Monday, March 24, 1997 | 11:59 a.m.
CARSON CITY -- Dan Yaffe's patience -- and his wallet -- are being taxed.
Yaffe, the 48-year-old owner of Philadelphia Freedom, a Las Vegas mortgage company, is keeping a wary eye on several major tax proposals the Legislature is addressing.
At the top of the list: a quarter-cent sales tax increase in Clark County to help pay for a $2.9 billion water project. The tax would remain in effect for 28 years.
Yaffe isn't alone in his skepticism of raising sales taxes. In a recent University of Nevada, Reno poll, 48 percent opposed a sales tax hike if more revenues were necessary, while just 35 percent favored a sales tax increase.
What troubles small business operators like Yaffe is that Nevada's booming economy was supposed to have meant taxes weren't going up this year.
During the fall election, many legislative candidates pointed to Nevada's budget surplus, which exceeds $250 million, and campaigned on a pledge not to raise taxes.
And when the Legislature began in January, Gov. Bob Miller presented a $3.04 billion two-year spending plan that included no new taxes.
But Miller's "no new taxes" message may have unintentionally lulled some small business owners and average citizens into a false sense of security, not unlike George Bush's 1988 "read my lips" pledge he later had to recant.
Already, Miller has praised the casino industry for offering a modest room tax hike to help pay for growth in Clark County.
In fewer than three months since the opening gavel of the 1997 legislative session, a stack of tax proposals has begun to pile up. A list of tax issues compiled just through the first month of the Legislature is eight pages long. The list doesn't include plans in Clark County for additional sales, room and real-estate transaction taxes that have since cropped up.
More than a few people are wondering how the tax situation changed between the 1996 campaign season and now.
The three-word answer, according to Yaffe and others, is: politics as usual.
"When I see they want to increase the sales and property taxes, I say to myself, 'It's the same old story with government,'" Yaffe said.
Taxes should be lowered during healthy economic times, not raised, he said.
"If you have a surplus, why don't you reduce the sales tax?" Yaffe asked.
In contrast, hotel-casinos and home builders have stepped forward with a different perspective, offering to have taxes increased on their industries.
They have acknowledged that the needs of the community are outstripping the tax revenues and have asked other segments of the business community to contribute also.
It's still difficult, though, for many people to understand why there is a need for taxes when there is a statewide budget surplus. The difference between what politicians say, and what they do, can be likened to a shell game, some experts say.
University of Nevada, Reno Professor Eric Herzik said Nevada politicians are adept at promoting "hidden taxes" they can later say they had no hand in raising.
That is allowed to happen, he said, because few politicians are willing to stand up at election time, as 1984 Democratic presidential candidate Walter Mondale and only a couple others have tried, and offer long-range spending plans for long-term problems.
That would take someone with the political courage to say that a fast-growing state has a lot of expenses that will cost a bundle of money.
Because that's seldom done, the result is that a patchwork of taxes are thrown together to take care of pressing needs in individual cities and counties.
The downside, according to Herzik and others, is new pressing needs always arise, meaning the public gets stuck with taxes they were led to believe wouldn't be necessary.
"If I lived in Southern Nevada, I'd be upset," Herzik said.
An example of the problem Herzik talks about is the sales tax being proposed in Clark County to complete construction of a water pipe and treatment facilities.
While the county has growth-related needs of up to $10 billion, no one at the state level has offered any long-range plan for dealing with it.
Casinos are spearheading a drive to finance the water project with an increase in water rates, hook-up fees and taxes, but a bill introduced last week asking the Legislature to approve the taxes and increased fees seems dead on arrival.
Miller wants the Legislature to pass a bill "enabling" Clark County Commissioners to increase the fees and taxes. He said he won't sign the bill if the Legislature itself votes to raise taxes.
Miller defends this tactic by pointing out that his message about taxes not being raised at the state level has remained consistent.
"My position is I don't support the Legislature imposing a tax on one county," he said.
Another problem with hidden taxes, according to Herzik, is that powerful special interest groups, who can afford to hire high-paid lobbyists, can protect their own industries while making someone lower on the tax food chain--namely, the proverbial "little guy" -- pay the tab.
Critics say the casino industry, which is pushing hard for the water project sales tax, has been successful in avoiding a direct tax to pay for more water -- the industry's No. 1 issue -- while spreading the pain to taxpayers throughout the county. Water rates will jump 72 percent to pay for a second pipe from Lake Mead.
"It shows you the power of the casino industry in this state," Herzik said. "Growth is spawned by the casino industry, but (politicians) don't really take them on."
Yaffe, the mortgage company owner, said he can't knock any group, including small business associations, for hiring lobbyists.
"Lobbyists are very good for the people they represent," he said.
But small business owners often feel "frustrated" by the political process, because they don't have time on a personal level to become involved with every issue. The end result, he said, is that the job market shrinks.
"The smart employer says, 'You can't beat City Hall, but you can hire fewer employees,'" he said.
Assembly Taxation Chairman Bob Price, D-North Las Vegas, said politicians who campaign against taxes are being irresponsible.
"I'm always a little leery of my colleagues who say, 'No taxes,' " Price said. "I doubt there's been a legislative session in recent years where there hasn't been a tax. It's a fact of life."
His point is illustrated by a remark that ran in The Nevada Tax Review newsletter, which says, "In the final analysis, no one escapes taxation, even though he never receives a tax notice."
That remark was printed in April 1923.
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