Bo Statham: Governor on funding: ‘If not now, when?’

Gov. Brian Sandoval has plans that could overshadow any possible election results which may occur on Nov. 4. According to the Reno Gazette-Journal, Sandoval told the editorial boards of the RGJ and Las Vegas Review Journal, “I have a unique opportunity, I feel, hopefully as second-term governor, going into the session and having the relationships I have with the Legislature to lead this effort in terms of looking at how we fund the state.”

Taken in its broadest context, the statement suggests the governor is talking about increasing state revenue and how it’s allotted to agencies and programs to fund state services. True fiscal reform, if that is what Mr. Sandoval means, is the single most important step the government could take.

Nevada’s fiscal structure fails in two fundamental measurements: it does not provide sufficient revenue to meet the needs of the state, and it’s regressive in nature.

State Senator Debbie Smith (D-Sparks) is quoted in the RGJ article as saying requests from state agencies for the next two-year budget are $1.14 billion more than the current budget. “I don’t know how you can look at the situation we are in and not have some type of revenue increase,” Smith said. According to the same article, Mr. Sandoval singled out K-12 education funding among the needs facing the government.

When asked if his plans include new taxes, the governor replied “You’ll find out.” But he also stressed, according to the RGJ article, it’s his duty to change the way state programs are funded. “If not now, when?” he’s quoted as saying. And further, “The revenue streams in this state are changing and we have to have revenue streams that match the new economy we have.” Does that mean actually increasing revenue or just moving things around?

The Nevada Constitution restrains the legislature’s ability to increase taxes. It forbids a personal income tax and requires a two-thirds vote of the legislature to levy new or increased taxes. Amending the constitution is a long and difficult process, but it has to start to bring about needed change. The governor’s rhetorical question - “If not now, when?” – is well taken.

The amendment process should be started in the 2015 legislative session to permit a non-regressive, fair and equitable personal income tax; it’s desperately needed to raise dependable revenue and reduce the sales tax burden on low-income residents. The constitution specifically permits a business income tax, but the legislature failed to act on an enabling bill last year. Mr. Sandoval should support such legislation in the next session.

Other possible revenue sources include removal of various loopholes in the tax code, such as those in the live entertainment tax. Obtaining a two-thirds vote to enact new taxes or increase existing levies is always difficult, which, in any event, would probably increase the unfair burden of existing taxes on poorer families. And Assembly Republican Leader Pat Hickey has already raised the specter of spending reductions as the price of much needed reforms.

Nevada may be the nation’s most tax-averse state. Instead of funding legitimate government services, the prevailing attitude is to cut taxes. Governor Sandoval must act with courage and exert strong leadership to change that paradigm.