Las Vegas Sun

January 19, 2018

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Budget and reality

Governor’s rhetoric falls short by failing to deal with all of the options

In an effort to rally support for his budget-cutting plan, Gov. Brian Sandoval on Tuesday said the government should “function like Nevada’s families live.”

Comparing government to family has been a key theme for Sandoval as he talks about the budget. In both his State of the State speech and his televised speech Tuesday, he talked about the “Nevada family” gathering to discuss the budget. It’s a folksy analogy, like a family gathered around the dinner table to discuss balancing the checkbook.

It’s a vivid picture, but as an analogy it’s simplistic and faulty. This and other analogies being used by Republicans give the public an incomplete view of the budget. They ignore the consequences of the draconian cuts Sandoval has proposed and bypass all of the options available to the state.

Sandoval, like his predecessor Jim Gibbons, has suggested that a family that experiences a loss of income would simply tighten its belt and hunker down. This might work if someone’s pay is cut by 3 percent and decides to eat out less often, but what if it’s significantly larger? A family would look for ways to replace the lost income. Family members who aren’t working might seek employment. Someone might take a second job or look for work with a higher-paying salary. There’s also the option of going back to school to train for another career.

The state government’s situation is like a family that sees its income dramatically slashed and its savings drained. Nevada’s budget deficit is more than $2 billion. The governor’s response is to ignore what families would do and instead make massive budget cuts.

Republicans like to say the state has a spending problem, and they often use another analogy, saying government should operate more like a business. Sandoval on Tuesday called for “changing the way we do business.”

That’s another poor analogy. Government and business exist for different reasons and have different purposes. But government can take some lessons from business and operate more efficiently, so what would a business do if its revenue fails to cover its costs? The CEO would be negligent if he limited his options. The budget would likely be cut, but core services would be retained. A smart chief executive would consider all options, including looking at ways to increase revenue.

Some conservatives have suggested lowering certain tax rates but widening the tax base to businesses that currently don’t pay. But that might create a “new” tax and thus fall under Sandoval’s tax prohibition.

Sandoval says raising taxes would hurt the “fragile economy,” and he is particularly protective of business. In his speech Tuesday, he said businesses shouldn’t have to choose between hiring someone or “paying Carson City’s bills.” That’s a false choice. Many businesses are hiring and still paying their taxes.

And the taxes paid by many out-of-state companies operating here are nominal compared with what they pay in other states. Nevada consumers don’t see a benefit from that. It’s not as if prices here are lower than in other states as a result. Those companies could certainly afford to pay their fair share from the profits they siphon out of Nevada.

But don’t waste your breath telling that to the governor. In the past few months, Sandoval has said that some businesses have held off making a decision about whether to move to Nevada because of the potential that the Legislature might raise taxes.

But Wednesday, he announced that an Urban Outfitters distribution center would be built in Reno, which he said will bring hundreds of jobs to the state. So much for businesses waiting to make a decision until after the Legislature

If taxes are all a business cares about, why isn’t Nevada booming economically? Nevada has one of the lowest tax rates in the nation and is considered one of the most business-friendly states. Businesses consider more than taxes, and they see that Nevada hasn’t invested in education and other vital services the way other states have. Any business looking for a well-educated workforce will likely look elsewhere.

If Nevada wants to attract businesses and keep them, it has to invest in education. Businesses make investments in things that will pay a return, and a well-educated public has been shown to have a positive effect on a state’s economy.

The bottom line is that the anti-tax rhetoric used to support gutting state services doesn’t fly because it’s not realistic. Smart families and businesses don’t paint themselves into corners — they face reality and deal with it. Sandoval and the Republicans should start doing the same.

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