BUDGET SPECIAL SESSION:

What gets cut?

When legislators meet to tackle shortfall, everything, apparently, will be on the table

Sat, Jun 14, 2008 (2 a.m.)

Chris Morris

Gibbons v. Gibbons

Arberry upset by governor's call for special legislative session (6-13-2008)
Dems have selfish motives for resisting (6-13-2008)
Their plans to cope with budget squeeze (5-25-2008)

Gov. Jim Gibbons’ call for a special legislative session is unprecedented in the history of the state, according to Nevada historians.

Special sessions have been held to address the state’s economy and tax revenues, but those were tied directly to a regularly scheduled legislative session. Off-year special sessions have been called to address issues such as medical malpractice costs in the state in 2002.

This is the first time, historians say, that an off-year special session has been called to deal with a statewide budget shortfall.

So here’s a primer on the proposals that could be discussed when the 63 members of Nevada’s citizen Legislature trek to Carson City to find between $60 million and $100 million that the state is expected to be short this year.

There seems to be no consensus among Republicans and Democrats. And Democrats, for their part, are irate.

Assemblyman Morse Arberry, D-Las Vegas, chairman of the Ways and Means Committee, which decides money issues, said he had to find out about the special session from the media.

“I know he (Gibbons) has personal problems but they should not have anything to do with running the state,” Arberry said.

Republicans, speaking on condition of anonymity, acknowledged that it wouldn’t hurt to have Gibbons look gubernatorial. But some said it was an uncommonly savvy move to force Democrats to address the state’s dire fiscal situation.

Gibbons will set the agenda for the special session next week when he signs the executive order. So precisely what will be on the table won’t be known until then.

But the governor said Thursday: “Everything is on the table.”

The issue the Legislature will address is not Nevada’s long-term fiscal plight or even the problems forecast for the next budget cycle. Instead, according to the governor’s spokesman, the session will deal with the immediate shortfall for the 12 months beginning July 1.

Below is a rundown of what might be considered in the session.

Delay cost-of-living raises

The idea: Gibbons’ allies are advocating this plan, which would delay until July 2009 a promised 4 percent cost-of-living increase for the 14,000 state and university employees and teachers scheduled to take effect next month.

Pros: It could save Nevada an estimated $125 million to $130 million annually.

Cons: There’s strong public sentiment that teachers — the largest number of employees set to get the raises — are underpaid. There also are legal questions about whether school boards can take back the 4 percent raisesthey agreed to with local teachers unions. If school districts are forced to provide the pay raises and find an estimated $90 million in savings elsewhere, layoffs in education are likely.

Politics: Democrats, especially in the Assembly, oppose the move. The state’s public employees union is preparing for war. But Senate Majority Leader Bill Raggio, R-Reno, came out Friday in favor of delaying the raises. The Gibbons administration and Republicans could argue that the alternative to the pay-raise delay — budget cuts and layoffs — would be too severe.

Tobacco

The idea: Take $1.2 billion in tobacco settlement money the state is set to get over the next 17 years and turn it into a one-time payment of $600 million to $700 million.

Pros: Quick infusion of cash to get us through tough economic times.

Cons: The one-time payment would be used to pay for ongoing expenses and operations. Also, that money currently funds children’s health programs, senior prescription drug programs and the Millennium Scholarship.

Politics: Assembly Democrats have said the plan, long pushed by Lt. Gov. Brian Krolicki, won’t pass the lower house. Plus, Treasurer Kate Marshall says that Krolicki is refusing to share his calculations with her office, which administers the tobacco settlement money. Gibbons himself expressed concern about using one-time money to pay for continuing expenses.

2 percent cuts

The idea: For each 1 percent the state cuts across the board, it would save about $32 million for the upcoming fiscal year.

Pros: This is a relatively simple, if painful, answer. Make department heads do most of the hard work of finding where to cut.

Cons: The governor in January ordered 4.5 percent cuts across the board and after that, department heads said there were no more cuts to make without affecting programs and likely laying off workers.

Politics: This is the alternative Democrats seemed to be pushing. The governor would order departments to make the 2 percent cuts, the Interim Finance Committee would pass them and there would have been no need for a special session. If this solution is selected, Gibbons will be portrayed as having wasted time and money (the early cost estimate for a special session is $100,000 for the first day and $50,000 for each subsequent day).

Reduced workweek

The idea: Reduce state employees’ workweek to four days or nine days every two weeks.

Pros: Some savings from not having to open the doors to state offices as often. The numbers are being crunched now.

Cons: Will the savings be significant? Plus, have you ever tried to get someone at Henderson or North Las Vegas city halls on a Friday?

Politics: Unknown.

