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August 1, 2014

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Nevada’s influence on taxes may disappear in 2013

In the past 5 1/2 years, Nevada’s representatives have created a sphere of influence in Washington when it comes to taxation.

Despite its somewhat small stature, Nevada has continuously had up to three seats on the two committees — Ways and Means in the House and Finance in the Senate — charged with controlling the lion’s share of U.S. tax policy.

It’s been a period of outsized political clout for the Silver State.

But as the country gears up for a massive tax fight that many now predict will spill into 2013, Nevada is on the precipice of losing all that political capital. Come next year, Nevada’s representation on the tax committees will be zero.

Jon Porter

Jon Porter

“It’s a real loss, a serious loss,” said former Nevada Republican Rep. Jon Porter, who served one term on the Ways and Means committee alongside Democratic Rep. Shelley Berkley.

Together, Porter explained, they posed an imposing front.

“To have a small state on both sides of aisle was pretty powerful,” he said. “Other members know: We’re not going to mess with Las Vegas.”

Las Vegas, and Nevada generally, has much at stake in the policy debates that filter through the two main taxation committees:

• The perennial sales tax deduction, worth almost $1,500 to Nevada families and over $450 million a year to the state as a whole.

• The expiring mortgage refinancing tax deduction, potentially worth tens of thousands to any Nevadan underwater on a home loan.

• The state’s fast-growing Medicaid- and Medicare-eligible populations and near billion-dollar unemployment insurance obligation to the federal government — issues not typically thought of as tax issues that are still considered by the committees.

Rep. Shelley Berkley, D-Nev., attends the Memorial Day Ceremony at the Southern Nevada Veterans Memorial Cemetery in Boulder City on Monday, May 28, 2012.

Rep. Shelley Berkley, D-Nev., attends the Memorial Day Ceremony at the Southern Nevada Veterans Memorial Cemetery in Boulder City on Monday, May 28, 2012.

Nevada’s tax dynasty started in 2007 when Porter and Berkley were appointed to Ways and Means while erstwhile Sen. John Ensign nabbed a seat on Senate Finance. Ensign kept that seat through his scandal-ridden next congress while then-Rep. Dean Heller replaced the ousted Porter on Ways and Means.

“Arguably, we had too much influence for a small state: You had both senators involved in major committees and two of three congresspeople? We probably swung the pendulum too far one way, and now we’re going back,” said Eric Herzik, professor of political science at UNR. “Does that hurt Nevada? Well it certainly doesn’t help Nevada when you’re not in the room where major decisions are being made.”

Being on those committees, as Herzik and former members explained, is often as much about playing defense as it is about playing offense.

Gaming and mining taxes? Non-starters with Nevadans at the table.

Cutting alternative energy tax incentives? That’s more politically divisive but an issue where the interests of Nevada, as an eager national petri dish for alternative energy development, would not necessarily find natural defenders in other states.

The committees can also be a platform for proactive lawmaking.

Berkley may be the best example of that: She has had the longest tenure on a tax committee and is the only Nevada House member to have spent the bulk of her time in Ways and Means in the majority. From that perch, she co-authored legislation on tax incentives for small businesses and extending the alternative minimum tax. She also made a push for a reduced estate tax that ended up being incorporated into 2010’s year-end tax bill.

The Nevada Taxpayers Association credits the Nevada delegation’s team effort the past few years with keeping the sales tax deduction on the books.

“That’s a case where you’ve only got five or six states that are in the same boat as we are, so you know that our delegation has to convince the others to go along,” said Carole Vilardo, president of the NTA. “That’s something to me that is provable as to where an impact can be made.”

Vilardo’s not convinced, however, that the delegation’s foothold on Ways and Means and Senate Finance is the only key to influencing tax policy.

She recently noticed, for example, that hearings on the sales tax exemption were happening in a surprising place: the House Judiciary committee. And the last discussion of taxes she’s been keeping tabs on is related to transportation — a debate before the Senate Environment and Public Works and the House Transportation committees.

“So I don’t know, am I concerned with tax committees — am I? Because it seems this stuff gets filtered all over the place,” Vilardo said. “For us, it’s the impact of how it’s going to come down to the state level, or even the local level, that we look at.”

