Governor's tax plan frustrating lawmakers on all sides

The ugly truth hit Nevada lawmakers last week: They have to choose between raising taxes or cutting services and, either way, voters won't like it.

Gov. Kenny Guinn has laid out a $1 billion tax proposal he says is necessary to maintain essential services and deal with growth. But when his deputy chief of staff Mike Hillerby presented it to the Assembly and Senate taxation committees, the complaints sounded just like they did two years ago.

Some said Guinn hasn't proven there is a deficit, while others called for budget cuts in state agencies they say are riddled with waste.

Some objected to specific parts of the plan -- especially a proposed gross receipts tax on businesses. Some objected to a lack of specifics, claiming Guinn hasn't given them enough details to make a decision.

And everyone is trying to develop a different plan -- one that somehow, magically, doesn't hurt and doesn't offend constituents.

The Nevada Supreme Court let legislators dodge the issue in 2001 by tossing out a tax petition proposed by the state's teachers. This year, they have to deal with the problem.

And some members, like Assemblywoman Sheila Leslie, D-Reno, say they're tired of the attitude that someone else -- anyone else -- should pay.

Everybody who comes in here says tax the other guy," she said. "That message is getting very old. On the money committees, we're working to make every cut we possibly can without jeopardizing basic services. When it comes to the revenue side, I'm open. But we need to be narrowing those options."

Guinn says he and his staff spent the past four years looking for every possible efficiency and trying to hold down costs. He says the fundamental review started even before the economy went south and 9-11 struck Nevada's tourism industry.

"The deficit is proven. It's a fact," he said. "The structural problems with our tax base are fact and we have cut millions from this budget."

Guinn made it clear Friday that, as far as he's concerned, the ball is now in the Legislature's court.

"I put a plan out there to fix it and I followed what the (Task Force on Tax Policy) recommended," he said. "If they don't like it, I want them to show me what they'd do. But don't tell me there's a lot of fat in this budget."

Legislative frustration was obvious in the initial hearing on the plan as Hillerby responded to a series of questions by saying the governor "is willing to work with you on that" or that his position was "flexible." Assemblyman David Goldwater, D-Las Vegas, asked whether they were being given a bunch of suggestions or a firm proposal. He wasn't alone.

"All they've done right now is the surface stuff," said Ways and Means Chairman Morse Arberry, D-Las Vegas. "We need more details quick."

But Assembly Speaker Richard Perkins, D-Henderson, and Senate Majority Leader Bill Raggio, R-Reno, said they would have more objections if the governor had presented them a "take it or leave it" plan.

"The Legislature likes that flexibility but, in the next six to eight weeks, the governor is going to have to weigh in on the details," Perkins said.

While he agrees the state needs more money, Raggio said the Finance Committee is looking for more cuts first.

"The first obligation is to determine the real needs of the state," he said. "I'm not committed to any of the governor's planks on tax, but I'm not rejecting any of them either."

He said lawmakers must ensure they raise only what the state needs. But, as chairman of the Finance Committee, Raggio has said on numerous occasions he doesn't believe there is much fat in the budget.

Assembly Majority Leader Barbara Buckley, D-Las Vegas, made the same argument, saying only when the budget is ready will lawmakers be able to determine how much revenue is needed.

Sen. Ann O'Connell, R-Las Vegas, who has opposed nearly every suggested tax increase for the past 20 years, said she doesn't think the budget is that tight.

"He took 500 people out but he put 420 people back in," she said. "I don't see the cuts."

She said she especially opposes the quarter-percent gross receipts tax on business and a proposed 15-cent increase in property taxes.

Assembly Minority Leader Lynn Hettrick, R-Gardnerville, also opposes the business tax, saying it would be unfair to low-margin businesses.

Sen. Mark Amodei, R-Carson City, expressed the curiosity of lawmakers who aren't on the tax and money committees.

"We're out of the loop," he said. "It's very frustrating right now."

Amodei said what Guinn calls a base budget seems much bigger than it should be.

"It's more than just two times current spending," he said. "How much of that do we need? We don't have enough information. We don't know what the actual deficit is."

Senate Taxation Chairman Mike McGinness, R-Fallon, said his biggest concern now is getting the governor's proposed tax legislation as soon as possible -- especially those increases Guinn wants passed by April 1.

"There were some issues that haven't been finalized and they need to be," he said. "We won't have the bill for a week, and that would give us like 10 days to process it. That's not enough."

Those early tax increases were having more problems on the Assembly side, where lawmakers have asked the treasurer's office for a cash flow chart to see if the state can get through this fiscal year without raising alcohol, cigarette and business activity taxes.

"If there's a case to be made for early taxes, it hasn't been made yet," Perkins said.

Guinn said he is "willing to work with them to develop the most equitable tax package for Nevada."

"If they don't like part of it, take it out, change it or do something else. If they don't replace it, though, they've got to tell me where to make the cuts."