Las Vegas Sun

March 29, 2024

Assembly takes up tax package

Role of specialist teachers will be known by July 15

Clark County School District specialist teachers who have been assigned to regular classrooms because of uncertainty over the K-12 budget will be sent back to their previous assignments if the state Legislature passes a schools budget by July 15, Superintendent Carlos Garcia said Thursday.

School officials had said July 1 was the deadline for sending the 411 literacy and technology specialists, and Gifted and Talented Education program instructors back to the jobs they had last school year.

But Garcia said Thursday that the July 1 date was identified as the deadline because it is the beginning of the next fiscal year. However, a closer look at exactly how long the district could wait to hire hundreds of new teachers showed the district could wait two weeks after that, he said.

"The drop dead day for us is July 15," Garcia said. "If it is resolved before then we can put them all back where they want to be."

Beginning a hiring push on July 15 would give the district just over a month to find at least 411 new teachers to fill the spots the specialists have been assigned to, he said

While legislators wrestle with propose tax increases that are linked to the K-12 budget, the uncertainty over the outcome of the budget battle has left school officials wary of hiring new teachers. The district has opted to leave nearly 1,000 positions open for the coming school year, and has filled 411 of them with the specialist teachers.

Garcia said that decision was made because the top priority for the district is to have teachers in all classrooms at the beginning of the school year.

School Board member Susan Brager-Wellman said she's hopeful the Legislature will come to a last-minute compromise that will let the specialists return to their previous assignments.

"It's not anyone's intention to go down this road, but we can't have classrooms without teachers there," she said.

Garcia and School Board President Sheila Moulton said they weren't so optimistic the budget will be passed soon enough.

If the K-12 budget is held up for months, Garcia said the district could stay open through August, although doing so would require about $13 million in deficit spending.

Garcia has said the school district could sue the Legislature for education funding, but Moulton said a lawsuit is not a likely or good option and Garcia has said a lawsuit would be a last resort.

Speaking during the Thursday school board meeting, Garcia said he is not taking sides in the battle between Democrats and Republicans in Carson City.

"All we want is a budget," Garcia said.

"I'm happy the senate took the action they did and I hope the assembly follows," Garcia said after the meeting.

"The senate's moving but in the assembly it's more of the same," Moulton said. "They've got to stop being martyrs and become heroes."

CARSON CITY -- The Legislature moved closer to passing a plan for new and increased taxes Thursday, with the Senate approving and moving the measure to the Assembly, where members began retooling the package in the image of their earlier bill.

The progress provided some with optimism that the state's two-year, $4.8 billion state budget will have a source of funding. Others are not as confident. While progress continued in the lower house, some Republican leaders warned that the final bill may not have the two-thirds majority needed to pass the increases into law, setting the stage for a constitutional showdown if the already-passed budget is not funded by July 1.

The Assembly, by simple voice vote, took the Senate's $873 million package of tax increases and added numerous amendments transforming the Senate legislation into a measure resembling the Assembly's tax bill. Included in the Assembly package but missing from the Senate bill was a franchise tax on revenues for all businesses taking in more than $100,000 in a quarter-year.

The franchise tax would raise $206 million over the next two years, and allowed the Assembly to lower the Senate's proposed 1 percent payroll tax by nearly half. The changes would still provide for new revenues of about $860 million -- the funding level demanded in the budget that has already been passed by both houses and signed into law by the governor.

Assembly Speaker Richard Perkins, a Henderson Democrat, set voice votes for the amendments while the Assembly worked as a "committee of the whole." But today the Assembly will have to reconvene under different rules -- ultimately demanding a two-thirds majority of the 42 members, a political hill that is much tougher to climb.

The Legislature has been deadlocked for weeks as it teeters on the brink of the largest tax increase in Nevada history. One-third of the legislators can block the tax increase, and holdouts have so far successfully done so through the regular session, one special sesssion and now this, the second special session called by Gov. Kenny Guinn, a Republican who has been sharply criticized by tax opponents in his own party.

Guinn says he will not reopen the budget for more cuts. Guinn, Attorney General Brian Sandoval and the Legislature's legal counsels have said the Assembly and Senate has a constitutional mandate to fund the budget they have passed.

That has not yet swayed some of the holdouts. Assemblyman Josh Griffin, R-Las Vegas, said Thursday that he does not think the tax supporters now have the votes to pass the measure. Griffin, a freshman lawmaker and assistant minority leader, was elected on an anti-tax platform, but has since become an advocate for the spending and tax increases backed by leadership in both parties and by Guinn.

Others were more optimistic. Majority Leader Barbara Buckley, a Las Vegas Democrat, said the Assembly still has four days to pass a funding bill before the constitutional equivalent of a perfect storm hits Carson City.

"I think that in spite of the dire consequences, we had a number of positive steps forward today," Buckley said Thursday. "I think we have made a lot of progress in the last 24 hours and we'll continue to make a lot of progress before June 30."

Buckley, an attorney, said failure to pass funding for the schools and state government would likely prompt court action.

"Certainly if we do not get the votes for this compromise tax revenue plan, the schools will face dire consequences and the legislators will have violated their constitutional duties," she said.

A lawsuit could not force legislators to change their votes, but it could force them to sit in the Legislature until the state and public school budgets are funded, Buckley said.

Even those who are skeptical of the need for many of the new taxes recognize the problem. Dr. Joe Hardy, a freshman Republican from Boulder City who said he fears the impact some of the taxes in the package would have on business, said he agrees with Sandoval and Guinn that passing the funding mechanisms are a constitutional necessity.

"Realistically, we have an obligation," he said. "Realistically, we have to fund education."

Hardy, however, declined to say whether he would vote for the final tax package.

Those supporting the funding measures had good news Thursday.

