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October 2, 2014

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LEGISLATURE 2013:

Legislature, Sandoval passed the buck on tax increases to counties

It may seem like a riddle, but the Legislature effectively voted to raise taxes this year without ever really voting to raise taxes.

That’s because legislators in several cases circumvented the two-thirds majority requirement to raise taxes and instead dumped the political toxicity of a tax vote on county commissions, whose members will vote on legislatively authorized taxes later this year.

Gov. Brian Sandoval also escaped signing bills that would directly raise taxes because the bills delegate that task to counties, whose commissions can raise taxes by two-thirds supermajority votes under three bills the governor signed into law.

And the Legislature took that action by an easier path — a majority vote, not a supermajority vote — than the legislation allows the counties to take.

So in a game of political hot potato among Sandoval, legislators and local elected officials, it's county commissioners who will get stuck with making the tough tax votes. In some cases, the counties sought the authority to increase taxes.

Here are three new laws by which the Legislature enabled county commissions to raise taxes:

• In Clark County, the gas tax could soon increase under a law that would tether the existing gas tax to inflation rates. That move would effectively raise the price per gallon of gas three cents every year. Supporters of the tax say it will help pay for much-needed road projects in Southern Nevada.

• The Clark County Commission could also raise the sales tax by 0.15 of a percentage point to pay for more cops in Southern Nevada. (Voters gave the county this taxing authority in 2004, but the Legislature had to pass a bill allowing the county to raise the tax.)

• In Washoe County, a new law would allow that county’s commission to raise the sales and property taxes to pay for school repairs.

Legislators say they passed these bills because they’re essentially local issues.

“It impacts the local governments, so they should be making that decision on the local level,” said Senate Majority Leader Mo Denis, D-Las Vegas.

As a result, Clark County commissioners will vote on increasing the sales tax, a process that will begin at a July 2 commission meeting with a discussion of the issue. They plan to address the gas tax increase starting Aug. 20, commission Chairman Steve Sisolak said. (Tax proposals in Clark County outside of the two the Legislature passed this year need a majority vote of commissioners, not the supermajority the sales tax and the gas tax will require this year.)

Sisolak said he would have preferred that the Legislature address tax policy in a more comprehensive manner and “not have all these little things come through.”

“If we get charged with making the tough decisions because the Legislature passed it off, that’s what we’ll have to do,” he said.

But a strong electoral dissuasion keeps them from passing big tax packages, several of which failed during the recently ended legislative session.

“When you have legislators who know taxes are a very sensitive issue with the public and have to run for re-election, history shows you that your opponent will use that against you if you raised taxes,” said Carole Vilardo, executive director of the Nevada Taxpayers Association.

Legislators have historically struggled to overhaul the state’s tax structure, which largely exists as it did in the early 1980s.

Instead, they have passed “all these little things” that Sisolak references.

Beyond county commissions, others are also seeking a legislative bypass route to change the state’s tax structure and increase taxes.

The state teachers union has put a 2 percent business revenue tax on the 2014 ballot, a move that the union has said is necessary because of the impossibility of passing taxes in the Legislature.

“We’ve said for years the legislative process is not the way to set good tax policy in Nevada,” said Lynn Warne, president of the Nevada State Education Association. “Since we’ve recognized that the legislative process isn’t the way to properly fund education, we’ll do it ourselves.”

Warne said she’s watched the Legislature fail again and again to pass tax increases that she says would adequately fund education.

Who’s to blame?

Former Republican Gov. Jim Gibbons, she said.

In 1994, Gibbons was responsible for introducing the voter-approved constitutional amendment that established the two-thirds supermajority requirement to raise taxes.

Since then, it’s been easier to pass taxes in ways that circumvent that legislative mandate.

“It’s easier to go back to voters because of the restrictions that have been placed on it (the Legislature),” said Josh Griffin, a former assemblyman and lobbyist at the Legislature.

Rather than frustrating attempts at changing tax policy in Nevada, others see the ballot measure as an underhanded gambit to approve a tax increase proposal similar to the teachers union business margins tax that failed to pass the Legislature in 2011.

“Folks aren’t getting what they want, so they go to the ballot,” said Warren Hardy, a lobbyist and former state senator. “They want another bite of the apple.”

Voters will have a chance to say “yes” or “no” to this tax on the 2014 ballot.

They’ll also have a chance to address the sales tax hike and the gas tax increase this summer at separate Clark County Commission meetings, Sisolak said.

Sun reporter Conor Shine contributed to this story.

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  1. The Counties do NOT have to raise taxes. We NEED CUTS TO EMPLOYEE COMPENSATION down to reasonable levels. Those of us still employed took a 10% hit, at least, and many long-term unemployed took a 100% hit. City/County/SD employees NEED TO TAKE A 10% CUT in pay.