Lawmakers review bill to make expiring taxes permanent

By Riley Snyder and Michelle Rindels, Associated Press

Thursday, March 26, 2015 | 5:40 p.m.

Nevada lawmakers are reviewing a major portion of Gov. Brian Sandoval's plan to raise and extend more than $1.1 billion in taxes.

The Senate Revenue and Economic Development Committee held a hearing on SB 483 on Thursday, which would extend and make a number of expiring taxes permanent, including some of the payroll tax and a sales tax.

The bill would also raise taxes on cigarette packages from 80 cents to $1.20 and raise the mining industry's payroll tax rate to the same level covering financial institutions.

The taxes were created in 2009, and lawmakers have temporarily extended them every two years. Sandoval, a Republican, called on lawmakers during his State of the State address in January to make the group of so-called "sunset taxes" permanent in order to help pay for his education initiatives.

The taxes themselves are projected to bring in nearly $545 million in direct revenue over the next two years, mostly through the modified business tax. But the impact of the "sunsets" is even larger than that because they also increase some local taxes.

A temporarily higher rate for the Local School Support portion of the sales tax and a 3 percent tax on hotel rooms in Clark and Washoe is expected to raise $697 million for schools over two years. If those tax rates expired, the Legislature would have to find another way to make up that money and meet its legal obligations to fund schools.

Bill proponents say those large sums are not luxuries, but are now funds that the state is dependent upon.

"The sunset revenue, or at least that dollar figure, has become part of our base budget," said Republican Sen. Ben Kieckhefer of Reno, chairman of the Senate Finance Committee. "If we were to extend the sunsets, we would be able to continue what we're doing right now and nothing else."

"If we want to make any advancements in our education policy or health care," he said, "we'd have to go above and beyond what the sunsets brought."

Still, some conservatives say extending the sunsets is a breach of trust with people who accepted the higher tax rates thinking they would eventually go away.

"We need to start keeping our word," Republican Assemblywoman Michele Fiore of Las Vegas said. "We called it a sunset tax, and we don't sunset them."

Although several lawmakers have brought forward alternative tax plans since Sandoval presented his proposal to increase the state's business license fees, most lawmakers are in consensus that the taxes in the bill should be extended. Assembly Taxation Committee Chair Derek Armstrong, R-Henderson, said he's in favor of extending the taxes permanently.

"I think there's a large portion of the building that's OK with extending the sunsets," Armstrong said.