Las Vegas Sun

August 27, 2015

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MEMO FROM CARSON CITY:

What the Legislature doesn’t know

Sun coverage

Republicans and Democrats agree that Nevada’s children need a better education system.

But Gov. Brian Sandoval has said time and again that he won’t raise taxes beyond his $6.5 billion budget, making it difficult to actually get the money that would pay for programs for Nevada’s kids.

One possible solution to this seemingly intractable problem lies with reclaiming the money the state spent before Sandoval even put that $6.5 billion budget together.

That is, the Legislature could look at tax expenditures — the money the state could spend but chooses to give away in the form of exemptions, tax breaks and abatements.

“All the money that is not collected because of the tax expenditures can’t be used for other public spending items, whether it be education or Medicaid or public safety,” said Geoffrey Lawrence, deputy director of policy for the Nevada Policy Research Institute, a free-market think tank.

But Nevada is one of the few states that doesn’t produce a comprehensive report detailing who gets state tax exemptions and tax breaks, how much those are worth and what the recipients of the break or exemption produce in the form of jobs or more economic activity.

“You need to know what’s working and not working,” said Carole Vilardo, president of the Nevada Taxpayers Association.

The governor’s budget methodically details state spending in a 3,414 page document; a similar document charting exemptions, breaks and other “tax expenditures” doesn’t exist.

If the Legislature had such a report, legislators could comprehensively review exemptions and breaks to cut ineffective incentives, reduce wasteful spending and more transparently account for their taxpayers’ dollars.

“You could point to how well or how poorly things are working and then kind of make your case from there,” Lawrence said. “I think a regular reporting requirement would be tremendously helpful in allowing policymakers, lawmakers and local officials to see how effectively this money is being used.”

For instance, the governor’s budget provides $10 million per year to expand full-day kindergarten programs at elementary schools.

The state Education Department told legislators this month that it estimates the money could pay for 181 teachers and full-day kindergarten programs at 47 schools, 36 of which would be in Clark County.

Using that math, a couple of million dollars saved by eliminating a tax break or exemption could pay for full-day kindergarten programs at seven more schools in Clark County.

Likewise, a business receiving a couple of million dollars in tax breaks, exemptions or abatements could create dozens of jobs.

“It’s the concept that we’re constantly looking at — the cost-benefit analysis,” said Sen. Debbie Smith, D-Sparks.

The Legislature last studied tax breaks in 2009 in a comprehensive report that looked at hundreds of businesses and nonprofits that received tax exemptions and abatements.

Assembly Speaker Marilyn Kirkpatrick, D-North Las Vegas, sponsored a bill in 2011 that would measure the amount of money given in exemptions, breaks and abatements as well as the number of taxpayers benefiting from them and the money the state could collect if the Legislature repealed them.

But the bill died because it cost money to produce the report. Now the bill is back, and Kirkpatrick said it should pass.

“This time, I’m succeeding,” she said.

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