Whether Nevada legislators adjourn their 2003 session on June 2 or in a special session, they're still heading toward enacting a record $1 billion tax hike.
There has been no concerted effort in budget committee hearings to reduce spending from Gov. Kenny Guinn's proposed $4.8 billion, two-year budget. A joint subcommittee even tacked an additional $370 million in education spending onto Guinn's plan.
Unless the Senate and Assembly budget committees cut spending dramatically by a May 19 deadline, the entire Legislature must increase taxes. The Nevada Constitution requires the state Legislature to approve balanced budgets.
Carole Vilardo of the Nevada Taxpayers Association says the $1 billion tax increase figure is not far off from what she hears will be approved. She hopes the increase won't top $700 million -- which still would be the largest tax increase in Nevada history.
The only question facing legislators in the last three weeks of the 2003 session is which patchwork quilt of taxes to approve.
The final plan is expected to be a combination of three major plans. They are:
--Guinn's proposal to raise $1 billion over the next two years by increasing cigarette, alcohol and business license taxes. The plan also would impose an amusement tax and increase property taxes. It also includes levying a 0.25 percent gross receipts tax in July 2005 on income of more than $450,000 received by a company.
--The Las Vegas Chamber of Commerce's general business plan to raise more than $550 million a year by imposing a 5 percent tax on services and increasing the business license tax. This plan includes reducing the sales tax rate to 5 percent.
--A plan by Assembly Minority Leader Lynn Hettrick, R-Gardnerville, to increase taxes by $636 million over two years largely through a real estate sales tax and an increase in the gaming tax. Hettrick's plan also calls for $400 million in cuts, although he already concedes this isn't happening.
From these plans, legislators and lobbyists say a compromise that appeases Republican and Democratic interests will emerge and get the required two-thirds majority vote of both houses of the Legislature.
"There will be some tinkering with the plans and you will get a compromise," Senate Minority Leader Dina Titus, D-Las Vegas, told the Las Vegas Review-Journal.
Under a possible compromise, Guinn's proposals to impose a tax on amusements would be killed. Guinn's proposed 15 cents per $100 assessed value property tax increase also wouldn't survive. Revenue instead would be made up by enacting Hettrick's 0.5 percent tax on real estate sales.
Also, the governor's plan to increase the $100 per employee annual business license tax to $300 would be reduced to $200. Sole proprietor businesses, which Guinn wanted to tax, would be exempted.
The proposal to levy a 5 percent tax on services would be accepted, but only in a limited way. Lawyer, accounting and architectural fees would be assessed the tax. But the business plan to cut the sales tax rate to 5 percent would be junked.
Guinn's controversial proposal to impose a 0.25 percent gross receipts tax in 2005 also would be approved, but only with a proviso that the 2005 Legislature must re-examine the need for the tax.
Assembly Taxation Chairman David Parks, D-Las Vegas, and Senate Taxation Chairman Mike McGinness, R-Fallon, have held behind-the-scene discussions in an attempt to develop a compromise bill.
Parks said whatever tax package receives approval must sustain state government's need for additional taxes for more than a couple of years.
"We are getting down to the wire," he said. "I am fully confident we will have something."
