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Nevada treasurer dumps airport fee idea, rewrites state budget

Putting together a budget for the state of Nevada isn’t so easy after all.

State Treasurer Dan Schwartz, who proposed to the Legislature a spending plan to rival fellow Republican Gov. Brian Sandoval’s budget, said he’s rewriting it because Nevada can’t raise $540 million as he’d like from a proposed $5-per-passenger airport fee. That’s because those fees are controlled by the federal government and prohibited by states.

“It doesn’t work,” said Schwartz, a conservative who’s working with state Controller Ron Knecht on his budget plan.

Schwartz is scheduled Thursday morning to present his proposed alternative budget to the Senate Finance Committee, which received a letter this week from an airport industry group pointing out that Nevada has no authority to raise revenue by collecting passenger fees at the McCarran and Reno-Tahoe international airports.

“Congress adopted this prohibition on state/local air transportation fees and taxes to protect air transportation, which is inherently interstate, from being overwhelmed by local impositions such as the one proposed by Mr. Schwartz,” said the letter, dated Tuesday and obtained by the Las Vegas Review-Journal.

The letter from David Berg, senior vice president and general counsel for Airlines for America, was hand delivered to state Sen. Ben Kieckhefer, R-Reno, chairman of the Senate Finance Committee.

Both the McCarran and Reno-Tahoe airports collect the maximum $4.50 passenger facility charge allowed under the Anti-Head Tax Act of 1973 and use the money for airport improvements. The industry has long sought a PFC increase.

Schwartz said Wednesday that with the airport fee off the table for the state, he’s rewriting his proposed budget, which he hopes will appeal to conservatives who don’t agree with Sandoval’s $1.1 billion proposed tax hike package.

Both Sandoval and Schwartz have proposed extending a package of taxes that were supposed to sunset next year, although Schwartz would reduce the revenue take to a total of $470 million over the next two years instead of the full $540 million.

Sandoval’s $7.3 billion biennial budget also would impose a new business license fee structure, collecting revenue on companies’ gross receipts on a graduated scale from $400 a year to more than $4 million instead of a flat $200 fee.

That fee is the main point of contention with conservatives such as Schwartz, who argue that voters in Nov. 4 rejected a gross receipts tax with 79 percent voting against a proposed 2 percent margins tax on companies making $1 million or more in annual revenue. Sandoval argues his tax plan is more fair and less costly.

Schwartz’ proposed biennial budget is $6.8 billion, which is higher than the current $6.5 billion two-year spending plan. He said he would likely fill the budget hole created by losing the airport fee by imposing new fees on hotel restaurant-bar receipts, which would mostly tap tourists. He planned to offer details during his testimony on Thursday, but a fee of just $0.25, or a quarter, per receipt could easily raise the needed revenue of hundreds of millions of dollars, he said.

Schwartz and Knecht have both also proposed increasing the current gaming tax of 6.75 percent in Nevada, which is lower than any other state and international destinations. The gaming industry has long argued it pays its fair share, especially if other non-gaming taxes the industry pays are included such as sales, property, liquor and cigarette taxes.

Schwartz said his goal in promoting a rival budget — which is not part of his formal duties — is not to embarrass Sandoval but to get lawmakers to discuss the many alternatives to imposing a business tax in Nevada in order to raise revenue to boost the state’s dismal education system — the goal Sandoval laid out in his Jan. 15 State of the State address.

“My overall intent, though, is to suggest that there are alternatives to the governor’s proposals that do not involve ignoring the will of Nevadans as expressed last November,” Schwartz said. “Moreover, it asks the governor to prioritize his programs. Throwing money at a problem does not solve it. Past experience has shown that to be true.”

Contact Laura Myers at lmyers@reviewjournal.com or 702-387-2919. Find her on Twitter: @lmyerslvrj.

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