The great legislative train wreck of 2003

Mike Willden, director of Nevada’s Department of Human Resources, was driving home from work last week, listening to talk-show host Rusty Humphries on KKOH. The topic turned to welfare. Assemblyman Ron Knecht (R-Carson City) told Humphries that Nevada’s welfare benefits are more generous than those in other states, such as California. Humphries went on to speculate that people were drawn to Nevada to receive these juicy benefits.

Willden was exasperated at the misinformation.

OK, fine, it’s far-right radio. Facts are ignored, skewed, interpreted through a lens of self-righteous outrage. And, any other time, erroneous facts bandied about on radio might not matter so much. But these days, given the legislative impasse in Carson City, such twisted statistics could prove precarious.

Knecht and other stalwart anti-taxers like Assemblyman Bob Beers (R-Las Vegas) have forced the legislature into a costly special session. Each day of the emergency session costs the state about $40,000 to $50,000.

The goal of these conservative Republicans is to force cuts in a hard-won budget passed by the Nevada Legislature during its regular session that ended June 3. Though the group is in the minority, the Legislature’s two-thirds requirement for the passage of new taxes has given them enough power to force the state’s cannonball express to a grinding halt.

The anti-tax zealots’ weapon of choice is rhetoric that slams any move toward adequate funding of education and state services as anti-Nevada (and, by extension, pro-California). If a compromise isn’t reached by the end of June, public schools could be shut down on July 1. As this paper went to press Wednesday morning, school districts across the state were preparing for the worst.

So, to set the record straight on welfare, Nevada’s average monthly welfare payment of $202 is slightly less than a third of California’s average $623, according to the Congressional Quarterly State Fact Finder 2003. Nevada ranks 44th in the nation as far as welfare—Temporary Assistance to Needy Families—payments go. California ranks third. It’s safe to say that no one is coming to Nevada to collect fat welfare checks.

“That’s pretty clear,” Willden said. “Nevada doesn’t have this generous giveaway program or loose eligibility rules or liberal spending patterns. That’s just not true.”

The state does spend a bit more per Medicaid recipient than California does, but Willden explained that this is because a higher percentage of California’s Medicaid recipients are children and able-bodied adults. Nevada’s Medicaid population includes far more disabled individuals by percentage. In Nevada, Medicaid spends about $822, on average, for a fairly independent disabled individual who lives at home. The cost skyrockets to about $5,000 a month if the person lands in an institution.

“It’s not fair comparing one state’s average to another state’s,” Willden said. “You have to look at who they cover.”

As the Nevada Legislature’s 2003 session drew to a close, people like Willden who were fighting for public services might have felt successful. Even if they didn’t see the complete restoration of funds that have been carved away over the past few years, at least they held their own in the state appropriations budget passed on June 2.

Unfortunately for these people, the funding package needed to pick up the spending tab—including new taxes designed to boost the state’s revenue by $860 million or so—never made it out of the 2003 lawmaking session. The governor launched legislators into a special session, giving them until June 6 to resolve funding issues. And when they didn’t meet that deadline, Guinn gave legislators another two days.

By Saturday, a tax bill had been introduced in both the Nevada Assembly and the Senate. A unified business tax, one version of a system formerly known as a gross receipts tax, was dumped in favor of a net profits tax—3 percent in the Senate, 5 percent in the Assembly. There were real-estate transfer fees, a tripling of the cigarette tax and a near-doubling of the business license tax, among other new taxes.

Because the bills raise taxes, each needed to be approved by a super majority (two-thirds or more) of senators and assemblymembers.

The bills didn’t make it. A feisty minority of mostly Republicans refused to compromise with any tax package. Reopen the spending budget, they demanded, because we want to make cuts—maybe not to K-12 education—but we’re giving too much money away to freeloading welfare mothers. And what are those university professors up to who aren’t teaching three classes a semester? And should we really be spending as much money feeding felons in the state prison system as we do feeding wild horses and burros kept in holding pens around the state?

That kind of talk has made Willden and others sensitive to spurious facts being tossed about on radio or anywhere else.

“That’s something they could do—open our budgets,” he said. Willden’s case illustrates the complications of reopening budgets. Any progress that legislators accomplished in the last four months could come to naught if the budget gets put back on the table. Legislators might as well be going back to the round house of Feb. 3.

The governor has repeatedly pledged not to reopen budgets. But the anti-taxers in both houses insist they won’t settle for anything less than a chance to slice spending.

Willden said that any more cuts to welfare programs would be disastrous. Over the past two years, the TANF program has made $30.5 million worth of cuts. It eliminated domestic-violence programs, substance-abuse programs and child-care services.

