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September 30, 2014

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analysis:

Government gridlock compels Nevadans to pursue progress via initiatives

Labor is preparing a business-tax ballot initiative.

A conservative businessman is threatening initiatives to raise taxes on mining and gaming.

A maverick attorney is proposing an initiative calling for sweeping changes to the state tax structure, creating what would be, in effect, a parallel government to that run by lawmakers and the governor.

These initiatives, pushed by groups and individuals of varying ideologies, from very liberal to very conservative, suggest a state that has lost faith in the ability of its political leaders and institutions to get things done, or at least big things.

Nevada is a wounded state, with a busted housing market and highest-in-the-nation unemployment. One pillar of its economy, construction, is gone and won’t be back anytime soon. Another, gambling, has come back, but is seeing competition spread across the country and world.

Who will do something about it?

Gov. Brian Sandoval, a Republican in his first term, has taken a cautious approach to the state’s tax structure, focusing instead on remaking the bureaucracy of economic development. He campaigned on a promise not to raise taxes. He notes some modest economic progress — an unemployment rate that peaked at 14.9 percent in December 2010 has dropped to 13 percent.

Respected legislators have been forced out by term limits or are pursuing ambitions for higher office.

And gaming, which has served as a guiding hand in the state’s political process, is fractured as never before.

That leaves discontented individuals and interests looking to voters.

“These initiatives show people feel they have no choice but to go around the Legislature because they’re not going to do anything,” said Kermitt Waters, the attorney who is pursuing a broad tax-and-spend initiative. Waters, a Democrat, has partnered with a conservative political operative, Chuck Muth.

Even members of the establishment, which has railed against initiatives, calling them messy, error-prone direct democracy, understands the frustration.

“There’s a frustration in the minds of many that there’s no significant action in Carson City,” Billy Vassiliadis, CEO of R&R Partners, one of the state’s leading lobbying firms, said. “Whether you’re pro-tax or anti-tax, pro-spending or anti-spending, there’s a lack of political action.”

The same sentiment is found in Washington, D.C., he said. “It’s a sign of political times. We’re in a political culture of obstruction.”

The AFL-CIO is writing a petition to put a broad-based business tax on the ballot. The state teachers union has signed onto the coalition, but gaming, mining and other businesses are so far uncommitted.

Monte Miller, a conservative businessman, is preparing initiatives to raise gaming and mining taxes. While he has declined to comment in depth about his proposals, many observers see it as a warning to mining and gaming to not support labor’s business-tax initiative.

It takes a two-thirds majority for the Legislature to raise taxes, a point of frustration for pro-tax groups who have been particularly outraged at the state budget cuts since 2008.

Danny Thompson, head of the state AFL-CIO, the state’s largest labor group, has said his ballot initiative is the direct result of his frustration with the legislative process.

Former Sen. Randolph Townsend, who was forced out by term limits in 2009, said the Legislature is less equipped to handle big policy questions because of a lack of personal relationships.

Randolph Townsend

Randolph Townsend

While lawmakers used to know each other’s families, socialize, go to the gym, “in a 120-day session you don’t leave the building — you don’t have time to leave the building — so you don’t build those relationships,” he said.

The result? “This new vitriolic feeling that if the other party has a good idea about A, you don’t want to say that’s a good idea. And if the opposition party has one about B you don’t want to give them credit for that. So they fight instead of getting a 30,000-foot view and saying, ‘What do we want to accomplish here?’ ”

Townsend helped pass the state law in 2005 that required ballot initiatives adhere to a single subject, a provision that has been used to challenge initiatives in court. It’s a provision that Waters is challenging in court before introducing his constitutional amendment initiative that would, among other things, eliminate residential property taxes and raise the mining tax to 20 percent.

The single-subject law came in response to some confusing ballot initiatives in the early 2000s, Townsend said.

“The public is busy,” Townsend said. “I don’t think it’s unreasonable to ask the people to hold to a single topic. If you want to do more you can either have multiple initiatives or run for office and if you’re elected you can deal with all the issues you have concerns about.”

But Waters said the single-subject restriction has been interpreted too narrowly and wielded too often to disqualify nearly every initiative since it was adopted. Waters said that without overturning it he would be unable to get his initiative on the ballot.

Prior governors have taken leading roles in shaping the state’s tax structure. In the late 1970s, voters in Nevada approved a stiff cap on property taxes, following California’s Prop. 13. The Legislature and then-Gov. Bob List stepped in and enacted legislation that shifted taxes and capped the rates in the state, albeit at a lesser level than called for in the initiative. The following year, voters defeated the initiative they had overwhelmingly passed two years before.

In 2003, then-Gov. Kenny Guinn tried to change the state’s tax structure, with a proposed gross receipts tax on businesses. While that failed, the Legislature raised taxes by over $700 million, mollifying labor groups and advocates for increased spending.

Dale Erquiaga, senior adviser to Sandoval, warned against blaming the system or any leader.

“Those folks who think the system is broken may be saying that because they’re losing,” he said. “Their ideas may not be carrying the day.”

The governor is open to new tax structures, he added. “He would be willing to hear them. The ideas have not been presented,” Erquiaga said.

Sandoval was at ribbon-cutting ceremonies for three businesses last week, all of which had moved here from California, where a significant portion of state tax policy and spending is controlled through initiatives. “The initiative process is a bad way to make tax policy,” Sandoval said.

While open to proposals to change the state’s tax system, Sandoval doesn’t believe a major infusion of money through tax increases is necessary, Erquiaga said.

