Wednesday, May 28, 2003
Copyright © Las Vegas Review-Journal

Senate panel votes for bill raising $560 million in taxes

CARSON CITY -- Although several members insisted a far bigger tax increase is needed, the Senate Taxation Committee on Tuesday voted 6-1 for a bill increasing taxes by $560 million.

Senate Bill 238 is the first piece of major tax legislation to pass out of a legislative committee.

The $560 million increase would be nearly twice the previous record enacted by the 1991 Legislature.

But the increase is about $340 million short of the $900 million legislative leaders are expected to recommend to balance the 2003-05 budget and $270 million less than what Senate Majority Leader Bill Raggio has suggested.

"We will let the entire body decide what to do," said Senate Taxation Chairman Mike McGinness, R-Fallon. "For us to hang onto it for another day or two would be irresponsible."

The Legislature is scheduled to adjourn Monday, and McGinness said staff lawyers might need several days to draw up the approved version of the bill.

The Taxation Committee initially agreed to $560 million in increases during a Monday meeting in which members cut an earlier $730 million tax increase plan they had backed.

SB238 calls for doubling cigarette and liquor taxes; increasing the gaming tax, now 6.25 percent, to 6.75 percent; assessing a 0.45 percent tax on the sale of real estate, with the first $200,000 exempted; and levying an 8 percent live entertainment tax. A 1 percent tax on services, including haircuts and auto repairs, would be imposed starting Jan. 1, 2005.

The Assembly Taxation Committee has not yet acted on a proposal by Assembly Speaker Richard Perkins, D-Henderson, to raise taxes by $970 million.

"I hope we can get together and find some common ground," said McGinness about possible meetings with Assembly Taxation Chairman David Parks, D-Las Vegas.

Sens. Joe Neal, D-North Las Vegas, and Randolph Townsend, R-Reno, plan to recommend additional tax increases during debates on the Senate floor.

Neal was the only Taxation Committee member to vote against the tax bill. He said the Legislature needs to raise about $1 billion in taxes, but he cannot support increases unless they include a large gaming tax increase.

"We are going after Joe Citizen to make up the $1 billion we need, and we are touching gaming ever so lightly," Neal said. "We have not stepped up to the plate with gaming in making it pay its fair share."

He said the gaming industry would pay only $75 million of the committee's $560 million tax increase plan.

Townsend has announced that he will try to win support for a universal business tax, a modified version of Gov. Kenny Guinn's 0.25 percent gross receipts tax, on the Senate floor. Townsend's proposal, which would raise $200 million over the next two years, lost on a 4-2 vote in the Senate Taxation Committee.

During Tuesday's hearing, Townsend won support for a plan to increase property taxes by 33 cents per $100 of assessed value, starting in July 2005. The Legislature that meets in 2005 could decide to reject the tax plan before it goes into effect.

Under his proposal, the first $200,000 in market value of a home or business would be exempt from the tax. The tax would raise about $100 million a year.

Sen. Ann O'Connell, R-Las Vegas, said Monday that the $560 million in tax increases is sufficient to fund state government. She said the economy is expected to improve and bring an additional $340 million in tax revenue to state government without any tax increases over the next two years.

But Michael Hillerby, Guinn's deputy chief of staff, said the $340 million growth in revenue already is built into the governor's proposed $4.8 billion budget for 2003-05.