Rep. Dean Heller, R-Nev., is seen in his office on Capitol Hill in Washington on Tuesday, March 15, 2011.

Rep. Dean Heller, R-Nev., is seen in his office on Capitol Hill in Washington on Tuesday, March 15, 2011.

A spokesman for Heller, who gave up a two-year stint on the Ways and Means committee when he was appointed to Ensign’s Senate seat, made a similar argument.

“Clearly, having a voice on (the Ways and Means) committee, it increases the clout of the delegation. But there’s other committees that are important to the state of Nevada, as well,” said Stewart Bybee, Heller’s communications director. “But the House, the Senate or Congress in general, it’s an institution of relationships. ... Obviously in the committees you sit on, you have direct influence, but there are other ways to influence the process.”

Berkley, who is running for Senate against Heller, will give up her seat on Ways and Means at the end of the year. Her spokesman declined to comment on the record for this article.

Still, Heller and Berkley make a point of carving a place for themselves early and often when it comes to tax legislation. Berkley has recently filed bills concerning sales taxes, energy taxes and mortgage forgiveness tax deductions. Heller has filed legislation on energy taxes and mortgage forgiveness, and penned letters on the sales tax issue.

Whether those bills go anywhere remains to be seen — but if they falter, it may not be because of a lack of committee-centered clout.

“In today’s environment, you can’t pass anything in normal committee procedures,” said David Damore, political science professor at UNLV. “There’s always some sort of stopgap; it always rises to a leadership level ... and there, you’ve still got (Harry) Reid, so that’s not going to change.”

As Nevada has built up its clout on the tax committees, Congress has become more politically divided. That means an increasing number of decisions have moved out of the committee room and to the final negotiating table, where Reid ends up shouldering the state’s delegation-wide interests, from Yucca Mountain appropriations to state-centric tax deductions. Reid’s office did not return requests for comment for this article.

Click to enlarge photo

John Ensign announces he will not seek another term during a news conference at the Lloyd George Federal Building in Las Vegas on Monday, March 7, 2011.

“The larger point is that it does show that the Ensign loss matters,” Damore said.

Ensign’s departure touched off the scramble for his Senate seat that, as a byproduct, is wiping Nevada’s tax committee slate clean.

“He did have a powerful position. He was working his way up; he was in his party leadership ... before he got demoted. We would have been protected either way,” Damore said.

“We’re going to essentially have an almost brand-new congressional delegation,” Herzik said. “These people have absolutely no clout. I think that’s the bigger issue: Not only are they not going to be on power committees like Ways and Means, they’re going to be the lowest-ranking unknown member on any committee.”

Rep. Joe Heck, if he wins re-election, will be Nevada’s most senior member of Congress after Reid, with barely two years under his belt.

Of course, there’s a chance the delegation could once again start punching above its weight class when it comes to tax legislation.

The victor in the Senate race could make a bid for a seat on Finance, where a vacancy will open up for each party because of retirements next year. Heck could choose to trade on his current assignments and use his sway with House Speaker John Boehner to nab an open spot on Ways and Means.

And while coveted Ways and Means slots are usually captured by those who have had the time to build some cache in Congress, a freshman could claim one in the name of continuing Nevada’s service on the panel. It’s not unprecedented: Ensign got one as a freshman back in 1999, only to abdicate it two years later when he left for the Senate.

“Is that important? It very well could be,” Vilardo said. “If your delegation is sitting on committees that have control of the issues that are important to your state, that is critical. ... But like everything else, it depends on what you’re doing with it.”

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  1. Because the Nevada Constitution's tax laws were written to favor the MINING industry's interests, just about anything done on the Federal level has a minimal effect for citizens. This could very well be the reason why our state representatives are bailing out to greener pastures.

    As Vilardo said, ""If your delegation is sitting on committees that have control of the issues that are important to your state, that is critical. ... But like everything else, it depends on what you're doing with it.""

    There you have it, and one of the reasons why the writer of this article was UNable to ellicit a statement or response from our current representatives! As they say, "Charity begins at home," and Nevada State Legislators really need to address the tax issues here to be effective.

    When you have nearly half of Nevada's population illiterate or apathetic, they won't put pressure on our LAWMAKERS because they aren't motivated to do so and we get the government that we ask for, which is what we are witnessing today!

    Blessings and Peace,
    Star