Tuesday, Aug. 2, 2011 | 6:43 p.m.
The National Republican Campaign Committee, which is providing a heavy assist to former state Sen. Mark Amodei’s special election campaign, unleashed a new ad today accusing Democrat Kate Marshall of facilitating Nevada’s economic crash.
Marshall has touted her experience as treasurer, arguing her decisions have helped steer the state through its fiscal crisis. That has opened her up to Republican attacks that the economic recession is a result of her time in office.
It’s a stretch to argue, as the ad does, that the decisions made by the treasurer, who is responsible for deciding how the state invests its money, are responsible for Nevada’s foreclosure crisis and the unemployment rate.
But the ad also accuses Marshall of supporting a $500 million business tax increase, a much more specific claim that should be easily proven by the record.
So what does the record say?
As backup, the NRCC uses the transcript from an October 2010 meeting of the Employment Security Council, which makes recommendations on how much to raise or lower the unemployment insurance rate charged to businesses to pay unemployment benefits to jobless workers.
With the highest unemployment rate in the nation, Nevada has racked up considerable debt borrowing from the federal government to pay those benefits.
That presented the council with a significant problem. Should it jack up the rate on cash-strapped businesses in order to prevent Nevada from borrowing more money? Should it create a special assessment on businesses to help pay the interest on the existing borrowed money? Should it hope the Legislature would take money out the general fund to pay the interest on that debt?
As treasurer, Marshall proposed refinancing the debt owed to the federal government at a lower interest rate. Under her proposal, the state would essentially sell bonds to pay off the federal government.
The proposal would prevent the federal government from potentially increasing the federal unemployment insurance rate on businesses and Nevada would have more flexibility with the term of the debt.
Marshall said she could structure the bond payment to delay the eventual rate increase employers would have to bear to pay off the debt. But she makes clear that a special assessment still would be required to pay the debt.
So how does the NRCC justify the $500 million tax increase claim? That’s roughly how much the state would need to raise in order to prevent Nevada from going into further debt.
When a council member asked Marshall if the state should just keeping bonding each year to take care of the debt instead of raising the tax rate on businesses, Marshall answered:
“The Treasurer’s Office does not appreciate debt. We don’t, we would never recommend that you operate in a way that constantly puts you in a situation where you’re going into debt.”
Indeed, the alternative to taking on more debt would be to raise the rate enough to generate about $500 million. But Marshall never directly advocated for that, nor did she have a vote on the panel or any authority to affect the rate herself.
In the end, the council recommended increasing the average rate charged to Nevada businesses to 2 percent from 1.3 percent. The Legislature spent money from the general fund to cover the interest due to the federal government and Nevada’s debt continues to climb.