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August 31, 2015

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Gov. Brian Sandoval straddles the line on promise to not raise taxes

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Cathleen Allison / Associated Press

Gov. Brian Sandoval, right, talks with advisers Dale Erquiaga and Heidi Gansert May 3, 2011, at the Legislature in Carson City. Sandoval’s extension of temporary tax increases to fund education shows his moderate tendencies.

Promising not to raise taxes — no how, no way, under any circumstance — might have seemed the smart political move for Brian Sandoval in 2010, when he was running in the Republican primary for governor.

But now that he’s running a state that is less than flush with tax dollars, he keeps bumping up against the line in the sand he drew as a candidate.

The latest is the agreement he reached with Amazon, under which the online retail giant will start collecting sales tax in 2014. Under the deal that Sandoval and his top staff personally struck with company executives during a meeting in the governor’s office earlier this year, Nevada will become just the seventh state to require the retailer to collect the tax.

The deal will be a $16 million-a-year coup for Nevada and was praised by the brick-and-mortar retailers as leveling the playing field with online companies, many of which don't collect the tax at all.

But it will also muddy one of his administration's talking points — that no Nevadan will pay more in taxes than they did when he came into office.

Predictably, the brickbats came flying in from the right, which pointed to Sandoval’s promises not to raise taxes when he ran for office.

Click to enlarge photo

Chuck Muth

“Nevadans absolutely will be paying higher taxes after the deal takes effect than they were paying before Sandoval was elected,” wrote conservative political consultant Chuck Muth on Monday, while also noting that technically, it’s not a new tax since individuals are supposed to send the state tax department a check for online purchases.

Conservatives also noted that these hedges aren’t necessarily a deal killer for Sandoval the candidate, who has managed to remain popular with the Republican base despite repeatedly reversing himself on taxes.

This is not the first time that Sandoval has been forced to explain his policies against the backdrop of what he said during the campaign.

At the end of the 2011 Legislative session, Sandoval agreed to extend $620 million in taxes that were scheduled to sunset — taxes he had promised to let expire. But near the end of the session, a Nevada Supreme Court ruling jeopardized some budget gimmicks he had used to fund his spending plan, prompting his reversal on the sunset.

In February, Sandoval said he'd support extending those taxes yet again, raising the hackles of the state's fiscally conservative watchdogs.

But Sandoval argued the state needs the additional revenue to pay for increasing federal health care mandates. And he says he’s still shackled by the Nevada Supreme Court ruling, which he says prevents the state from taking local government money.

To justify the sunset decisions, Sandoval and his administration repeatedly sound this common refrain: No Nevadan will be paying higher taxes than they did when Sandoval took office.

That’s not true of the deal Sandoval struck with Amazon. In Clark County, residents will pay 8.1 percent more for their purchases on Amazon.

Nevada joined South Carolina, Indiana, Virginia, Tennessee, California and Texas as the only states where Amazon is voluntarily collecting sales tax, according to the company. The company declined to discuss the agreement in further detail, as did Sandoval’s administration, citing confidentiality of tax agreements.

But on “Face to Face with Jon Ralston,” Sandoval explained that the agreement came about because the Retail Association of Nevada, which represents large stores like Best Buy and Wal-Mart, along with small retailers, approached him before the start of the 2011 session.

He said in the interview that small businesses were being hurt by online stores that don’t collect sales tax.

He also said that it’s not a new tax because individuals are supposed to be sending in their use tax to the state’s Department of Taxation.

Tax Department Director William Chisel said that “rarely happens.”

(A spokeswoman for Sandoval said: “To the best of his recollection, the governor has not made purchases subject to the tax, so he has not paid it. He had made online purchases at Apple and Zappos.com, which collect the tax and which he paid.”)

But right now, Sandoval doesn’t need to worry about challenges from the right.

Robert Uithoven, a GOP consultant, said Sandoval has helped raise money for Republican candidates and has been active at party events.

“He has built up so much goodwill, he can make decisions the base may not like, and they will not hold it against him,” Uithoven said.

Even Muth said that Sandoval’s decision to support extending the sunsetting tax won’t cause him to face a primary challenge in 2014, when he’s up for re-election.

He’d have to do something “terribly egregious” during the legislative session, which starts early next year, Muth said.

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