Revenue roulette begins at the Legislature
A veterans home in Northern Nevada. A major expansion in services to children with autism. Social workers in schools to deal with bullying, teen suicide and other mental health concerns.
Only in Nevada would we consider these initiatives too good to be true and be surprised they’re included in Gov. Sandoval’s proposed budget for the next two years. But the only way these worthy services will transform from dream to reality is if Nevada joins 47 other states in agreeing to a broad-based business tax.
The governor’s long awaited revenue bill, Senate Bill 252, was presented in a marathon hearing last week that every legislator was invited to attend. Sandoval is proposing an increase in the business license fee, based on gross receipts, to make it easier to collect and presumably fairer than other recent proposals. It would increase the current flat fee of $200 per year for each business regardless of size, to different levels based on revenue and the type of industry. It’s estimated the new fees will raise $437 million over the biennium.
In the Nevada tradition of saying “no” immediately to any glimmer of a business tax, Lyle Brennan, publisher of Nevada Business Magazine, penned an editorial comparing Sandoval to the emperor with no clothes. He stated Sandoval is “either anti-business or simply doesn’t understand how business works” and said the governor is “woefully unprepared when it comes to realistically dealing with issues that businesses face post-recession.”
But in a refreshing change of pace, the Las Vegas Global Economic Alliance issued a statement before the hearing in support of the governor’s proposal, acknowledging the state budget must have additional revenue to meet his education priority goals. And they were honest about the reason many businesses refuse to move to Nevada—our poor educational outcomes.
At the highly-orchestrated hearing on SB 252, additional business groups came to the table to support the governor, including representatives of the powerful Nevada Resort Association, who noted that casinos expect to pay about 58 percent of the new revenue. IGT, Switch, hospitals, taxi companies, mining, contractors and subcontractors all supported the new tax plan along with a bipartisan group of three former Nevada governors. The Wolfgang Puck Group even brought pizza to the committee.
Opposition to the bill came from the usual suspects who are consistently against any version of a broad-based business tax—the Nevada Policy Research Institute, the retailers and the truckers.
No one knows exactly what the 63 people charged with voting on a new revenue plan for Nevada will do in the end. Despite the superb organization of the initial hearing by the governor’s people, including live tweeting on the governor’s Twitter account thanking each of his supporters as they testified, there are a number of signs of a rocky road ahead.
Several days before the hearing, Douglas County Republican Assemblymember Jim Wheeler introduced his own bill, Assembly Bill 323, to eliminate the business license fee altogether. Three Democratic Senators introduced S.B. 378, a bill to abolish the Modified Business Tax (MBT) and replace it with a new fee on gross receipts over $25,000. Assembly Republicans made it known they were working on their own plan to raise the existing MBT, which only 4 percent of Nevada businesses pay. And the Assembly Democrats seem focused on improving the entertainment tax.
These alternatives may all be negotiating chips in the final budget deal or they may be designed to create enough chaos to ensure no new tax plan gets passed.
The Las Vegas Metro Chamber of Commerce was noticeably absent from the governor’s supporters. Their reasons? “More study is needed,” “the devil is in the details,” and a demand for “more educational reforms.” Pick your favorite shibboleth.
No worries, chamber members. It’s only Nevada’s future at stake.