Tax issue will still be a hot topic in 2004

Note to all those hoping the tax issue will fade into memory next year: Don't count on it.

For most of 2003, government, lawmakers and businessmen were focused on taxes - specifically who should pay and how much.

While many on both sides left the Legislature hoping the rancor and the issue would go away, it's pretty clear the focus during 2004 is going to be the continued fallout from the tax battle.

The fight generated several ballot issues, including two to repeal the new tax law and a failed attempt to recall Gov. Kenny Guinn. It also spawned a ballot proposal designed to bar public employees, including teachers as well as local government workers, from running for the Legislature and prompted Rep. Jim Gibbons, R-Nev., to design a ballot question which would require lawmakers to fund education before other parts of the budget.

And the Supreme Court opinion effectively setting aside the two-thirds majority required to raise taxes has already drawn two opponents for its author, Chief Justice Deborah Agosti.

Most of the major players agree how those issues play out depends heavily on the economy. A strong economic recovery would enable many businesses to either absorb or pass along the higher taxes. A weak economy would leave many of them blaming the taxes for their woes.

"If the economy is going good, the tax increase will become less of an issue," Guinn said.

He said people are already seeing benefits of what was done and beginning to realize that "they aren't getting hit like they thought they were going to.

"Schools are open, teachers were hired, there's a lot of construction going on," he said pointing to the Carson Freeway and Henderson's spaghetti bowl.

"There will be a sense that there was a great deal of good done for the future of Nevada," Guinn said.

Speaker Richard Perkins, D-Henderson, said he believes people support the programs lawmakers spent the money on.

"Ultimately, the general public will see what we did was try to shield the average taxpayer, invest a little more money in education and invest more in health care for seniors and children," he said. "I think that will be very much appreciated."

All those interviewed say they don't expect any new tax hikes in the next session.

"We may tweak them a little and find some problems that need to be corrected," said Senate Majority Leader Bill Raggio. "Other than that, the revenue package is in place for a while unless something happens with this petition -- which would be regrettable."

Assemblyman Ron Knecht, the Republican freshman from Carson City who was one of the strongest opponents of higher taxes, maintains even if the economy is good, the tax issue will hand both houses of the 2005 Legislature over to the GOP.

Aided by recent scandals involving Southern Nevada legislators accused of "double dipping" salary and benefits while serving, he predicted a 26-16 Republican margin.

Perkins said he expects voters to treat lawmakers individually returning those they believe are good, replacing those who aren't. When the voting is done next November, he said he believes Democrats will actually increase their majority in the Assembly by a couple of seats.

Knecht, an economist with the Public Utilities Commission, said with the economy showing signs of recovery, he expects the new taxes will generate more than expected.

He said that will make it much easier to balance the budget without major cuts.

Raggio too referred to the potential hole in the budget created when lawmakers and Guinn used one-time funding to cover more than $100 million this budget cycle: "I'm hopeful revenues will reach the point where we're not going to be looking at major cuts next session."

Assembly Minority Leader Lynn Hettrick, R-Gardnerville, said if the economy isn't doing well, it will mean program cuts and that those "could be draconian." If the economy is good, he said one "tweak" he would support would be to roll back the half-percent tax increase for the state's small casinos.

"When we put a 1Ú2 percent on the lowest group we murdered them - and we didn't put enough on the big group," he said.

Like Knecht, Hettrick believes the anti-tax sentiment will help the GOP gain seats in the Assembly even though he argues it wasn't a partisan battle. He points out the Republican Senate supported the tax plan as did several Republicans in the Assembly.

"I think we have the opportunity, better than 50-50, to take over the Assembly," he said.