The tax increases received supporting testimony from several key industries. Steve Holloway, Las Vegas Associated General Contractors executive vice president, told the Assembly that the tax increases in the bill are an "acceptable compromise."

To the holdouts against the measure, he said construction contractors, homebuilders, labor unions, real-estate agents, mining interests and others would accept a broad-based business tax to keep the state and its schools funded.

"The industries who will pay the lion's share of the taxes proposed (in the Assembly bill) support the bill," Holloway said.

Guinn, in an afternoon press conference in his office, said he was encouraged by the Senate passage of the tax bill, although he said the broader business franchise tax was probably better than the Senate's reliance on a payroll tax. The Assembly, in its amendments, changed the Senate bill to depend more on the business franchise tax.

Michael Hillerby, Guinn's assistant chief of staff, said the Senate approval of Senate Bill 6 Thursday "is a great first step."

Asked if this bill complies with Guinn's call for a broad-based business tax, Hillberby said the administration has to look at the details. "Having only a payroll component, we have some questions about that," he said.

But Hillerby was quick to point out that the Assembly has "other ideas" about a tax plan to pay for the two-year budget. "They have acknowledged they are going to have to go to conference committee" to hash out a final version of the tax plan, he said.

The Senate, by a vote of 15-5-1, passed the bill that has new or increased taxes in 10 categories, anchored by the payroll tax that will bring in 37.5 percent of the new tax revenue.

Senate Minority Leader Dina Titus, D-Las Vegas, said she opposed a payroll tax but voted for the bill to get the negotiations process moving with the Assembly. She said this tax should not be "the cornerstone and the big piece" of the package. Her comments reflect the opinions of many Democrats in the Assembly who want a broad-based business tax.

Still, the action by the Senate, on the second day of the second special session of the Legislature was the first time any major tax bill has been passed this year. Senate Majority Leader Bill Raggio, R-Reno, said the ball is in the Assembly's court now.

He said there will probably have to be some compromises with the Assembly. "We're going to have to make some adjustments," he said.

But he said he takes comfort in the details of SB6 because the bill "has made every lobbyist unhappy."

The only group that doesn't have a lobby, he said, is the people of Nevada.

Voting against the bill were Republicans Sandra Tiffany of Henderson, Barbara Cegavske of Las Vegas and Maurice Washington of Sparks. Democrats opposed were Maggie Carlton and Valerie Wiener, both of Las Vegas. Sen. Ann O'Connell, R-Las Vegas, abstained because of her ties to a financial institution.

There is a 3 percent net proceeds tax on banks and other financial institutions in the bill.

Passage in the Senate required a two-thirds vote or 14 members.

The present $4.8 billion budget is 24 percent higher than the spending program of 2001-2003.

Tiffany called the revenue increase needed to support it the "largest tax increase by three times" in the state's history. The budget has grown by 32 percent in public school aid and 30 percent in human resources while there's been only a 3 percent to 4 percent growth in population, she complained.

The Legislature, she said, has been hit with rhetoric that this budget is for such things as "kids and health care for seniors." She said there is going to be another $1 billion spent and questioned whether more students would be passing the proficiency exams and standardized reading and math tests. She suggested that things "are not going to change."

In addition, she said the average person is going to pay in a number of ways in addition to the tax increase -- such as higher hunting and fishing licenses and other fees.

Legislators said this was not a "perfect bill" but they voted for it to get the process moving so the Assembly could consider it, make changes and then send it to conference committee.

Sen. Warren Hardy, R-Las Vegas, said he believed some budget reductions could be made. He said he liked the payroll tax because it will not require establishing a "mini-IRS" to collect the tax. He also said he was worried about the impact of the 1 percent hotel room tax in his district, which includes Mesquite and Laughlin.

Sen. Joe Neal, D-North Las Vegas, noted he was unsuccessful in getting his plan for a major tax increase on Nevada casinos. He had advocated going to 10 percent of gross revenue, up from the present 6 percent. Instead the bill includes a 0.5 percent increase.

"I understand we can't get it all at one time," he said. "We owe it to children to provide education," he added as he endorsed the tax package. He said those who opposed the tax should reveal their reasons because if they don't they could be called "obstructionists."

Besides the payroll tax, Titus also said she opposed a section in the bill that limits growth in future budgets to a combination of population and inflation increases.

Titus said Nevada ranks last in a number of spending categories, and the budget limit would not give the state a chance to catch up.

But Neal pointed out earlier this section could be changed by the 2005 Legislature. One session of the Legislature cannot bind a future session, he said.

Raggio lashed out at "external forces," who are spreading misinformation about the budget. This did not include legislators, he said. But he said there are people who contend the state doesn't need a tax increase.

He suggested they were "living off this planet" and the state has been frugal in its spending. It has drained all of its reserves in the period after Sept. 11, 2001, when the economy fell on hard times.

It ranks 47th in the nation in payments for welfare, Raggio said. And nobody has suggested that the salary increases for teachers and state workers in July 2004 be eliminated.

"We came up with a responsible budget," the Senate majority leader said.

Republicans in the Assembly want to reduce the budget but they have not yet revealed where the cuts would be.

Sen. Mike Schneider, D-Las Vegas, described himself as the most conservative Democrat in the Senate and said, "I don't want to vote for taxes. But I'm ashamed to be in this state -- where we're last in every category." He said the state was last in the nation in funding for mental health and Medicaid.

He said the Legislature has not been "drunken sailors" spending money in the past years. He said the budgets have been "very lean."

Sen. Dennis Nolan, R-Las Vegas, reiterated that the overriding concern is a tax plan has to be passed by July 1. He said delay would take the state to the "threshold of a disastrous effect." He said it will be changed in the Assembly but the Senate fulfilled its responsibilities Thursday.

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