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September 2, 2015

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Carson City Memo:

The Nevada tax battle is over for now, leaving liberals to play the long game

The tax battle is over. And if you don’t like state funding for education, health care or government services in general, you are on the losing side.

This fight has defined Nevada politics for at least the past decade. But recently, those in favor of higher taxes have concluded a significant revenue increase won’t get through the Legislature for the foreseeable future.

Led by Gov. Brian Sandoval, Republicans are promising to keep taxes at the current levels when the 2013 Legislature convenes. Without their support, doing anything more is impossible given the constitutional requirement that taxes pass with a two-thirds vote.

Going around the Legislature isn’t working either. A once-ballyhooed ballot initiative calling for a $1 billion business-profit tax still hasn’t been filed. More importantly, it has failed to draw the kind of broad coalition that could fund signature gathering and a public campaign.

That has spread a sense of resignation among those who believe state government and schools are underfunded. With higher taxes off the table, the pragmatists in this group have instead shifted to the more amorphous goal of “restructuring” the state tax base, in effect, laying the groundwork for more state money in the future.

Consider, for example, this statement from Sheila Leslie, a former state senator and one of the most liberal legislators: “I think the only way to get tax reform through the Legislature in the next two years is to have it be revenue neutral.”

Billy Vassiliadis, lobbyist for the Nevada Resort Association and a leading Democratic political consultant, said Republicans’ willingness to discuss “tax reform,” even if it doesn’t mean more money, is progress.

“We would welcome any step forward that seems smart, business-friendly and sensitive to constituencies served in education and health care,” he said.

Even, if it’s revenue neutral.

“If the discussion is meaningful, it’s a good place to start,” he said.

Bob Fulkerson, executive director of the Progressive Leadership Alliance of Nevada, said “it’s pretty clear” that taxes won’t be raised significantly in the immediate future.

“In the short term, next session, maybe the next one, it’s almost impossible to get taxes,” he said.

Liberals’ only hope for something sooner is “if the AFL-CIO gets enough support to pass its initiative,” he said.

The AFL-CIO, the state’s largest labor organization, has been talking about an initiative petition calling for a tax on business profits. The money would be earmarked for education.

The initiative is the outgrowth of frustration with the 2011 Legislative session, when Democrats and pro-tax businesses concluded the legislative process was broken and that it was impossible to reach the two-thirds requirement to pass a tax increase.

That left the ballot as the only way to raise taxes.

AFL-CIO Secretary-Treasurer Danny Thompson said the group plans to move forward with its initiative.

But they won’t have any help or money. The mining and gaming industries, which have long called for a broad-based business tax, won’t be there. The teacher’s union, which supports the concept and certainly the funding for education, won’t sign on.

Meanwhile, state Sen. Michael Roberson, R-Las Vegas, said last week that he would be open to a discussion of the state’s tax structure during the session but has also reaffirmed that he won’t support additional taxes.

State Sen. Mo Denis, D-Las Vegas, who will likely lead Democrats in 2013, said that for those who want more teachers in the classroom, or to restore state employees’ pay cuts, “there is no short-term solution.”

He said instead, there should be a discussion from the first day of the session on the state’s tax structure.

“There are things we can do that might be tax neutral,” he said.

Democrats and Republicans say that a solution will likely have to be bipartisan and be led by a popular governor.

Sandoval plans to run for re-election in 2014. But Sandoval is widely believed to harbor greater political ambitions that would make his support of a major tax increase less likely.

So for now, the tax fight is on hold.

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