“Does gaming pay its fair share in Nevada? Yes. Does mining pay it’s fair share? The governor has said yes,” Erquiaga said. “The current fiscal situation is based on the Great Recession, not Nevada’s tax structure. We should respond in kind and focus on job growth.”

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  1. Talk about double-speak---there are plenty of folks trying to suggest or "present" new tax structure, and the Man known to say, "No new taxes," is truly open to it?

    Did I read this correctly, "The governor is open to new tax structures, he added. "He would be willing to hear them. The ideas have not been presented," Erquiaga said." ?

    Ridiculous.

    Mining has enjoyed well over a century of limitless exemptions and pays a pittance in return for what it takes from Nevada. It is time for corporate mining and foreign held mining to pay their FAIR SHARE to Nevada. Permitting times can be reduced in exchange for such consideration (as long as no harm is done to either environment or citizens).

    Blessings and Peace,
    Star

  2. "Gov. Brian Sandoval, a Republican in his first term, has taken a cautious approach to the state's tax structure, focusing instead on remaking the bureaucracy of economic development."

    This basically means Governor Sandoval is useless and doesn't want to nor intend to do anything about any of this.

    And don't hand me this "focus on economic development" crap. Governor Sandoval, just last year, had some high falooting meeting with businesses. They were asked what Nevada needs to do to promote businesses setting up here. They all unanimously said the main thing preventing it from happening is not the weather nor the business environment. It's the education. They all felt the education in Nevada prevents any business from hiring locally. Because the education level is lacking.

    And this is a direct result of 17 years of predatory and out-of-touch Republican Party Governors getting elected. They all TARGET education at all levels to save money. It is so bad that schools are almost mandated not to issue pencils and pens anymore, just hand guns and knives. The youth of Nevada is being turned into criminals.

    Governor Sandoval is not a leader. He just wants to sit there and look important. The only time he goes in front of a microphone is to state he will not raise taxes and implore people he's not on vacation, he's still working. All he has shown is that he toes the line and does what the past Governors have done, and hopes to get away with it. We're onto it.

    I encourage we do this initiative thing. So long as it is a common sense approach. I understand our economy in Nevada needs probably more jump starts all across the board than any of these intitiatives can provide, but hell, let's do it, after all, it's a start. You gotta start somewhere. Because the way we're going right now is straight down a craphole.

    It's time for people to have a DIRECT IMPACT on the course Nevada takes. Because our elected officials are not taking the ball and running with it. They are just making the situation worse.

    Put this stuff on the ballot. If Governor Sandoval, after being elected into office by the people, clearly intends to do nothing, then get the hell out the way and let the people take over this Government and get us headed in the right direction.

    Governor Sandoval may look at it unfavorably. Like he's being fired or something. Or getting his power taken away from him.

    So be it.

    He's not.

    After all, he will STILL be actively employed and working for Jones Vargas.

    Like he does now.

    He clearly don't work for Nevada.

  3. I suspect the legislature is Gridlocked to stop the Tax Increases that must be implemented on Corporations that have received a Free Ride for a very long time. If Public Initiatives are the way forward - Let's Go!!
    Mining AND Gaming had better come up with a fair solution quickly, or the Public should solve it for them. Once All of Nevada's Gold is mined what will we have to show for it.

  4. Put the same bills on the ballot and let the public vote on them.

    One simple line: Shall the mining companies pay 5% of their gross receipts AS RENT to the people of Nevada?
    Yes: [ ]
    No: [ ]

    Lets see what happens!

  5. A straight up vote of the people would mean mining would lose statewide except in rural mining centers like Eureka and Ely. The rurals love the money from mining even as it grossly under funds the damage it does to their personal property, the court system, the city and county capital improvements, and the state and federal roads.

    Rurals are pretty well isolated from much of the ill effects of mining because they know the rural members of the legislature will move metro taxes to counter the VERY poor rural funding from mining. If the southern and metro legislators ignored mining's lobbying and, imposed proper taxes on miners, the miners would stay and mine with that larger tax bite. This is where the minerals are but, of course, when they are gone so will be the taxes and, the HUGE profits that mining took with them will also be gone. As they say they get the money and we get the shaft.

    Mining is an ongoing partnership between various legislators lobbying perks and campaign funds and mining.

    Follow the money, but I doubt much will ever come out of the legislature in the way of mining tax reform. Any effective initiative will be promptly cut down by the miners with their buddies in the legislature and courts.

  6. It's time for the free ride that mining and gambling gets from Nevada to end. In 2011, the 10 casinos in Pa. paid more in taxes to the state than the 260 casinos in NV paid.

    Something is clearly wrong here. What are they going to do, move?

  7. "These initiatives show people feel they have no choice but to go around the Legislature because they're not going to do anything," said Kermitt Water..."

    Way too true. A prime example is enshrined in the Nevada Constitution's Article 4, Section 38, added in 2000: "Use of plant of genus Cannabis for medical purposes. 1. The legislature shall provide by law for....." We're now in the 12th year and the legislature STILL has not obeyed that people's mandate, as shown by the many recent raids on medical marijuana operations. Even though all legislators, along with the cops, cannot hold office until they take the required oath to support, defend and protect that very Constitution.

    "Indifference to personal liberty is but the precursor of the State's hostility to it." -- United States v. Penn, 647 F.2d 876 (9th Circuit, 1980), Judge Kennedy dissenting

  8. How about the people start a federal initialization of ballot questions, so we can cut off the power hungry lobbyists and make laws built by the people.