Gibbons' veto of tax bill looms


CARSON CITY -- Who won? Who lost? And is it all over?

Those were the questions on a sunny Saturday at the Legislature, the day after the frenzied passage of the budget and taxes.

With state spending for the next two years and tax hikes to fund it waiting for Gov. Jim Gibbons' veto, legislators don't have the business that usually occupies them for the last week of the session, set to end June 1.

The centerpiece of the budget compromise, a $781 million package of increases to existing taxes, landed in Gibbons' office around 4:30 p.m. Friday

The bill cleared its final hurdle when Senate Majority Leader Steven Horsford, D-Las Vegas, gave in to Senate Republicans on their condition that the increases to sales, payroll and business license taxes expire after two years.

Including higher room taxes in Reno and Las Vegas, already approved, taxes in the next biennium would increase by some $1 billion.

"It was certainly a chaotic finish," said Assembly Speaker Barbara Buckley, D-Las Vegas.

"But in the end, stepping back, I'm pleased we were able to avoid implementing the governor's vision for our state: closing down UNLV, Draconian cuts to K-12 education, shutting mental health clinics. We made severe cuts but we also added revenue, and I think we achieved the best result for the state."

In the halls of the Legislature, the buzz was that Horsford, in his first term as majority leader and at 36 the youngest to occupy that position in state history, got schooled by state Senate Minority Leader Bill Raggio, R-Reno, the 82-year-old veteran known for his legislative gamesmanship.

"Raggio got everything he wanted," said one lobbyist who spoke on condition of anonymity. "He got the sunsets (on taxes), he got his (way on the) tax study, he set the agenda. The old man basically bent the young whippersnapper across his knee."

It was Raggio who decreed that only existing taxes would be increased and that the tax hikes passed Friday wouldn't exceed about $780 million. The tax bill passed with five of nine Republican votes in the state Senate, by a final margin of 17-4.

In the Assembly, the final vote of 29-13 included just one Republican vote in favor of the tax bill.

Horsford agreed to remove a provision from the bill that would have authorized a commission to look for ways to implement a broad-based tax on Nevada businesses. Raggio said he also wanted a tax study but wanted to leave it open-ended.

Though he was practically strutting through the halls during Saturday's brief session, Raggio declined to claim victory.

"I'm not looking at political victories or partisan victories," he said.

"That ought to be apparent at this point in my career. These are all things we've got to compromise on."

In the end, he said, "We accomplished what we indicated we could support, and I think the important thing is there are no new taxes. We represented to the public that we were dealing with a fiscal emergency and we needed to support essential services, but we insisted the new revenues would be temporary and would sunset, and that was agreed to."

Asked to evaluate Horsford, Raggio said, "I think he learned a lot in his first year as leader. We all benefit from experience here."

However, a countervailing view also was circulating, one that held that Horsford had shown surprising toughness and guts through a process that saw him convene the state Senate until 4 a.m. one night, remaining unfazed as Republicans carped.

"Nobody's going to remember that Raggio got his sunsets or what happened with some tax study," said another anonymous lobbyist. "They're going to remember who rose above that crap and got something done. It took a courageous leader to say, 'I don't care if people in this building think I lost this one. I care that schools don't shut down.'"

Horsford expressed no regret over the concessions.

"I was extremely satisfied with the final outcome," he said. "I'm proud that we were able to get a bill that funds our state government to the governor in time, so that education can be funded the way we want and not with the drastic cuts he (Gibbons) wanted."

Horsford dismissed the notion that he surrendered in the final battle.

"There were conditions that the Republicans put on their support of the tax plan, and those conditions were met," he said.

"To me, it's more important that we protect our future, especially education, than some internal political battle. I'm much bigger than that."

As for what lies ahead for the rest of the session, Horsford said there are plenty of policy bills legislators still want to consider, but he felt confident it would be possible to finish on time for the first time since 1999.

"There's still a lot of things that need to be done before sine die, but usually it's the budget that holds up the end of the session," Buckley agreed. "On my end at least, there's nothing that is going to keep us here."

Both houses have today and Monday off and will return to work Tuesday.

As they await Gibbons' veto and the all-important override vote, lawmakers still must pass the public employee pension reforms on which Republicans conditioned their approval of taxes.

There are other loose ends, and already Saturday it was clear there would be more mischief.

A dispute over energy bills between the Assembly and state Senate could not be resolved, leaving the bills' fate up in the air. Both pieces of legislation are important priorities for Democratic leaders.

And so the week ahead is sure to hold plenty of wheeling, dealing and monkey business. But a major weight has been lifted.

The outstanding issues are "not complicated matters," Raggio said.

"From here on out, there are going to be skirmishes. People have all these bills that in their opinion are hills to die for, and they will play political games. But we'll deal with those."

Contact reporter Molly Ball at mball @reviewjournal.com or 702-387-2919.

TAX INCREASES

MODIFIED BUSINESS TAX

NOW: 0.63 percent of payrolls of nonfinancial businesses.

PASSED FRIDAY: Drops to 0.5 percent on the first $250,000 annually, rising to 1.17 percent above $250,000.

ADDITIONAL REVENUE RAISED (over two years): $345.7 million.

SALES AND USE TAX

NOW: Varies from 6.5 percent minimum; base rate of 7.75 percent in Clark County.

PASSED FRIDAY: Additional 0.35 percent on retail purchases.

ADDITIONAL REVENUE: $280.4 million.

GOVERNMENTAL SERVICES TAX

NOW: Annual motor vehicle registration fee depreciates to 85 percent of car's value after 1 year, 10 percent per year thereafter, down to minimum of $6.

PASSED FRIDAY: Depreciation would begin at 95 percent after one year, 10 percent thereafter, down to minimum of $16.

ADDITIONAL REVENUE: $94.3 million.

BUSINESS LICENSE FEE

NOW: Annual fee of $100 per business license.

PASSED FRIDAY: Fee rises to $200 per business license.

ADDITIONAL REVENUE: $60.8 million.

HOTEL ROOM TAX

NOW: In Clark County, generally 9 or 10 percent.

PREVIOUSLY PASSED: Hike of up to 3 percentage points in Clark and Washoe counties. Cannot top 13 percent.

ADDITIONAL REVENUE: Estimated $220 million.

Las Vegas Review-Journal
 

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