Democrats: New governor has first budget move

CARSON CITY -- The loss of one seat in the state Senate and two in the Assembly in Tuesday's election left Democrats without the two-thirds majority they would need to pass tax increases over the veto of Gov.-elect Brian Sandoval.

But that does not mean tax increases are off the table.

Senate Majority Leader Steven Horsford, D-Las Vegas, said last summer it will take a combination of $1.5 billion in tax increases and $1.5 billion in spending cuts to balance the state budget in 2011.

Horsford, re-elected Wednesday by his caucus as majority leader, wants to see Sandoval's budget before getting serious about the need for higher taxes.

"Our job is to react first to the budget presented us by the governor," Horsford said after speaking with Sandoval.

"I am encouraged. He is a governor who will show up to work every day. He has pledged cooperation with our caucus. It is incumbent on him to provide us with a budget and a plan and vision to move our state forward."

Sandoval has announced he will veto tax increases and present a budget balanced with existing tax revenue. The Economic Forum, a group of five business leaders, is expected Friday to give a preliminary estimate of state tax revenue.

Revenue over the next two years probably will be in the $5.2 billion range, about $1.2 billion less than current state spending. Some legislators say the budget is $3 billion short in revenue, based on the assumption that the state needs to raise $8 billion to end furloughs and wage freezes, make up for the end of federal stimulus funding and cover growth in social service caseloads.

Democrats still hold an 11-10 majority in the Senate. New Assembly Speaker John Oceguera, D-Las Vegas, has a 26-16 Democrat advantage in the Assembly.

Republican Michael Roberson defeated incumbent Democrat Joyce Woodhouse in Senate District 5 in Henderson to give the Republicans a net gain of one in that chamber.

In the Assembly, Republican Mark Sherwood defeated Democratic incumbent Ellen Spiegel in District 21 in Henderson, and Republican Pete Livermore won Carson City's District 40 seat, one that had been held by retiring Democrat Bonnie Parnell. That brought the GOP a two-vote gain in the Assembly.

The loss of three Democrats means members of the majority party have to pick up more Republican support if they decide to raise taxes over Sandoval's promised veto.

And that has happened before.

In the 2003 session, taxes were raised by more than $830 million, including by a 17-2 vote in the then-Republican-dominated Senate. Republicans Bill Raggio of Reno, Mike McGinness of Fallon and Dean Rhoads of Tuscarora voted for the higher taxes. They will return for their final legislative session in 2011.

Five of the 19 Assembly Republicans voted for the same tax increase, including former first lady Dawn Gibbons of Reno and Joe Hardy of Las Vegas, who was elected to the Senate on Tuesday.

In 2009, legislators passed bills that raised taxes by about $800 million. The tax increases will expire on June 30, 2011, unless reauthorized by the Legislature.

Raggio and Rhoads again voted for the tax increase bill, which passed the Senate 17-4.

The Assembly approved it 29-13 with one Republican, John Carpenter of Elko, voting yes. Carpenter said God made him do it.

Although the new Senate will have more conservative Republicans, Raggio probably will be renamed minority leader today during a caucus meeting in his Reno law office.

Now 84, and ending his 38th year as a legislator, Raggio has led his party in the Senate since 1983.

Assemblyman Pete Goicoechea, R-Eureka, is expected to be picked by his caucus as minority leader today over John Hambrick of Las Vegas during a meeting in Reno.

Goicoechea ran into criticism in the summer from conservative consultant Chuck Muth when he was quoted in a Las Vegas Review-Journal story saying that tax increases might be needed next year.

Raggio over the summer said raising taxes was unavoidable because spending had been cut to the bone.

He wasn't shying away from the T-word Wednesday.

"I have always said raising taxes would be the last resort," Raggio said.

But he rattled off reasons why taxes might be needed, mentioning the state no longer has a rainy day fund or federal stimulus funds to fall back on.

"I have never been one to hold back what I believe," said Raggio, who backed Democrat Harry Reid in the U.S. Senate race. Reid was re-elected.

Raggio said he called Sandoval to congratulate him on his victory and pledge his cooperation with the new governor. Raggio has a long-standing relationship with Sandoval. The new governor's father, Ron, was deputy sergeant of arms in the state Senate when Raggio was majority leader.

Goicoechea was taking a wait-and-see attitude Wednesday on whether tax increases will be necessary in 2011.

"We will work with his (Sandoval's budget)," Goicoechea said. "He says he can do it without (raising taxes). We are all prepared to look at his numbers."

Goicoechea had expected to pick up at least two more seats in Tuesday's election. He said efforts by Reid and his supporters to get out the vote not only led to Reid's victory but helped Democrats hold a couple of close Clark County seats in the Assembly.

Eric Herzik, a political science professor at the University of Nevada, Reno, expects a more cooperative attitude between the new governor and Legislature than existed under Gov. Jim Gibbons.

"This state has an incredibly bad budget situation," Herzik said. "But the leadership of the various party groups and the governor's office will come together this session to fashion some sort of budget agreement."

The Legislature that awaits these leaders in February will be filled with newcomers.

Ten of the 21 senators and 20 of the 42 Assembly members will be freshmen, the most since 1967.

But seven of the new senators -- Mo Denis, Mark Manendo, Ruben Kihuen, James Settelmeyer, Don Gustavson, Sheila Leslie and Joe Hardy -- are currently Assembly members.

In the Assembly, two new members -- Maggie Carlton and Pat Hickey -- also are not true freshmen.

Carlton won an Assembly seat after being term-limited out of the Senate. Hickey is returning to the Assembly, where he last served in 1997.

The new Legislature also reflects more of the complexion of Nevada than possibly any time in history.

Seven legislators are black: Horsford in the Senate, and Harvey Munford, Dina Neal, Jason Frierson, Kelvin Atkinson, William Horne and Steven Brooks in the Assembly.

Also, eight are Hispanic: Denis and Kihuen in the Senate, and Brooks, Richard Carrillo, Olivia Diaz, Irene Bustamante Adams, Lucy Flores and Teresa Benitez-Thompson in the Assembly. Brooks is from both a Puerto Rican and African-American background.

Legislative researchers do not keep records of the racial and ethic breakdowns of legislators. But the number of African-Americans and Hispanics in the Assembly is more than any session since the 1970s, they said.

Contact Capital Bureau Chief Ed Vogel at evogel@reviewjournal.com or 775-687-3901.