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Governor Brian Sandoval called on the Legislature to support his controversial budget that aims to increase fees and taxes to pay for a big bump in education funding.
The popular Republican governor spoke Wednesday afternoon during a joint tax committee hearing about his plan to raise $437 million during the next two years. All other Wednesday afternoon committee meetings were canceled.
He told lawmakers they have a once in a lifetime chance to change the course of Nevada. He was joined by former governors Bob Miller, Robert List and Richard Bryan.
Bryan Wachter with the Nevada Retail Association told KNPR’s State of Nevada that although his group agrees with the governor’s goals, his plans to get there is are problem.
“We congratulate the governor on his leadership for the budget itself in terms of where he wants to spend state resources,” Wachter said. “The question we have is: is a gross receipts tax the best vehicle to get that money? We disagree.”
Wachter believes the proposal puts an undue burden on businesses because of the structure. He believes changes to the modified business tax, the sales tax and the live entertainment tax are better ways to generate more revenue.
“We need to do things to our existing revenue streams to make them better, more efficient and would actually bring in more dollars before we look at something that is incredibly new, incredibly unpredictable,” Wachter said.
So far, the biggest cry against the governor’s budget has come from Sandoval’s own Republicans, who own majorities in the Senate and Assembly.
Assembly Majority Leader Paul Anderson also applauded Gov. Sandoval’s efforts to improve the state’s education system but he too has reservations about the business license fee structure.
“I guess my biggest fear in all of this is basing, what I believe are very important reforms, very important investments…on a tax that’s new to this state and unproven,” Anderson said. “We agree on the goal in many aspects but we’re not sure if this is the right path.”
He also said that before the governor’s proposal can move forward the revenue projections and fee impact must be verified by Senate and Assembly staff.
The details of Sandoval's plan were revealed in SB252 which was introduced in the state Senate on Wednesday. The more than-200 page bill details Sandoval's plan to change the state's flat $200-per-year business license fee to a tiered system with rates ranging from $400 to $4 million a year based on revenue and industry type.
Matt Taylor with the Nevada Registered Agent Association said he doesn’t agree with the proposal because of the potential loss of businesses that are registered in Nevada but don’t actually have a physical building or employees in the state.
“Nevada gets a great benefit from that. At current rates we’re raising roughly $65 million per year in revenue for those business,” Taylor said, “I think this issue has not been examined.”
Anderson disagrees with that idea. He admits there is a chance that Nevada will lose some businesses that are Nevada businesses in name only but for businesses that are really invested in the community improving education is a priority.
“The goal we’re trying to achieve is education reform and investment and that’s absolutely paramount” Anderson said. “I simple can’t balance the equation on those folks versus everyone that’s here has skin the game and has a desire to move this state forward.”
Las Vegas Review-Journal columnist Steve Sebelius said the governor really needs to court businesses.
“Who I really think he needs to persuade is the business community,” Sebelius said. “Ultimately, he’s got to bring those folks onboard or it will be a guerilla war in the Legislature as people try to pick off lawmakers one by one to vote for one proposal or another.”
However, one business community that has been relatively silent is gaming. Sebelius guesses the industry is more supportive of the effort than not but so far it has not taken a high-profile role in the current debate.
For the most part, Democrats appear to like the budget because of its emphasis on improved school funding, but that hasn’t stopped one democratic leader from proposing an alternative budget.
State Sen. Pat Spearman has unveiled an alternative tax plan that she says would generate as much revenue as Gov. Sandoval’s. Under Spearman’s plan, the modified business tax would be repealed and replaced with a 0.47 percent tax on business gross receipts that exceed $25,000 in a quarter.
The questions is: will the governor get enough support from his own party?
“I don’t know if we can say that he has all of the Republicans. I think he’s got most of the moderate Republicans, the business-type Republicans. But there is still vehement opposition in the Assembly amongst some of the anti-tax Republicans to this plan,” Sebelius said.
Sebelius believes the governor’s budget will sail through the Senate. The real fight he believes will be in the Assembly.
“He has put all of his prestige on this,” Sebelius said, “The difficulty has always been in the Assembly and that’s where the battle is going to be.”
The two-thirds of a majority needed to pass the budget could end up being the biggest hurdle for the governor, Sebelius added.
Anderson believes everyone in Carson City is onboard with the idea that changes need to be made, the question remains how will lawmakers get there.
“This is us focused on solutions,” Anderson said, “We’re in a very unique position to get some solutions truly done.”
(The Associated Press contributed to this report)
Steve Sebelius, columnist, Las Vegas Review-Journal; Matthew Taylor, president, Nevada Registered Agent Association; Assembly Majority Leader Paul Anderson, R-Las Vegas; Bryan Wachter, director of government affairs, Retail Association of Nevada