Legislature cancels study of state’s tax structure

By Cy Ryan

Friday, July 30, 2010 | 2:05 a.m.

CARSON CITY — A study by a national firm to chart the possible future tax structure of Nevada and potential tax increases has been cancelled by the Legislature.

Lorne Malkiewich, director of the legislative Counsel Bureau, said Moody’s Analytics failed to make any progress analyzing the state’s tax structure and presenting recommendations.

Moody’s will not be paid the $153,000 for that part of its contract.

The firm will continue working with the Nevada Vision Stakeholder Group in developing a quality-of-life study on how the state should look in five, 10 and 15 years. It will be paid $99,925 for that portion of the contract.

Malkiewich said the stakeholder group will have several more meetings with Moody’s, and the final report on quality of life will be completed by Sept. 15.

Malkiewich said he talked with state Senate Majority Leader Steven Horsford, D-Las Vegas, about the decision to amend the contract. Horsford was one of the main advocates of the study, and Moody’s won out in the competition for the contract late last year.

Nevada faces a $3 billion deficit in the next biennium. But both candidates for governor — Democrat Rory Reid and Republican Brian Sandoval — have said they will not raise taxes.

The 2011 Legislature will have to grapple on how the deficiency will be overcome — either by massive reductions in government programs or major tax increases — or some combination of both.

Malkiewich said it “was the feeling it (the tax study) could not be done,” and there was a mutual agreement it could not be completed.

A notice of default was delivered to Moody’s earlier this month for the entire contract. Discussions have been under way between both parties to resolve the problem.

A media representative for Moody’s could not be reached for comment.

The tax study would have included an analysis of the different taxes, the allocation of the revenue, the stability of the taxes, the adequacy of the taxes, the burden on taxpayers and the earmarking of tax revenue.