Monday, June 2, 2003 | 11:21 a.m.
CARSON CITY -- Legislative leaders agreed to a $862 million tax plan Sunday night and will spend the hours leading up to today's midnight adjournment of the session working to win the two-thirds support required for passage.
Shortly after the agreement was reached about 10 p.m., leaders of both the Democratic-led Assembly and Republican-led Senate said they didn't know if they had the votes needed to pass the plan.
"I wish we could vote now," one Assembly Democrat sighed after finishing weeks of work on the plan that will result in the largest tax increase in the state's history.
The tax plan is centered around the Unified Business Tax, a form of the gross receipts tax. The plan does not include either the payroll tax or the sales tax on services sought by business lobbyists. In addition to the unified tax, the plan includes a new 5 percent franchise fee on banks and a new 10 percent tax on live entertainment.
The gaming tax would increase by 0.5 percent over the next two years, raising $71.3 million over the biennium.
The tax plan also features increases in the real estate transfer tax and the taxes paid on cigarettes, liquor and restricted slot routes. Businesses would also pay more to file paperwork with the secretary of state's office for licenses, documents and commercial recordings.
The plan contains no increases in property tax or sales tax, despite a negotiation move late Saturday night by Senate Republicans to replace business taxes with a 0.4 percent increase in the sales tax.
The phones in the Assembly leadership offices were still ringing after 11 p.m. Sunday as bill drafters in the legal division of the Legislative Counsel Bureau posed last-minute questions before the overnight printing.
Assembly lawmakers could vote as early as 11:20 a.m. today on the $4.9 billion appropriation bill, which will require $861 million in new revenue in order to be funded. The budget bill, introduced at 11:20 a.m. Sunday, has to sit idle for inspection 24 hours before a vote.
Originally the appropriations bill also contained the Assembly taxation plan, with Speaker Richard Perkins, D-Henderson, saying a person who votes for a budget will be required to pay for it.
If the taxes are amended into the appropriations bill on the Assembly floor today, the vote could come by late morning.
In the Senate, Republican officials insisted Sunday night they did not know whether they had enough votes to pass the plan. Sources told the Sun that a conservative trio of Clark County senators spent some of weekend lobbying their colleagues in both houses not to support an $860 million tax increase.
Gov. Kenny Guinn had proposed a $998 million increase to fund his budget.
The state constitution requires a two-thirds vote on all tax or fee increases. The budget requires approval from a simple majority.
In the Senate Republicans hold a 13-to-8 edge. Fourteen votes are required to approve a spending plan.
In the Assembly Democrats have control by a 23-19 margin. Twenty-eight votes are required to pass the tax plan.
One Assembly leader said Sunday that the Democratic Assembly caucus will stand united in supporting the tax increase. If that occurs five Republicans will have to break from their caucus to support the bill.
Assemblyman Josh Griffin, R-Henderson, has voted for $860 million in new taxes in committee and is expected to do the same on the floor today.
At least six Assembly Republicans were considered "yes" votes on taxes at the start of the weekend. But the more conservative members of the caucus, including Minority Leader Lynn Hettrick, R-Gardnerville, have been lobbying against the size of the tax increase.
The state has a $704 million deficit between its expected revenues and expected expenses over the next two fiscal years.
The $861.6 million tax plan includes $351.8 million in new revenue in fiscal year 2004 and $509.8 million in 2005.
The main tax in the plan is the Unified Business Tax, a modified form of the gross receipts tax proposed by both Guinn and the Nevada Task Force on Tax Policy.
The business tax lawmakers consider today is a bit different than the one proposed in the Assembly Democrats revenue plan last month.
It will be a 1 percent levy on a company's gross margin. The margin is described as the gross receipts less the cost of goods sold. When the tax is put in place Jan. 1, it will exempt any business whose gross margin is less than $10 million.
That exemption will drop to $450,000 in 2005, when the tax is expected to generate $130 million.
Another key tax contained in the plan is an initial increase in the Business License Tax, followed by a rollback on the tax in subsequent years.
The tax levied on each full-time employee will increase from $100 to $160 in fiscal year 2004 and will be rolled back to $100 in 2005 and to $75 in 2006. The tax would generate $48.6 million in new revenue in 2004.
Both Guinn and Perkins said any tax plan that they would approve must fund the budget and must contain a broad-based business tax.
The tax negotiations had been ongoing in private all weekend after lawmakers agreed on a final budget number Friday afternoon.
Friday night Senate Democrats reported their caucus was split 50-50 for and against the Unified Business Tax, and suggested neither option would be passable.
At one point on Saturday, Senate Democrats had called for a draft on a net profits business tax -- a tax the Task Force on Tax Policy and earlier legislative committees had rejected.
At the same time Senate Republicans were asked to examine two different forms of a payroll tax.
Amid the frustration over an apparent lack of consensus emerged an idea to pass the Unified Business Tax, a payroll tax and the net tax and let businesses decided which to pay.
That was quickly discounted because there would be no way for the state to estimate the amount of revenue it would be getting.
By Saturday afternoon many feared lawmakers would not be able to come to agreement by tonight and would be forced to return to work in a special session to pass a budget and taxes.
Guinn said he would call a special session for later this week if lawmakers had a tax deal but simply ran out of time to pass it. Guinn controls how a special session would run.
Not only does the governor, by proclamation, set the times for the session, he also sets the topic and the specific bills to be considered.
The Legislature adjourned in chaos in 2001 after a negotiated deal on a reapportionment plan fell apart on the last day of the 120-day session. The special session called in 2001 lasted just two days.
Guinn convened the Legislature last summer for a special session to address the medical malpractice crisis.
Lawmakers said Sunday they did not want to be forced into a third special session in just two years.
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