Two Democrats break ranks, call for state tax hikes

By David McGrath Schwartz

Saturday, Feb. 13, 2010 | 2 a.m.

Although Democratic leadership in the Legislature has shown no interest in raising taxes, two lawmakers have broken ranks to say they don’t think the only solution to Nevada’s budget crisis is to cut.

Assemblywoman Peggy Pierce and Sen. Bob Coffin, both Las Vegas Democrats, said the Legislature should consider raising taxes during a special session this month to avoid some of the worst cuts.

“We’ve already cut too much,” Pierce said. “We have the smallest government in the country and it’s not even close.”

She noted Nevada has the second- or third-lowest tax burden and ranks among the worst states in a variety of indicators. “There’s a connection. This chronic underfunding of government, our regressive tax system punishes working people, and does not require many, many businesses to pull their load,” she said.

Coffin said cuts will be necessary, but they won’t be enough to cover the state’s $881 million deficit alone.

“We have to do something to stop this carnage,” he said. “You’ll find under my recipe, we’re still going to have to cut budgets, big time. But we’re going to have to raise taxes ... If there was any waste, or excess, it was squeezed out in the first four rounds of budget cuts. This is the fifth round, and the biggest.”

Democratic legislative leadership, including Senate Majority Leader Steven Horsford and Assembly Speaker Barbara Buckley, have said the state should not raise taxes during this prolonged recession.

That position has prompted criticism from traditional Democratic allies such as the teachers union and social service advocates. But even some liberal lawmakers agonizing over the cuts being negotiated with Gov. Jim Gibbons have noted that as a practical matter, the two-thirds majority necessary to raise taxes in the Legislature simply isn’t there.

“I don’t think all of my colleagues don’t want to talk about taxes. I just have a shorter fuse about being calling a coward,” Pierce said of criticism lawmakers have received from their allies.

Coffin said: “I’m working on leadership.”

On how to raise the money, Pierce and Coffin disagree.

Pierce favors a broad-based business tax on profits. This, she said, would capture large businesses — including liberals’ favorite target, Wal-Mart — that don’t pay their fair share.

Coffin says the state needs a tax that will bring in revenue immediately. An increase in the sales tax is “the quickest, most publicly acceptable,” he said.

But questions about such a solution remain.

The Nevada Constitution allows the governor to call special sessions and set the agenda. How specific a governor can be — can the agenda enumerate only solutions that the CEO finds palatable, for example? — has never been resolved.