Monday, June 9, 2003 | 11:15 a.m.
CARSON CITY -- When lawmakers resume efforts to agree on a tax plan Tuesday, they must include a limit on future tax increases if they want the proposal to pass, Assembly Minority Leader Lynn Hettrick said today.
His Republican caucus has blocked new taxes so far, but Hettrick, R-Gardnerville, said he intends to seek a compromise today.
Assemblywoman Chris Giunchigliani, D-Las Vegas, a member of the special committee on taxes in the Assembly, said she has not heard of any negotiations.
The Legislature has been deadlocked for weeks in the debate over proposals to increase taxes to solve the state's budget crisis.
A tax plan in the Assembly lost Saturday on a 23-18 vote. It needed two-thirds, or 28 votes, to pass. The Senate's tax plan also was defeated, 13-8. It needed 14 votes to pass.
Senate Majority Leader Bill Raggio, R-Reno, said at least one of those who voted against the plan wanted a cap on the taxes. And he said that could be accomplished when the lawmakers return to work in special session tomorrow.
Hettrick said he wants to see a cap on future spending, much like is called for in Assembly Joint Resolution 18. Hettrick said the budget increases should be tied to future population increases, economic growth and the consumer price index. The index is a measurement of changes in the retail prices of a constant marketbasket of goods and services. It is computed by comparing the cost of the marketbasket at a fixed time with its cost at subsequent or prior intervals.
The limit could be overridden with a two-thirds vote of the Legislature, he said.
Hettrick today also repeated some Republicans' calls for additional trims in the budget as well as in the tax plan.
But Guinn said he won't reopen the biennial $4 billion spending program. He has already signed the appropriations and authorization bills that provide the money to keep the agencies running for the next two years.
Marybel Batjer, chief of staff for Guinn, said today there won't be a Cabinet meeting in the next day or two to discuss contingency plans for reducing spending. State department heads have been notified, however, that they will be "on call" just in case, she said.
The largest problem looming, she said, is funding for the school districts. The $1.6 billion school aid bill hasn't passed the Assembly yet. Unless the legislation is approved before July 1, there won't be any money released to schools on that first day of the fiscal year, Batjer said.
She said the administration is looking into whether the school districts can spend their local money first.
Today lawmakers get to finish their first two days off in weeks before returning to a deadlocked legislative process replete with acrimony and the lack of consensus on education funding.
A series of setbacks Saturday caused Guinn to extend the current special session and remove any time deadlines from his proclamation ordering lawmakers to pass an education budget and the taxes to fund it.
Both the Senate and Assembly voted down different $860 million tax packages Saturday evening, so Guinn gave the 63 legislators a two-day break Sunday and today.
"I think everybody's tired," Guinn said late Saturday night in his office after lifting the deadline from his proclamation ordering the special session.
Guinn said Saturday's vote in the Senate, which came up just one vote shy of the two-thirds majority for passage, suggested to him that lawmakers are willing to approve the tax package if a slight amendment is made.
An amendment to provide a capping mechanism in the net profits tax -- a device to exempt a certain number of businesses -- will be drafted over the next few days for the lawmakers' consideration Tuesday, officials said.
"I think it has the potential to get there," Guinn said.
Senate Majority Leader Bill Raggio, R-Reno, and Assembly Speaker Richard Perkins, D-Henderson, assured Guinn that lawmakers were making progress and could pass a tax plan by the end of this week -- even though they are already a full week into overtime.
Guinn did not set any new deadlines, but made it clear the calendar itself serves as one since the fiscal year ends June 30.
"They'll have to decide," he said. "Do they want to shut down K-12 schools on July 1?"
The state Senate has already approved the $2 billion Distributive School Account bill and another measure regarding class-size reduction.
But on Saturday night, the Senate voted down the tax bill as one Democrat joined seven Republicans in opposition.
Shortly thereafter the Assembly voted down its version of the tax plan, 23-18, along strict party lines. Assemblyman John Carpenter, R-Elko, was absent.
In the Senate, Raggio had counted votes before convening the floor session for a vote on the tax bill. Raggio and another lawmaker who was in the caucus that preceded the floor session said Sen. Mark Amodei, R-Carson City, had committed to vote for the bill.
But when the vote was taken Amodei joined the opponents, the vote failed and few comments were made on the provision.
Others voting against the measure were: Maggie Carlton, D-Las Vegas; Barbara Cegavske, R-Las Vegas; Warren Hardy, R-Henderson; Ann O'Connell, R-Las Vegas; Sandra Tiffany, R-Henderson; and Maurice Washington, R-Sparks.
Carlton, who has said all session that she supports $1.3 billion in new taxes, voted against the $860 million bill because, she said, "it will not get us where we need to be."
She also called the net profits tax a Band-Aid and said it was not as broad as it could be.
The Senate's bill included a 3 percent net profits tax that exempted the first $50,000 of a business' net profits. The bill also included a 1 percent room tax increase; a 10 percent live entertainment tax and increased levies on real estate transfers, cigarettes, liquor, slot routes and gaming.
In the Assembly, the party-line vote was sparked early Saturday morning when Democrats voted in committee to approve a tax bill that included the $2 billion education funding bill and a class-size reduction measure.
Assembly Republicans cried foul and held up a legal opinion supporting their call that a school budget vote could be taken separately from a tax vote.
"It's unprecedented that we would put these two together," Sharron Angle, R-Reno, said in committee.
Assemblywoman Sheila Leslie, D-Reno, summarized the Democrats' position, saying: "You're either for education and the money to fund it, or you're a hypocrite."
The Assembly's measure, Assembly Bill 1, included a 5 percent net profits tax with no exemption; a 5 percent financial institutions tax and a steeper increase in the business activity tax. The Assembly bill did not include a room tax.
When AB1 reached the floor for a vote at 7:15 p.m., Giunchigliani rose in support of the measure, even though she said it fell short because it lacked full-day kindergarten and smaller class sizes for kindergarteners.
"We still make 5-year-old babies deal with class sizes of 45," Giunchigliani said. "Shame on us."
Giunchigliani scolded Assembly Republicans who started the five-day special session with a call for yet another special session to reopen the budget and reduce the amount of spending. She suggested that move was retaliation against Guinn, who had called some of the same Republicans "irrelevant" at the start of the regular session.
Hettrick said his caucus had no choice but to vote down the education budget because of the tricks Democrats had pulled.
"I won't deal in spin or anger in my remarks," Hettrick said.
Hettrick said the only reason the state's appropriations bill passed on the last day of the regular session was because it didn't require a two-thirds majority. Only bills requiring tax or fee increases require the two-thirds.
"Our statement was clearly made in our vote," Hettrick said of passage of the appropriation bill June 2 without any speeches about the level of funding being too high.
The appropriations bill, which has already been signed into law by the governor, passed the Assembly 24-18 in the last hour of the regular session.
Assemblyman Joe Hardy, R-Boulder City, said he loved children but thought the tax package "can be improved."
Assembly Majority Leader Barbara Buckley, D-Las Vegas, gave an impassioned speech about the state's fiscal problems, overreliance on the gaming industry and need to diversify its tax base.
"We were not elected to demagogue. We weren't elected to argue," Buckley said. "We were elected to fix things."
The 120-day regular session ended last Tuesday without a vote on a tax package. Guinn ordered lawmakers into a special session June 3 and then extended the session by two days after the Legislature failed to take a vote by the initial 5 p.m. deadline Friday.
The special session, which began last Tuesday, now is costing about $50,000 a day, much more than the $10,000 to $15,000 daily cost that was estimated at the beginning of the special session, officials said.
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