Tuesday, May 27, 2003
Copyright © Las Vegas Review-Journal

STATE SENATE: Raggio bucked on taxes

Taxation panel supports $560 million increase, less than finance panel sought

CARSON CITY -- Asserting their independence from legislative leaders, Senate Taxation Committee members decided Monday to reduce the amount of tax increases they will support to $560 million.

That amount of money is $144 million less than what Gov. Kenny Guinn contends he needs to fund schools and operate government at current levels over the next two years.

It also is $270 million less than what Senate Majority Leader Bill Raggio, R-Reno, and the Senate Finance Committee contend is needed to balance the budget and $410 million less than what Assembly Speaker Richard Perkins, D-Henderson, proposes to impose in tax increases.

Two weeks ago the same committee backed tax increases of $730 million over the next two years.

But members decided Monday against approving nearly $200 million in property tax increases on home and business owners.

Guinn had wanted to raise property taxes on the average home by about $100 a year.

Members also rejected a modified version of Guinn's 0.25 percent gross receipts tax, killed a plan to charge banks a 7 percent business tax, and rejected proposals to levy a 1 percent tax on company payrolls and a 5 percent satellite TV tax.

The committee did approve an 8 percent live entertainment tax, estimated to bring in $40 million over the next two years.

The rebellious move comes just seven days before the constitutionally mandated adjournment of the Legislature and raises concern that Guinn may need to call a special session to find revenue to balance the state budget.

"I love government," quipped Sen. Sandra Tiffany, R-Henderson, at one point during the Memorial Day evening hearing. "I just won't fund it."

Sen. Ann O'Connell, R-Las Vegas, said she feels the committee has sufficiently funded state government with $560 million in tax increases.

She noted that the Economic Forum, the independent group that calculates state tax revenues, predicted the economy will grow over the next two years and state government will receive $340 million in extra revenue without any tax increases.

Counting that money, she said state government has more money to operate than Guinn maintains is necessary.

O'Connell said she was not concerned about defying Raggio.

"I am representing my constituents," she said.

But Sen. Randolph Townsend, R-Reno, announced he will move to impose additional taxes when the tax bill, Senate Bill 238, reaches the Senate floor for a vote by the entire Senate.

"I want to make sure there are no surprises," said Townsend, whose tax proposals were shot down repeatedly by the committee.

"I reserve the right to bring them to the floor for inclusion."

He joked that eventually he was "going to get a building named in my honor. I don't know about you guys."

Michael Hillerby, Guinn deputy chief of staff, maintained after the meeting that O'Connell does not understand the governor's proposed budget and a $560 million tax increase is far less than needed to fund state government.

"I hope the public is watching," he added.

Hillerby said the $340 million in revenue expected by economic growth already has been built into the proposed $4.8 billion budget.

He said tax revenues over the last two years have come in $186 million less than estimated at the 2001 Legislature because of a drop in tourism after the Sept. 11, 2001, terrorist attacks.

Senate Taxation Chairman Mike McGinness, R-Fallon, said the committee will consider today whether to increase the room tax and business license fees.

He remains hopeful the committee will back about $800 million in tax increases.

But throughout the Memorial Day evening hearing, Tiffany, O'Connell, Dean Rhoads, R-Tuscarora, and Joe Neal, D-North Las Vegas, defeated tax increase proposals. Often McGinness joined them in killing tax bills.

Neal said he will reject most tax plans unless the gaming industry also is assessed a major gaming tax increase.

Generally only Bob Coffin, D-Las Vegas, and Townsend supported increase plans.