes permanently

By David McGrath Schwartz

Sunday, May 29, 2011 | 2:47 p.m.

The fight over "sunsetting" taxes is so fun this session, Nevada just might do a replay in 2013, when the Legislature meets next.

As Democratic lawmakers and Republicans, including Gov. Brian Sandoval, tried to negotiate a deal on Sunday, one sticking point was this: Would the Legislature and governor agree to permanently put taxes passed in 2009 into law, or temporarily extend them for another two years?

Sandoval is insisting that the taxes only be extended until 2013, according to sources with knowledge of negotiations. If that $672 million is only temporarily extended and scheduled to go away in July 2013, it would create another, likely contentious tax fight in the next legislative session.

Democrats said their preference was to permanently put those taxes in law.

Sandoval was negotiating with Democrats over extending at least a portion of those taxes to finalize a budget deal.

He backed off his strict no-tax policy after Thursday’s Nevada Supreme Court decision, which negated a 2010 money grab by the Legislature. Sandoval’s office said the precedent that case set potentially blew a hole in his budget as high as $650 million. Unwilling to make those further cuts in his budget, he said he would reconsider taxes passed in 2009.

Multiple sources on both sides of the budget debate said whether to make those taxes permanent was still a source of contention.

Also in play: Assembly Republicans were holding out for more changes to the construction defect statute.

Assemblywoman Debbie Smith, D-Sparks, said she “had no idea why we’re bargaining K-12 funding for construction defect.”

Assembly Republicans, including some who own contracting businesses, said the statute heavily favors trial lawyers. Sandoval and Republicans are seeking other changes to how state government operates, including changes to the state’s education system to make state law supersede collective bargaining agreements and change the governance structure of education in the state.