As predicted, the Republicans grow government

The legislative session is at the halfway mark, and the battle lines over the state budget are beginning to take shape.

There are already major media ads opposing Gov. Sandoval’s budget, which calls for over $1.3 billion in new taxes and makes temporary taxes permanent. The Democrats have introduced their own budget proposal. It calls for new taxes and more spending but is essentially dead in the water, as the last election rendered the Democrats irrelevant.

That leaves the Assembly Republican budget.

All during the last election campaign, the Republican candidates had one virtually universal promise: No more taxes! The Republican platform says that Nevada has a spending problem, not a revenue problem. So, this Assembly Republican budget, the first one proposed by Republican legislators since 2003, must surely repudiate any tax increases while championing spending cuts, right?

Alas, just like in 2003, the Republican Assembly budget is little more than an alternative without any difference. In 2003, it was Republican Gov. Kenny Guinn. Today it is Republican Gov. Brian Sandoval. The governors’ names are different, but the goal is the same: more government. Whether you take the governor’s high road or the Assembly’s low road, you arrive at more taxes and spending. Assembly Majority Leader Paul Anderson (R-Las Vegas) actually called the plan “a different path to the same results.”

The Republican Assembly plan would not create a new tax, kinda sorta, but would instead expand the Modified Business Tax on payrolls from those businesses with $350,000 in payroll to now include those paying $200,000 in wages. Plus it would repeal the health insurance exemption, the only real deduction allowed, because Obamacare now mandates insurance coverage. (Never mind Republicans’ constant calls to repeal Obamacare.) They would also increase the business license fee by 50 percent, while Sandoval’s plan calls for a 100 percent increase.

If only someone could introduce a way to increase spending by a reasonable amount, say by population growth and inflation, minus productivity gains, that would not require new taxes and would even sunset those taxes supposed to die?

The libertarian Nevada Policy Research Institute has stepped to the plate and pinch hit a home run. Its recently released “Freedom Budget” allows for an increase in spending over 2013 levels while much less than the governor’s 2016 proposal. Some departments would be slashed dramatically, like the Office of Economic Development and the Nevada Tourism office. Government should not be in the business of picking economic winners and losers or promoting tourism in order to raise public revenue. But others, like the Nevada Department of Conservation, would see a generous increase. NPRI generally calls for the full funding of state agencies’ budget requests, simply because the governor has actually asked for much

more than what the agencies themselves have!

As I have predicted, putting Republicans in charge of government did not result in reducing the state budget by one dime. But reasonable spending increases could be palatable if there are real economic reforms. There have to be serious reforms in collective bargaining, in education accountability, school choice, the Medicaid expansion, prisons, economic opportunity, drug policy, and the basic tax structure of the state. Republicans in charge could put an end to class size reduction proposals. There is no need for more preschool.

Fortunately, there is still a two-thirds requirement for tax increases, although in 2003 that was overcome in a dramatic special session. Principled Republican legislators can kill new taxes. The hope is they can help midwife a Nevada that is more flexible, competitive and built for the 21 century.