Friday, January 07, 2005
Copyright © Las Vegas Review-Journal

SURPLUS REVENUE: $300 million rebate proposed

Nevadans would receive up to $300 per vehicle under Guinn budget

Gov. Kenny Guinn on Thursday uses a giant check made out to "Nevada Taxpayers" to propose a $300 million rebate to those who registered vehicles in Nevada in 2004. Photo by John Locher.

Gov. Kenny Guinn on Thursday said the state's "roaring" economy has generated enough surplus revenue to give $300 million back to people who registered vehicles in 2004.

The governor proposed a rebate of up to $300 for each vehicle as part of his state budget. The plan, which requires legislative approval, could result in rebate checks arriving in the mail this summer.

About 80 percent of vehicle owners would get a full rebate of the registration fee paid on cars, trucks, motorcycles, trailers or recreational vehicles. The remaining 20 percent, who paid more than $300 to register a vehicle, would get back $300.

"I believe that the fairest way to rebate this money is through the vehicle registration that we pay," Guinn said during a news conference at his Las Vegas office.

Guinn and Assembly Speaker Richard Perkins said lawmakers did not expect such a robust economy two years ago when lawmakers drained the state's rainy day fund and approved $833 million in new taxes to be collected over two years. Now a budget surplus of at least $320 million is expected by the June 30 close of the fiscal year.

Several weeks ago, Guinn was cool to a proposed bill draft by state Sen. Bob Beers, R-Las Vegas, that sought to rebate $100 to each vehicle owner.

"Perhaps it's an idea that grows on you over time," Beers said Thursday. "I'm happy to see a consensus growing."

Lawmakers on both sides of the aisle, as well as business and taxpayer representatives, immediately cheered the idea.

"There may be changes or tweaks, but in some fashion, I'll definitely say there will be some rebate to taxpayers this session, barring any 9-11 type of event," said Perkins, D-Henderson. "It's the taxpayer's money, and we should find a way to get it back to them at the same time we're looking out for our children and our senior citizens."

Guinn said his budget, which closes today and heads for the printer before it is unveiled on Jan. 24, is balanced in terms of revenues and expenditures. He also said he gave "full consideration" to funding state needs, including paying for 35,000 additional incoming students and addressing the 137 schools on the state's "needs improvement" list and the dozens of others heading for the list.

The governor also pledged he wanted to replenish the so-called rainy-day account used in times of crises, such as a wildfire or other natural disaster.

The fund, which had just $1 million in it after the 2003 session, now has $120 million. By law, initial surplus money has gone into that account. Guinn said he wants the account to have at least $150 million and probably $200 million.

Beers and other lawmakers said that while they were thrilled by Guinn's proposal, they wanted to make sure it added up.

"I'm still working on that math," Beers said.

Guinn said the Economic Forum's projected $320 million surplus will likely increase by the time that group of economists next meets in May, due in part to mounting sales and gaming tax revenue.

Assemblywoman Chris Giunchigliani, D-Las Vegas, wondered if Guinn had accounted for the estimated $200 million "hole" in the budget as a result of a loss of federal estate taxes and other dollars.

"Before we lock up any dollars, we should make sure we've restored the accounts and filled the holes where we have them," said Guinchigliani, vice chairwoman of the Ways and Means Committee.

State Senate Minority Leader Dina Titus, D-Las Vegas, said even if the state fills the rainy day fund and replaces missing federal monies, "you've got to do something for mental health and education in that budget."

She also worried that "this little check doesn't divert people from the property tax cap, which is a bigger and more critical issue to solve."

Assembly Minority Leader Lynn Hettrick, R-Gardnerville, agreed. Some of his constituents in Douglas County have seen property tax values increase 85 percent to 130 percent.

"I think it can be done," said Hettrick, who said he researched a similar rebate. "I think it makes a statement about the governor's feeling about the last tax increase.

"I think we raised too much."

State Sen. Dennis Nolan, R-Las Vegas, voted for the tax increases in 2003. Now the state Senate's assistant majority leader, he said the vehicle rebate is a better option that repealing the new taxes or rebating those levies.

Hettrick also said he does not think the taxes passed in 2003 should be rebated to the businesses that paid them. Instead, he has a proposal to roll back some of those taxes and use the funds to offer access to health insurance for the state's uninsured.

Hettrick and Beers were two of the 15 Assembly members in 2003 who railed against Guinn's proposed $1 billion tax package. "It's the last chance for legacy time," Beers said about Guinn's announcement Thursday.

Guinn, bound by term limits and preparing his final budget, acknowledged he is happy to finally be in a position where he didn't have to "cut, cut, cut."

But the governor, who has not been warmly received at some state party functions since the 2003 session, downplayed talk of his legacy or political pressure.

"I don't have to run again. I don't have any political motivations," he said.

"Within the Republican Party there's a lot of pressure on giving some of the tax money back and the governor's going to be accommodating," said Scott Mackenzie, executive director of the State of Nevada Employees Association.

In creating his upcoming budget, Guinn is bound by the predictions of the Economic Forum, which last month estimated there would be $720 million more in revenue in the next two-year budget cycle, for a total of $5.75 billion in revenue.

The employees association has asked Guinn for a 5 percent raise in each of the next two fiscal years, while teachers have asked for a 3 percent raise in each of the next two years.

Three percent raises for teachers and state workers would cost $172 million over two years.

"We're in a wait-and-see mode," said Ken Lange, executive director of the Nevada State Education Association. "We're watching to see whether or not he (Guinn) has chosen the right priorities in his budget in terms of enhanced salaries for teachers and school support staff as well as substantial resources for educational programs."

Guinn committed Thursday to giving state employees a raise, but declined to specify the amount he will propose.

"There's always going to be people who are not happy," Guinn said. "We could have taken more of this money and put it there or put it over here."

Guinn said he spent roughly six months working on the proposal with members of his staff and cabinet. He rejected proposals to refund the money through a sales tax amnesty day or through property tax rebates.

The sales tax amnesty would overly benefit tourists and wealthy residents, he said. And the property tax rebate would be of no value to renters.

After the Economic Forum released its projections in early December, Beers and Republican activists called on the governor to offer a rebate.

Nevada Taxpayer Association President Carole Vilardo said she thought the voters would be very happy with the proposal: "I think anybody that owns a car will be very ecstatic."

The only question, she said, would be whether the state would be better served using some of the surplus to adjust some of the taxes passed in 2003.

There are already 20 proposals from her group to correct some of the problems that have arisen in implementing the omnibus tax package that included increased or new levies on businesses, banks, live entertainment, and the transfer of real estate and increases to taxes on cigarettes, alcohol and gaming.

Christina Dugan, director of government affairs for the Las Vegas Chamber of Commerce, said that though the proposed rebate would give people more money to spend, the proposal must be carefully considered.

Hettrick, the Assembly minority leader, said it would be premature to roll back taxes passed in 2003 given the uncertainty over how the Legislature will address escalating property taxes