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July 28, 2015

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J. Patrick Coolican:

Horsford taking tax fight to local level

J. Patrick Coolican

J. Patrick Coolican

Steven Horsford

Steven Horsford

I walked into Senate Majority Leader Steven Horsford’s office in Carson City feeling pessimistic. A business lobbyist had just told me that most newly elected Republicans are ideologues committed to allowing taxes passed in 2009 to lapse and then to cutting schools, universities and social services — sometimes drastically so — to balance the budget.

Democrats have offered no plan of their own. More than 40 days into the 120-day session, they seemed to be replaying their 2009 strategy, decrying budget cuts while pretending they don’t need to raise taxes until the final month of the session. That’s when a few elder statesmen and women will emerge from a conference room and announce the latest triage dirty Band-Aid of cuts and tax increases to get the state through the next two years.

Except, this year, unlike 2009, many of those elder statesmen and women are gone, and there aren’t Republican votes for a budget deal.

The downbeat assessment from the lobbyist on whether Nevada will recover: Tourism, sure. But we’re dismantling key quality-of-life services. “Would you send your kid to college in this state after this?” he said.

Another veteran business lobbyist said he’d never seen anything quite like it, a toxic mix of Republican ideological intransigence and rampant Democratic political careerism.

Most Republicans have taken “the pledge,” a promise not to vote for a tax increase under any circumstances, enforced with priestly judgment by conservative activist Chuck Muth. Meanwhile, Democrats — including, presumably, Horsford and his Assembly counterpart John Oceguera — are eyeing one and potentially two open congressional seats, which can only serve to get in the way of the people’s business.

Bad vibes all around.

But after 30 minutes with Horsford, during which he did nearly all the talking, I came away thinking that at the moment, he’s probably being underestimated.

“I’m not playing,” he said sharply.

His first task, he said, was to gather information on the governor’s budget and determine how it would affect senators’ districts.

Now, in a series of one-on-one meetings, he’s showing them the effect, especially on rural community college campuses, rural mental health clinics and nursing care facilities.

Horsford has been criticized for not trying to schmooze Republican members; remember, he needs his own caucus, which isn’t yet solid, as well as three Republicans to override an expected Republican veto by Gov. Brian Sandoval.

His response: Friendly poker games and cocktails aren’t going to sway anyone, especially given how ideological the Republican caucus is and how loyal they are to Sandoval.

His guide, he said, isn’t famous U.S. Senate schmoozer Lyndon Johnson, but Tip O’Neill, whose famous line is “All politics is local.” He’s hoping senators will care more about what is happening in their districts and the social, economic, educational — and, yes, political — repercussions of the cuts than what Muth thinks.

This makes some sense, but I also detect a certain frustration with the entire process, and we’re only 40 days in. Relationships matter, and I’m not sure why he can’t be both LBJ and Tip.

In general, both he and Oceguera, whom I spoke to earlier in the week, seem intent on signaling a different narrative than “Democrats need Republican votes.” Now, it’s also, “Democrats are in the majority. You don’t have the votes either.”

Horsford said that on a parallel track, he’s been trying to show the problems in the governor’s revenue assumptions, with help from his liberal lieutenant, Sen. Sheila Leslie, D-Reno.

Together they’ve noted the tax department’s failure to audit gold mining companies’ generous tax deductions and raised questions about Sandoval’s attempt to borrow against future insurance taxes and take money from school bond funds.

Thursday, Leslie began hearings on the failure of our tax system, which studies have shown to be unstable and too reliant on tourism and development. Our high sales tax is regressive — meaning harder on working and middle class Nevadans than the rich — while the payroll tax is a tax on jobs.

Horsford’s concern isn’t just staving off the worst cuts in education. He also wants to reform the tax code. Merely continuing tax increases passed in 2009 isn’t good enough even if it raises enough revenue.

Among his list of tax reform ideas intended to make the tax system broader and more stable and fair:

• Expand the sales tax to services, which make up a significant portion of economic activity but go untaxed. The rate could be dropped to make the effect less regressive.

• Adopt the Texas franchise tax, which is a modified gross receipts tax on business and that allows for some deductions; or the Ohio commercial activity tax, which is a more pure gross receipts tax on business. Veterans of the 2003 tax fight, which went well into the summer and provided no permanent fix, are no doubt groaning. (Nevada is one of a few states in the country without some kind of corporate income or gross receipts tax.)

• Grab more money from local government while giving those entities more autonomy over their own taxes and spending.

Horsford insists the debate will happen this session, and this key question finally settled.

“I’m not looking to put a Band-Aid on it. Business and the private sector cannot have a tax discussion every two years. It creates too much uncertainty.”

He’s about to get pilloried from all sides because in addition to increasing taxes, he’ll be cutting spending and offering to compromise with Republicans on reforms that will outrage public employees.

Horsford said one of his goals has been to carry the debate “outside the building.”

“The building” is the ominous term many use for the Legislature and evokes a hive of swarming lobbyists pushing special-interest agendas.

So that’s why Horsford welcomed more than 1,000 mostly college students to the capital this week, hoping voters will pressure legislators to preserve education and other services.

I’m skeptical he can pull it off, if a bit more optimistic than when I walked into his office.

Coolican’s column appears on Tuesdays and Fridays.

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