Democrats, trapped between grassroots and powerful business interests, stay silent on margins tax

By Andrew Doughman

Wednesday, Sept. 18, 2013 | 2 a.m.

Democratic legislators in Nevada who have publicly and loudly called for higher taxes to better fund the state’s education system have gone silent now that it’s up to voters to decide.

Months after adamantly calling for more education funding through tax increases at the Nevada Legislature, Democrats aren’t saying whether they support or oppose a ballot measure that would establish a 2 percent business revenue tax that could add hundreds of millions of dollars to Nevada schools annually.

Caught between a grassroots base that loves the margins tax, and a campaign fundraising base — the powerful mining, gaming, retail and business lobbies — that hates the margins tax, Democrats are doing and saying almost nothing substantive about the proposal that will be on the 2014 ballot.

“They’re going to go around raising money and the first question people are going to ask them is, ‘Do you support the margins tax?’” UNLV political science professor David Damore said. “So if they haven’t taken a position, they can say ‘No, I’m not publicly supporting it.’”

Meanwhile, Democrats face pressure from proposal supporters who say they’d like to see their elected officials publicly support the tax. Unfortunately for Democrats, these are some of the same people who also form the backbone of their voting base.

“Democrats are in a tough spot right now,” said one Carson City lobbyist who counts casinos and other big businesses among his clients. “Gaming, mining, the chamber, retail are all coming out against it. But you've got the teachers supporting it. So I think it’s less to do with the merits than the politics of who are they going to piss off with whichever side they take.”

Lynn Warne, former president of the Nevada Education Association, the state teachers union that led the effort to get the tax on the ballot, argued Democratic lawmakers need her membership as they head into re-election campaigns.

“Educators are voters who support them at the ballot box,” Warne said. “Candidates are going to ignore their own constituents at their own political peril, so at some point they’ll have to make a decision on where they stand on the issue.”

But Democrats in elected office have largely not returned emails and phone calls from the Sun and other media outlets asking about the ballot question.

Those who have replied have avoided taking a definitive position on the tax, a 25-page proposal that will appear as the Education Initiative.

“I am hopeful that discussions about the (the Education Initiative) will bring people to the table to build consensus around a sensible tax policy that moves our state forward,” said state Sen. Justin Jones, D-Las Vegas.

Others say there’s no need to say anything about the ballot measure. Earlier this year, legislators had a chance to vote on the measure, but they chose to do nothing and punt the measure to the people.

“The voters will decide it at this point, so no reason to even take a position,” Assemblyman Andrew Martin, D-Las Vegas, wrote in an email.

While several Clark County Democratic clubs and the county party itself have endorsed the proposal, just two of the state’s 38 Democratic legislators told the Sun they would support the tax.

Sen. Tick Segerblom, D-Las Vegas, and Sen. Joyce Woodhouse, D-Henderson, both said they will vote for the tax next year.

“Without a tax increase dedicated to education, there will not be improvement in Nevada's education system,” Segerblom said, noting that he believes an improved education system will lead to job creation in Nevada.

While Democratic legislators generally ignored an email from the Sun asking about their stance on the initiative, at least one was more forthcoming when interviewed face-to-face.

“In light of the initiative being on the ballot, I will be voting for it,” Woodhouse said at a fundraiser for the Hispanic legislative caucus this week.

Many Republican legislators had no qualms about making their opposition to the tax known to the public.

Beyond the rhetoric about "killing jobs," some of them are raising questions about the nuances of the tax, which collects 2 percent of revenue from any business grossing more than $1 million a year.

Those businesses get to deduct for cost of goods sold or payroll costs, but Republicans argue that many small businesses operating on tight margins will inevitably have to raise prices, fire workers or close up shop due to the margins tax.

Others note that the state’s single-subject rule governing ballot initiatives prevented the teachers union from simultaneously enacting the tax and imposing a mandate on the Legislature to spend it on education.

“There is no guarantee that the money raised by the margins tax will go to education,” Senate Minority Leader Michael Roberson, R-Henderson, said.

Yes, the ballot initiative does require all money collected from the tax to be swept into the state’s education piggy bank, the Distributive School Account.

But there’s no guarantee legislators won’t then divert state funds now dedicated to education to spend on health, transportation, public safety or other state services. State law would allow them to do so as they craft Nevada’s spending priorities in the next two-year budget.

Supporters of the tax, though, say they’ll raise hell at the Legislature if that happens.

Assemblywoman Michele Fiore, R-Las Vegas, wrote to the Sun in all capital letters that the teachers union is a group of "BIG FAT GREEDY LIARS" for calling the tax the Education Initiative when there’s not a full guarantee that the money raised from the tax will be spent on education.

Democrats are largely taking a wait-and-see approach, saying they still have unanswered questions.

When asked at a fundraiser this week, Senate Majority Leader Mo Denis, D-Las Vegas, said he’s “all for more money for education,” but he hasn’t made a decision about this particular tax yet and needs to think about it more.

“I’ve got so much going on right now,” he said. “I will get to that.”

Assemblywoman Irene Bustamante Adams, D-Las Vegas, was chairwoman of a legislative taxation committee that held a hearing about the tax.

She said she’s still not satisfied with the level of information circulating about the tax proposal and needs to see concrete examples from both supporters and opponents of the tax before she makes a decision.

Bustamante Adams represents a Las Vegas Assembly district with a high concentration of minority-owned small businesses, so she said she wants to see how the tax would affect the businesses her constituents patronize.

“I’m the type who goes to a buffet and needs to see everything before I make a decision,” she said.

Politically, it’s also easier to oppose a tax increase than to support one in Nevada.

Strident opposition or noncommittal silence are two strategies that allow elected officials to dodge controversy.

“That’s the path of least resistance,” Damore said.

But with few prominent elected officials willing to take up the banner for passing the tax, the public debate gets short shrift.

“We need a robust discussion about taxes,” Damore said. “This is an opportunity to do it, and they’re more or less letting Republicans win the debate.”

The teachers union has been having the tax debate throughout the Las Vegas Valley. Their representatives are continuing to give presentations on the tax to politically active groups and engage in debates with opponents of the tax.

Discounting the scant legislative support, teachers union leader Ruben Murillo said they’ve seen an “overwhelmingly positive response from core Democratic groups.”

“We’re energized and excited with the amount of commitment we’re getting,” he said.

Murillo said he fully expects Democratic legislators to come around eventually and endorse the proposal.

He may be right.

Denis declined to say whether he supports or opposes the proposal.

He then declined to say how he’d personally vote at the ballot box in 2014 but did offer supporters like Murillo some indication of where he might be leaning.

“At the end of the day, it’s the kind of thing I’d probably support,” Denis said.