“We’ve basically cut everything but the basic cash grant,” Willden said. “We’ve been cutting and cutting and cutting, just so we can keep our head above water.”

After Sept. 11, 2001, the demand for assistance skyrocketed far beyond projections. The welfare caseload turned out to be 56 percent higher for the 2002-03 biennium than the caseload funded by the state in 2001. The Department of Human Resources tapped out its own rainy day fund.

“We blew through our $22 million savings,” Willden said. And though in the past few months there’s been a slight decline in the TANF caseload, demand for help with groceries and health care is growing.

"[Demand for] food stamps is growing at gangbuster rates,” Willden said. “Medicaid is growing at gangbuster rates.”

Add any kind of new economic downturn to the mix—another terrorist act or the impact of, say, a casino opening in nearby Auburn, Calif.—and the agency lands in dire straights.

“Because we’ve already cut everything that can be cut, we’d be forced to cut TANF grants to low levels, 1991 levels or below. That doesn’t seem to be the right thing to do.”

Hoping to set the record straight, Willden e-mailed Knecht and Humphries.

“All I wanted to do is point out to him, when you go on radio and say that, it’s dead wrong,” Willden said.

Knecht, in a subsequent e-mail to Humphries that was copied to Willden and legislators, characterized Willden as “one of the Bash Nevada … Tax and Spend Crowd.” An offer on Willden’s behalf to meet with Knecht and provide additional information was final proof, wrote Knecht, of Willden’s “indecency and incompetency.” Knecht called Willden’s letter a “hate-driven screed.”

Willden said he doesn’t know what to think.

“Like my 2-year-old daughter says, ‘It makes me crazy.’ I just don’t understand the legislative process here.”

After the Senate voted to adjourn its regular session early in the morning on June 3, there was a lull. Among the weary observers in the Senate Gallery were a trio of legislative-intern types—late-teen boys in suits and ties. The three sat in the front row of chairs playing a game of their own invention. Each flipped quarters onto the dark blue carpet, launching coins from the chair’s cushion. The object of the game was to get the coin as close to the railing as possible without touching the wall.

Flip. Clink. Moan.

Flip. “Ahh!”

Flip. Thwup. “You’re getting creamed,” one boy said, laughing as his quarter landed.

Their fun didn’t seem out of place in the Senate Chambers, where games with money had been de rigueur for the 120-day session.

At the end of the day, no one won. The session was a train wreck. A standoff, an impasse. Stubborn factions were spoiled children or “tin men.” The tax-and-spend crowd was guilty of “Californication” and “Nevada bashing.”

It seemed that not even the highest level of state politician could force the train over the pass. Gov. Guinn held unsigned bills as political leverage on his desk. He controlled the parameters of the special session and used his authority to set deadlines, set the agenda.

But there his power ended. Despite his best lobbying efforts, a vocal minority of stalwart naysayers keeps state government derailed.

These power plays may signify the democratic process at work.

“Both sides have enough power to at least cause the other side to negotiate,” said Eric Herzik, a Republican political analyst and interim dean for UNR’s School of Arts and Science. “That’s the key point here. Some middle ground is going to have to be found.”

He remained hopeful that a compromise will probably be reached before the governor shuts down state services.

“At the end of the day, no one wants the government to shut down,” he said, referencing the mid-1990s, when a right-wing crowd led by Newt Gingrich decided that “people don’t like government because it costs too much.”

What these Republicans discovered was that shutting down the federal government did not help their political agenda.

“People may complain about government and taxes, but damn it, they want it there every day,” Herzik said.

During a late-night recess on day 120 of the regular session, lawmakers wandered around on the Assembly floor passing out cookies and munching on candy or taquitos doused in salsa. At 9:41 p.m., strains of “Take Me Out to the Ballgame” played softly in the background. If that were a reminder for the Assembly to get chugging, it didn’t work.

It was impossible for an observer to tell whether these acts of lawmaking required long stretches of inaction or whether lawmakers were merely waiting out the clock. Perhaps they were punishing the governor for pushing his tax agenda down their throats, for calling the anti-tax crowd “irrelevant” in his State of the State address at the beginning of the session.

Ride the clock out they did, adjourning with the single largest and most controversial issue of taxation unresolved. The ensuing special session has featured less-frenetic lawmaking but even more tedious stretches of waisted time and more closed-door meetings and caucuses and pollings and deals.

Assemblywoman Sheila Leslie (D-Reno) grabbed about two hours of sleep on June 3 before going to work at her paying gig, as a special-events coordinator. She tried to get her hours in last week, in between trips to Carson City. She said she needs the paycheck.

“They don’t pay us for the second 60 days,” Leslie said. “My savings are gone.”