Room tax increase

The idea: The teachers union, Speaker Barbara Buckley and three major gaming companies have reached a deal to raise the room tax in Clark and Washoe counties by 3 percentage points to a maximum of 13 percent. Proponents are trying to get an advisory question on the November ballot, with the Legislature taking action in 2009.

Pros: $150 million a year in new revenue, mostly paid by tourists.

Cons: Could it affect tourism in a soggy economy?

Politics: Not going to happen. Despite calls from Democrats such as Sen. Bob Coffin to implement the room tax increase immediately, Gibbons has said he wants to see a vote of the people before he signs off on it. Same goes for those, like Raggio, in the midst of a primary challenge from the right.

Broad business tax

The idea: No way, no how, from the governor to Republican and Democratic

legislative leadership. No one, right now, wants to raise taxes.

Discussion: 16 comments so far…

By jfnance32

6/14/08 at 8:43 a.m.

Suggest removal

Buckley and her Donkeys should do what they always what to do and that is demand to raise taxes.

They should demand an income tax of 10% on everyone in the state. That would make their union friends, who are no friends of Nevada, very very happy.

Where is the leadership from the Donkeys?
By LVPaco

6/14/08 at 9:18 a.m.

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Terry Lanni CEO of MGM-Mirage said it best. There should be a broad based business tax. If we keep cannibalizing the gaming industry we will hurt ourselves in the long run.

Nevada has to have a secure tax system. Southern Nevada needs to move forward as it grows and should not be held hostage by Northern Nevada. Thank goodness Bill Raggio is term limited.
By teacher

6/14/08 at 9:51 a.m.

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Let Bill Raggio live on a teacher's salary. Politicians like Raggio are why we need term limits.

jfnance, if you're not well off, then how can you be suckered by the Republicans? The lack of business taxes here is unheard of in other states, where schools and all sorts of other public services are better.

But maybe you're one of the wealthy pigs who can't get enough, who takes, takes, and takes, and lets others do much of the work that you makes you rich, and relies on the government for infrastructure, and for all sorts of other things, like protecting your riches - but doesn't think they should pay taxes.

Are you aware of what's been happening for the past few decades in this country, of the change in the difference between rich and not-rich? Or are you one of those millions of Americans who doesn't pay attention, but thinks they should be able to vote, anyway? Thanks for Bush, and the rest of the Republicans who want a system where they're the ruling class and the rest of us are either their lackeys or peasants. Well, it's been working. And the peasants who are still Repulican lackeys, well, they're really sad. They'll probably vote for McCain even though he says he doesn't really understand economics, wants to keep making the rich richer, and voted against giving veterans of this ridiculous, very expensive war state college tuition plus a monthly stipend. (Who's paying for this war? Not the enormously rich; the future generations will. But, as another of our prominent Republican state pols put it, "Our grandchildren don't vote.")

I heard the schools were really good here thirty years ago, when the Mafia had a lot more power and influence. Those mobsters weren't even close to being the selfish, greedy, arrogant, can't-get-enough pigs who've gotten this country and state in their grip.

It's going to get worse here before it gets better. Wake up, Nevada!
By LadyLuck

6/14/08 at 12:22 p.m.

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No new taxes, huh? What do you call taking away a much needed COLA from state workers? I call it a special tax. Many of you out there try to compare government budgeting to private budgeting, but there is no comparison.

To all those candidates running for state legislative office, please try to educate yourself before you start being a blow-hard about the way to fix the state budget.

I watched some clowns on Face to Face this week and they all seem to think that there is so much spending to cut. I say to Mr. Nathan and Mr. Fellows, go talk to some state agency heads and see what their budgets are spent on before you open your mouth next time.
By jfnance32

6/14/08 at 1:31 p.m.

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Buckley and the Donkeys should have the courage to say in public what they whisper in private and that is do a broad base business tax.

You libs should demand that your Donkeys do their job.
By lvmachead

6/14/08 at 8:59 p.m.

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This "crisis" has been building for the past 20 years. It's time to rethink the total tax structure of the state. The state lags in spending on all fronts. Education is and has been grossly underfunded. The same for all other social services. Highway funds have been raided and the roads and bridges are a major safety issue. the legislature needs to open the legislature needs to get in session and stay there until they can come up wit ha fix. Continuing to cut underfunded services is irresponsibility bordering on criminal.
By CynicalObserver

6/14/08 at 9:48 p.m.

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I am tired of the smug pundits including Jon Ralston and some casino owners talking about a "broad based business tax".

Do these idiots realize now many call center jobs exist in the southeast BECAUSE there is no franchise tax or corporate income tax here? The call centers can pack up and move 1000 jobs in a few months, if it appears that their cost of doing business here is going up more than they want.

