Taxing issue

Education funding is shaping up as an important issue in this election year, though often in indirect ways.

Democratic Clark County Sen. Aaron Ford—who voted for a major tax increase to raise money for schools last year, and would normally not want to raise the issue—visited Reno to ask if Washoe Republican state senate candidate Heidi Gansert would have voted for the hike. The hike is not popular in Gansert’s GOP so she declined to answer. The Democrats are raising the issue against her because she’s expected to be a strong general election candidate, so they are hoping that little known Republican Eugene Hoover will take her out in the GOP primary. That would improve the prospects of Democrat Devon Reese.

A similar strategy was used by U.S. Sen. Harry Reid in 2010, who was able to focus negative attention on Republican Sue Lowden, throwing the primary to sometime Republican Sharron Angle, who Reid then easily beat by six percentage points.

Republican Sen. Ben Kieckhefer then came to Gansert’s defense, though he, too, would probably rather not talk about the tax hike. He voted for it and the Washoe County Republican Central Committee has, as a result, called for his recall (“Mixed message,” RN&R, Sept. 10, 2015). But it’s easier for him to address it. She’s up for election. He’s not up for reelection.

Gansert is Gov. Brian Sandoval’s oldest political ally, dating back to their days at Manogue High School when they served as student officers together. When he became governor, she resigned from the Nevada Assembly to become his chief of staff. It would be surprising if she did not support his position on the commerce tax, which he recommended and signed.

The Democrats didn’t let go of it. This week, on March 15, the Nevada Democratic Party sent out a news release headed, “Why Is Heidi Gansert Still Hiding Her Position on Education Funding?”

Hoover, Gansert’s Republican opponent, went to the legislature last year to speak against the commerce tax. He owns a courier service, said the tax would hurt small businesses like his, and said that he would support a ballot measure to repeal the tax.

The tax was subsequently amended to set a $4 million threshold before a business pays the tax.

Such a referendum petition is now circulating for signatures. It is a double-edged sword. Ballot measures appear on general election ballots, not primaries. If the referendum qualifies for the ballot, it will no doubt draw opponents of the tax to the polls where they can then vote on candidates. It will also draw supporters of education to the polls where they can do the same thing. Which side will benefit more? Will voters who go to the polls specifically to vote on the ballot measure be mostly trying to save schools or kill the tax?

“Well, that’s it,” said political analyst Fred Lokken of the portentous choice.

It’s an important question because the answer is also likely to determine whether they vote for Republicans or Democrats elsewhere on the ballot.

When the Nevada sales tax was created in 1955—an enormously unpopular decision—it was done specifically to aid schools that were feeling the impact of the baby boom, just as the commerce tax was created for schools. A referendum to repeal the sales tax qualified for the 1956 ballot and was marketed as a “Save our schools” proposition. The repeal of the sales tax was defeated by more than two to one—69 to 31 percent—and the Democrats won the state’s only seat in the U.S. House, a U.S. Senate seat, and the Nevada Assembly (holdovers saved the Nevada Senate for the GOP), even though Republican President Dwight Eisenhower won a landslide at the head of the ticket.

Lokken said the wording of a ballot measure and the way it is marketed will likely affect which political party most gains from having the measure on the ballot. Republicans will treat the measure as a tax issue while Democrats treat it as a school issue, but otherwise no one knows the coming context of the referendum campaign.

Without knowing those factors yet, Lokken said he would expect Republicans to gain most from the commerce tax referendum qualifying for the ballot. He thinks so because of the popularity of early voting. Each election, early voters have become a larger percentage of overall turnout, and “for 10 days before Election Day, early voters tend to be very conservative, very old and very white.”

Another factor that cannot be predicted is Nevada’s growing reputation as a corporate welfare Mecca. If state officials had not spent years handing out huge subsidies to out of state corporations, Nevada might not be suffering from a lack of school funding in the first place. School districts have been hurt by STAR bonds (sales tax anticipated revenue). If large corporations get aid from government, will voters see schools as equally deserving? More to the point, will there be anyone to make that case? Democrats and Republicans have often voted in tandem to grant corporate welfare.

There are other factors that generally have not yet surfaced in most public debate. For instance, referendums deal with existing laws, and a law which is approved by voters in a referendum cannot then be changed by the legislature without another vote of the public. If the referendum seeking to repeal the commerce tax qualifies for the ballot and the petition is then defeated by voters—thus retaining the tax—all its provisions, including the $4 million threshold, would be protected from change by the legislature unless the voters approved. So sponsors of the measure will gain whether it wins or loses. If it wins, the tax will be dead. If it loses, the threshold will be enshrined in law that will be very difficult to change.

The Elko Daily Free Press, which recently covered State Treasurer Ron Knecht’s support for the referendum, editorialized, “We would like to see Knecht ’win’ by getting his measure on the ballot. Then, if he ’loses’ by voters ratifying the tax, it will mean the rate is set in stone—thereby protecting small businesses from being sucked into its web.” The headline on the editorial: “Anti-tax referendum could win by losing.”

Life for candidates and the referendum will be further complicated in Washoe County, where voters will face a second schools tax measure on their ballots—a sales tax hike.

Lokken said he has rarely seen a year’s politics so difficult to predict, given numerous factors that could affect the campaign. He pointed to the presidential race and the unexpected emergence of candidates Bernie Sanders and Donald Trump as evidence.

“We don’t know how having recreational marijuana on the Nevada ballot will be a factor,” he said. “We have no idea how the U.S. Senate race is going to connect with voters.”