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August 30, 2015

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Sandoval quells conservative outrage over reversal on tax pledge

Brian Sandoval

Brian Sandoval

Chuck Muth

Chuck Muth

Gov. Brian Sandoval’s initial decision to reverse himself on a promise not to extend the 2009 tax increases prompted conservative outrage. But in the days following his pronouncement that the expiring taxes were on the table, he has reined in his critics by dialing back his original pronouncements, reaching out to vocal conservatives and working closely with Republicans in the Legislature.

Last week, Sandoval appeared to break the quintessential political promise, a surprise from a governor who had shown no signs of backing off his vow to steer a no-new-taxes budget through the Legislature.

That vow, Sandoval made clear time and again, included allowing the 2009 sales, payroll and business license tax increases to expire as scheduled July 1.

Several conservatives immediately vented their frustration after Sandoval’s advisers said the governor was willing to extend the tax increases because of a Nevada Supreme Court ruling that has blown a hole in his budget.

“It is quite disappointing to see that after more than 100 days of Gov. Sandoval consistently advocating for the interest of the Nevada taxpayers during this legislative session, he reportedly is ready to precipitously abandon his promise not to raise taxes,” wrote Steven Miller of the Nevada Policy Research Institute.

Conservative operative Chuck Muth, keeper of the anti-tax pledge and adviser to several conservative state Republican senators, was a little more blunt.

“Once you lose the trust of the people who put their full faith in you, who stuck their necks way out for you, who believed in you, you can never get it back,” Muth wrote. “Make a promise, keep a promise.”

But since Thursday’s court decision, Sandoval has persuaded Muth to retract his harsher statements and allow the administration some breathing room to come up with a plan.

The issue is whether the state could take $62 million in user fees from Clark County’s Clean Water Coalition. But Sandoval, a former federal judge, is concerned the opinion — that picking and choosing among local government funds to loot for the state general fund — could have a broader effect. The court concluded such pillaging must be uniform for counties and local governments to be constitutional.

So although the ruling dealt only with the coalition’s levy on Clark County sewer customers, it could apply to all of the county and local government dollars Sandoval had wanted to take to finance state government — an amount totaling $656 million.

Republican lawmakers, even those who have signed pledges not to raise taxes, have largely avoided criticizing the governor. And although a number of conservatives interviewed by the Las Vegas Sun admitted they are uneasy about how Sandoval will respond to the Nevada Supreme Court decision, they are holding their fire.

“It’s a little bit premature because we don’t know what he’s going to do,” Muth said after he spoke with Sandoval. “We don’t know whether he’ll take some of the sunsets or all of them. Whether he’ll take a narrow view or a broad view (of how big the budget hole is) and frankly, what he gets in return out of concessions from the Democrats.”

The Sandoval administration bought time with Keystone Corp., an anti-tax business group that had been one of the loudest voices opposing bargaining the expiring tax for reforms on things such as prevailing wage, education, construction defects and collective bargaining.

“There is great concern among Keystone members in the last 48 hours, but no one has seen a plan and we’re willing to withhold judgment,” said Robert Uithoven, a conservative consultant who is affiliated with Keystone.

The group had lambasted Assembly Republicans and the Las Vegas Chamber of Commerce for trying to negotiate policy reforms in exchange for tax increases.

Now, however, Uithoven said Sandoval can make a compelling argument for lifting the sunsets if he can put a price tag on some of those reforms — allowing conservatives to compare, for instance, how much limiting collective bargaining for local government employees could save taxpayers versus how much lifting the sunsets would generate in new revenue.

“Of course there will be some people on the right who are not happy,” Uithoven said. “But he has a lot of time to get his message out on why he is doing this.”

Tray Abney, government relations director of the Reno-Sparks Chamber of Commerce and tax increase opponent, said Sandoval might be the target of attacks from the right if he extends some of the expiring taxes.

“Yes, it makes it a little more politically difficult for him, but he’s more than capable of explaining to the state and the voters the need for it,” Abney said.

The Sandoval administration quickly dialed back its original statement that the governor would simply lift the sunsets to plug the $656 million hole created if the state can no longer take local government funds.

On Friday, Sandovav adviser Dale Erquiaga said the governor will only consider lifting portions of the sunsets to generate just enough revenue to offset cuts he thinks are unacceptable. He also said lifting any sunsets must be accompanied by action from the Democrats on Republican policy priorities.

Even the most conservative legislators, who have in the past chastised Republicans who support taxes, stopped short of criticizing Sandoval.

Still, it may be a short-lived detente.

Assemblyman Ed Goedhart, R-Amargosa Valley, admitted to some frustration at the administration’s broad reading of the court decision, putting the budget hole at $656 million. “This is a $65 million hole, not a $600 million hole,” Goedhart said, noting the state treats counties differently in many areas. “For them to take this ruling to say it’s a $650 million hole doesn’t pass the common-sense test.”

Goedhart refused to criticize Sandoval, but cautioned that lifting the sunsets would only deepen mistrust among voters skeptical that politicians ever keep their word. The 2009 tax increase was supposed to be temporary, he noted.

“People never trust the government to have a temporary tax,” Goedhart said. “So this will just feed into some people’s skepticism that the government ever lives up to its promises.”

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