That's exactly what Client Logic did here, when their unemployment tax went too high. They bought another company, changed their name to Sitel, and moved 500 jobs to New Mexico. Did any of these pundits write about the loss of the Client Logic jobs? No.

When you're 25 years old, with only a high school diploma, and can't get a job at a casino because the Mexicans have a lock on the $10 to $13 per hour jobs there, all you can do to pay the rent, and feed your kid is work at a call center.

But of course, the assh*les and idiots who make and influence policy in this state do not have a clue about the potential job losses a broad based business tax would cost.

Ever heard of zappos.com? EIGHTY MILLION GROSS INCOME projected this year, out of one call center. They moved here because there is no income or franchise tax. They can move again just as easily.

By the way, "Tax Free Texas" just adopted a huge franchise tax on the GROSS income of all Texas businesses GROSSING more than $500,000. Every company that can feasibly move out of Texas is talking about doing so. The Texas Legislature has met 3 times, trying to amend the law to staunch the job outflow, but companies understand one thing: Once a state sets up a bureaucracy to collect taxes, when the state wants even more taxes they already have the people and computers in place to collect it.

Does anyone remember No Income Tax New Jersey? Its now the highest taxed state in the USA.

So Jon Ralston, before you or MGM Mirage or the opinion makers and legislators say Nevada should adopt a broad based business tax, why don't you come down to south east Las Vegas and Henderson and talk to us about where you are going to find the call center workers new jobs. Maybe you can convince the casinos to get rid of the people with phony Green Cards and arrange direct job transfers for all of the call center workers.
By CynicalObserver

6/14/08 at 9:53 p.m.

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One thought about a way to save money big time. Just shut down the Clark County School District for a year. They are the most expensive and ineffective public agency in the state.

I pay to send my kid to daycare, so all the moms and dads who use the schools as a babysitter can start paying to care for their kids too.
By DavidMorgan

6/16/08 at 1:07 a.m.

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Ok all you guys. Let's cut out the "don't gore me, don't gore you" type crap. We all know that Nevada's tax base was adopted right after the internal combustion engine was invented but just before ole man Edison got lucky with a filament. Any truly competent, adult discussion of Nevada's worthiness of being a state of the union (and being able to afford the dues) requires a top to bottom evaluation of where the money is, and go after it. It's in three places right now. Big gaming, mining and a low-end business tax. Big gaming pays 6.75% in Nevada but between 20 and 50% in other states! Hellll-oww!!

Sorry folks, but dem's da facts. If you don't like it, move to Guatamala where they speak your pin-headed, droopy-brained right-wing babble.
By jfnance32

6/16/08 at 8:11 a.m.

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I believe that all this rubbish about the tax structure not working is just a way to raise taxes.

Do the tax structure folks say that do not want have a net increase in taxes?

They do not say that and one should assume they want to greatly increase taxes.

They want to raise taxes and the tax structure argument is just a red herring.

Nevada state revenue goes up and down just as much as every state in the country. Many of those states have income taxes, taxes on businesses, sales taxes and every tax one can imagine.
By thebs

6/16/08 at 9:05 a.m.

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As always, Jfrance gets it all wrong.

If he were to use that pea-sized piece of flesh between his ears, he'd recognize that basing the tax structure on a single industry leaves us in a precarious position when that industry doesn't perform.

The one salient point he made: Nevada's tax revenue fluctuates wildly based on a single industry. Unfortunately, he's unable to understand WHY that happens.

He's happy to sit here while non-gaming businesses make billions of dollars without contributing a dime toward the services that they take advantage of. Meanwhile the tax burden on gaming, who employ a huge percentage of Nevadans, only grows.

I guess Jnfrance's solution is just to bleed gaming dry in the guise of a sensible tax structure.
By jfnance32

6/16/08 at 1:39 p.m.

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Wow...thebs is pro-gaming.

I guess you are proposing to lower taxes on gaming and raise them on non-gaming.

Are you really just what to raise taxes under the guise of "fixing" the tax stucture?

So non-gaming business now are not moving up and down along with gaming business?

Wow...the only businesses now suffering are gaming. Wrong!!!!!! Most businesses in Nevada are in synch with gaming. If gaming is down so is much of the businesses in Nevada. So that would not "fix" the tax structure.

Again, all you really want to do is increase taxes.

Also, will taxing non-gaming businesses help or hurt the current state of the economy?

Yeah,, that is ticket lets tax our businesses so that the economy will improve.

Sounds like something that Hussein wants to do.
By thebs

6/16/08 at 3:10 p.m.

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"Are you really just what to raise taxes under the guise of "fixing" the tax stucture?"

