Las Vegas Sun

June 15, 2024

Jon Ralston:

Governor sucks air out of tax discussion

Brian Sandoval 2.0 already is resetting the campaign agenda for 2012, and, perhaps, the tax debate for 2013.

Gov. Sunny roiled the political world last week when he announced he would extend expiring taxes, inducing most Republican lawmakers to become an amen chorus, causing most Democratic lawmakers to play Oliver Twist and catalyzing a meltdown on No-Tax Island.

As I wrote last week, the ripple effects were sure to be felt near — helping Republicans run as moderates in the Democratic districts they need to take the Senate — and far — making it more difficult for a Democrat to run against Sandoval 2.0. (I am sure some of the wingnuts hope to recruit a no-tax primary challenger to Sandoval 2.0 in 2014, but who would take that on and be able to self-fund? I am not sure Sheldon Adelson is available.)

But Sandoval’s extensions of sales and payroll levies also have had another immediate impact — they potentially neutralize various proposals circulating to place tax initiatives on the ballot and/or before the Legislature.

Various sources confirm that the AFL-CIO’s plan to collect signatures to put a so-called margin tax on the ballot is wheezing on life support, bereft of backing from other labor organizations (where are you, teachers and Culinary?) and without hoped-for money from a gaming industry that would rather live to fight another day. The gamers especially would love to avoid having to defeat an initiative being proposed by businessman Monte Miller, who has a couple of initiatives out there – one would create a fourth tier to tax major gaming companies and another would raise the constitutional mining tax cap.

“I’m going forward,” Miller told me Tuesday. But, he added, “I would do some very heavy thinking (about the gaming initiative if the industry chokes the AFL-CIO proposal). I’d consider it (dropping it).”

It seems clear Miller always wanted to use the gaming initiative as a Damoclean sword to stop the casinos from funding the AFL-CIO plan. Miller said he has talked to the “highest levels” of gaming companies and he has no comfort level yet they are going to back away from the AFL-CIO, whose grass-roots chief, Gail Tuzzolo, couldn’t be reached Tuesday. But sources tell me that the gamers, as much as they have wanted to corral businesses into the tax structure for decades, might agree to a quid pro quo deal with Miller – we won’t fund the AFL-CIO initiative if you drop yours.

(This does not apply to mining, I don’t think, as Miller seems adamant about that cause. “People are falling all over themselves to sign the petition,” Miller told me. “It is not a tax increase, but it gets them to the negotiating table.”)

Sandoval 2.0 has helped release a pressure valve; my guess is a deal will be in the works soon.

“The governor (by extending the taxes) has removed the notion of a crisis,” said one insider. Indeed, Sandoval 2.0, by saying he wanted to ensure education was funded properly, is willing to inject an estimated $600 million (no one really knows because it is far in the future) into education, thus erasing a great campaign theme for labor and gaming to pass that business tax initiative.

Yes, for anyone who has followed Nevada’s funding of education, this is a break-even move. An argument could be made (although not by Democrats, who have little credibility on this after last session’s taxing debacle) that a combination of much more money and much more reform is needed to bring Nevada’s public education system into first-world status.

The real question is whether Sandoval 2.0, having sucked the oxygen out of the new-tax debate, is willing to breathe some life into the tax reform discussion. Often, those two words will cause ears to close because they are heard as “tax increase.” But there is a real debate to be had, separate from how much government needs to fund education and other essential services, about how the state raises and spends money.

Sandoval has not turned a deaf ear to tax reform, although he has been, typically, cautious in both his 1.0 (no new taxes) and 2.0 (extend some taxes) iterations. But it’s clearly time for a Nixon-goes-to-China moment, with the governor going to the Nevada Policy Research Institute, which has issued lacerating criticism of his tax extensions, to begin the tax reform discussion.

Although NPRI is obviously against any tax increases, it has argued, as anyone with a triple-digit IQ would, that Nevada’s exceedingly narrow tax base needs to be broadened. Indeed, NPRI has proposed a broader sales tax base in exchange for lowering the overall sales tax rate, which is regionally high.

That seems like a good place to start the discussion, eh, Sandoval 2.0?

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