Some assemblymembers, she said, had apartment leases that ran out at the end of the session. She knew of lawmakers who were sleeping on the floors of their offices.

By Friday morning, she wanted to believe a compromise could be reached.

“There are some who want to cause a train wreck,” she said. “They think that the more special sessions we have, the more likely it is that they’ll get their way.”

That morning, the Assembly voted to work on a bill introduction for a tax package that included a 5 percent net-profits tax for businesses starting in January 2005 and a bank franchise fee that would bring in $20.5 million starting in fiscal year 2003-04.

The concept initially received tentative support from a few key Republicans.

“This is all our work that we feel comfortable with,” said Assemblywoman Dawn Gibbons (R-Reno). “We’ve already approved the budget. Now we need to fund it, and this is the fairest way. There were no lobbyists drafting this. It is our hard work. I think the public will appreciate that we got together and passed something fair.”

Leslie agreed.

“Businesses have gone forever without paying anything,” Leslie said. “Forty-seven states have a form of net profits tax. Other states have bank franchise fees. … I’m sorry, but the free ride is over.”

She said she felt most of the lawmakers were annoyed by scare tactics, sick of lobbyists and just plain worn out.

“All of us are very tired of the threats,” she said. “People always have the option of voting us out of office. I’m not afraid. And lobbyists have been very heavy-handed.”

A new version of a unified business tax introduced Thursday had gained the support of the gaming lobbyists. But their endorsement made many lawmakers suspicious that the idea had been concocted by casinos.

A net profits tax didn’t share that flaw.

“Gaming doesn’t like [the net profits tax] because its profits aren’t capped,” Leslie said. “I can go for that.”

She said it was time for a bill to be written and a vote to be taken on tax packages. “We’ll sit back and watch. Are we for the future of Nevada or not? That’s the choice.”

The tax package was already a compromise, Leslie said.

“I didn’t get my way, and I’m not going to act like a spoiled child,” she said. “The governor is not going to blink. They’re trying to force him to open the budget, but he’s not going to do it. Now the only thing to cut is education, and even [Assemblywoman] Sharron Angle (R-Reno) isn’t going to do that.”

On Saturday afternoon, Gibbons withdrew support and voted no, as did other Assembly Republicans, on the funding package included in AB 1. The vote on the bill was 23-18, five votes short of the needed two-thirds majority. The vote on a similar Senate bill was 13-8, one vote short.

Guinn gave lawmakers a two-day break. The session reconvened at noon Tuesday, but at this paper’s deadline, both the governor and the anti-tax folk reiterated a refusal to budge on the budget.

In the meantime, the Senate has approved full funding for K-12 public education. But the issue hadn’t hit the Assembly floor as of Wednesday morning. Some legislators are having a hard time making it back to Carson City this week because of work and family commitments.

Herzik had been optimistic as tax packages discussed last week in the Assembly and the Senate began to look more alike. Extremists seemed to be losing ground, and the mood in committee hearings seemed to be one of compromise.

"[Assemblywoman] Chris [Giunchigliani] wanted a billion-two, then you have guys like Bob Beers who would put nothing in,” Herzik said. “I don’t think either of those end points are winnable positions.”

As the special session progressed, though, the factions began to look more entrenched.

“They’re waiting for the other side to blink first,” Herzik said.

Waiting could prove to carry a hefty political price tag.

“People are willing to say, ‘OK, you didn’t get done by midnight [June 2]. Go home, get some sleep and get back to work. You ran out of time because you had so much to do.’ Now it’s, ‘You’ve had your extra time and you still didn’t get done.’ I think the public will be far less sympathetic. They’ll say, ‘Come on, guys. Get over it.’ “

The bad news regarding the two-thirds required supermajority for tax increases is that the government is deadlocked by one third of its members. There is a bright side, Herzik argued. “The good news is that we’ll get more of a consensual product rather than one that one side crammed down our throats. … It forces us to work together.”

That’s one philosophy of how democracy is supposed to happen.

“The truth is somewhere in between,” Herzik said. “Both sides have enough power to where the other side has to negotiate. That’s the classic dilemma of American politics—fragmented power. It’s not an efficient system, and it wasn’t designed to be.”

Herzik said he laughs whenever he hears the idea that government should be run like a business.

“Because the system is open to so many voices, and those voices all have a little chunk of power or can combine to have a chunk of power, you can slow down the system,” he said, “or have it turn in certain ways that it wouldn’t if it were run like a business.”

If Nevada’s government were a corporation, the chief executive would be none other than Kenny Guinn, Herzik said.

“Then the Republicans would be irrelevant, and we’d have $980 million in new taxes," he said. "That’s the way it would be. … But the Republicans are using the inefficiencies of government to protect their cause. I bet you they don’t even see the irony."