Again, use that pea-sized piece of flesh between your ears and write something people can comprehend.

You still miss the point, our tax structure is based on a one-trick pony, and when that pony is sick, we all suffer. And only fools suffer gladly. I'm sure you have a huge grin on your face.

Your rambling mess of incoherent illiteracy evades basic logic. Nevada has held a long policy of allowing business to operate without paying taxes in order to lure them here. It's inherently fair to ask businesses, who make profit within our borders, to contribute to the community.

No, you'd rather watch Nevada bleed gaming dry than have a fair and equitable tax structure, one that would be able to better weather downturns in the economy.

Southwest Airlines? Citibank? Wal-Mart? Why should they have to contribute to the state's economy? You'd rather they do business in this state for free?

And you ignore the fact that economic downturns affect business sectors in different ways. While gaming revenue is down, the overall economy is still growing. Thus, if you can follow this very simple logic, the gross effect on state revenues would not be as severe with a broad-based system.

But who am I fooling? You couldn't possibly understand that.
By jfnance32

6/17/08 at 1:39 a.m.

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theBS: "You still miss the point; our tax structure is based on a one-trick pony"

Response: No, it is a three-trick pony. Sales tax is number 1. Gaming tax is number 2. About another 1/3 of the state revenue comes from over 100 miscellaneous taxes.

In fact, the biggest part of the state shortfall is coming from a drop in sales taxes. Sales in restaurant-bar, automobile and auto parts sales, general merchandise sales and clothing sales are all down.

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theBS: "Southwest Airlines? Citibank? Wal-Mart? Why should they have to contribute to the state's economy? You'd rather they do business in this state for free?"

Response: They already pay taxes. If these entities are purchasing goods in the state then they are paying sales taxes. If they own property then they are paying property taxes. If they pay wages to employees then they are paying a Modified Business Tax based on the wages that they pay to their employees. They are also paying a business tax based on revenue to a local county/city government.

If we desire to diversify Nevada's economy then we should not raise taxes on non-gaming businesses.

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theBS: "And you ignore the fact that economic downturns affect business sectors in different ways. While gaming revenue is down, the overall economy is still growing."

Response: Gaming revenue has never gone down when the rest of economy grows. I do not know who told you this. It has NEVER HAPPENED.

The only time gaming revenue has decline is when the economy has declined. In fact, most of the time (like now) gaming revenue declines at a lesser rate than other sectors in the economy. That is why it is known as a recession resilient industry.

The biggest non-gaming sectors are banking, credit card and customer service call centers. Their in-state profit is only tiny compared to the gaming companies. So I guess you can tax their in-state profit at 50% to get an equivalent 2% of what the state collects in gaming tax.

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In closing.....

Again, this tax structure argument is just a red herring. I believe it is a ploy to just to raise taxes.

If you think that the broad base business tax is the messiah to solve the state budget problems then get your lovely leaders, like Buckley and Ms. Taxus, to push for it. You might have to look under the rocks to find them.

One more point, you are not very good at generating insults either.
By Fernando

6/26/08 at 6:42 p.m.

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Does anyone realized what illegal immigrants are costing us?

Extra classrooms (and a poor education for our kids while they wait for another to understand)
The schools could fire numerous teachers were it not for this problem. How about the additional electricity and buildings errected to educate and cool or heat this population? (All Taxes)

Unreimbured hospital and medical expenses (much paid by the state), this cost hospital beds and untold physician and nuring hours. Those with insurance and those citizens with or without money get the bill- how much from taxes?

There are the job losses that a lack of openings due to a suddenly buldging population. This results in more unemployment and welfare checks and food stamps (deportation was serious reality during the depression after the Rouring 20's).

Are you prepared to put bars on your windows as they do in Mexico (I Know too well) when there are no more jobs for this population?

Please don't say they do jobs Americans won't. When I began working in construction 10 years ago I was surrounded by citizens. If they work so cheap we should have seen a decrease in the price of a home since then, right?
By Fernando

6/26/08 at 6:54 p.m.

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Oh, I have a friend that works for the state in a Social Services Center of some sort where she expressed intense discontent with the way in which Nevada cuts gobs of welfare checks to illegals. She herself is an immigrant.
And if a child gets Tuberculosis from a classmate that got it from his/her uncle that just dashed across who do you think will be paying the bill? A major role of Ellis Island, a hundred years ago, was to test for TB and Leporacy(spelling), a form of TB. No there is no vaccination and all Americans should know that as of 3 years ago it was still the #1 killer in the world (don't know today). Check for yourself. All my legally immagrated friend were tested prior to entrance. As TB and leporacy again are on the rise what will this cost us?

Where they just insensitive at Ellis Island?