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November 21, 2017

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Nevada Senate sends $1.5 billion tax plan to governor

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Cathleen Allison / AP

Nevada Assemblyman Erven Nelson, R-Las Vegas, speaks in support of Gov. Brian Sandoval’s $1.5 billion tax plan during the Assembly floor debate at the Legislative Building in Carson City on Sunday, May 31, 2015. The Assembly approved the plan 30-10 after a two-hour passionate debate.

The Nevada Senate concurred on a $1.5 billion omnibus tax plan the Assembly passed Sunday, sending Gov. Brian Sandoval a historic measure to bolster education funding by more than $600 million in the next two years.

The approval ends debate about education reform and provides funding to enact the myriad education measures Sandoval first proposed in his state of the state speech in January.

The money will help fund a $7.4 billion general fund and boost state K-12 education funding by nearly 16 percent to $2.85 billion.

It will also add about $400 million to the Distributive School Account, a coffer for public school funding separate from the general fund. It is the largest tax in state history.

The measure passed by a vote of 18-3.

The three Republican no votes were from Sens. Pete Goicoechea, James Settelmeyer and Donald Gustavson.

Sandoval was one of at least 10 Republican governors nationwide who proposed increasing taxes this year.

“The Legislature faced many challenges this session but none greater than the task of changing our education system to ensure that every child is given the opportunity to receive a first-class education,” Sandoval said. “The passage of this bill begins a new era of public education in Nevada, a time when our students and schools are a priority in our communities.”

The Assembly was the legislative hurdle for Sandoval. He had to overcome a cadre of no-new-tax Republicans and infighting among the Assembly Republican caucus.

Sandoval was more confidant about the plan’s chances in the Senate, with Majority Leader Michael Roberson at the helm.

Lawmakers from both parties showed an early appetite for raising taxes, with senators passing a measure in April that would have raised $438 million each year. That bill, SB252, was Sandoval’s first attempt at passing a tax increase for education funding. But the measure never had a hearing or vote in the Assembly.

“We have all watched the other body struggle this session,” Sen. Greg Brower, R-Reno, said on the Senate floor. “We have heard some jokes. We have made some jokes. But we should all be proud at what happened at the other end of the building last night.”

The tax package now on Sandoval’s desk is an omnibus measure combining SB483 and AB464.

It includes the extension of sunset taxes in SB483 that raise more than $600 million by increasing rates on the payroll and sales tax. It also raises the tax on a pack of cigarettes from 80 cents to $1.80.

The sunset taxes went into effect during the recession in 2009. Republican Gov. Jim Gibbons vetoed the measure but the Legislature overrode it.

In his first campaign for governor, Sandoval promised to let them expire, but he twice extended them. The economic conditions and the state’s budget grew dependent on them.

Now, with education reform a top priority, the sunset taxes are paramount for funding Sandoval’s plan.

The provisions in AB464 — the Nevada Revenue Plan — will raise at least $510 million every two years.

The bill also increases rates on the state’s payroll tax, while adding a new business filing fee and creating a gross receipts tax.

The gross receipts tax will have 27 rates, depending on the business type and revenues. Businesses earning less than $4 million will be exempt.

For companies making more than $200,000 a year, rates on the payroll tax will be increased from 1.17 percent to 1.475 percent, with mining and financial institutions paying 2 percent. Businesses will be able to credit 50 percent of their gross receipts tax against the payroll tax.

Lawmakers in opposition to the revenue plan compared the gross receipts section to the margin tax ballot initiative, which 80 percent of voters defeated in November.

The plan, though, is different.

The margin tax had a flat rate for all companies, a $1 million exemption threshold and was estimated to raise $580 million more than the gross receipts section.

The measure will also levy fees on out-of-state companies that earn revenues from business transactions in Nevada.

Lawmakers in both parties praised the passage of the tax plan.

Sen. Debbie Smith, D-Reno, tried raising money for education in the last two sessions with no luck. “This means so much — the fact that we are finally funding education in the state,” she said.

Sen. Scott Hammond, R-Las Vegas, voted against the first tax measure Sandoval proposed but changed his mind after vetting the current plan.

Quoting the 1980s film “Footloose,” he said, “There is a time to weep, and there is a time to dance. This is a time to dance.”

Gustavson, one of the three no votes, compared the measure to the margin tax initiative and questioned whether increased spending was the right path to education reform.

“The leadership in both houses should be ashamed of themselves to force through the largest tax increase in Nevada’s history that includes the type of tax the voters did not support,” he said. “You want to know why our constituents distrust politicians? You’re looking at it.”

The Legislature has passed a series of measures to create more charter schools, build new facilities, enact more curriculum for English language learning and mandate all students read proficiently by the end of third grade.

Another education measure, funding the UNLV Medical School, will be in a addressed in another bill, SB514, this afternoon.

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