CARSON CITY — Gov. Brian Sandoval sat alone Wednesday at a witness table and challenged lawmakers to come together and adequately fund education and propel Nevada into a 21st century economy.
“Today is the day,” the Republican governor told members of the Senate Revenue and Assembly Taxation committees in a packed hearing room.
The unprecedented proceeding included testimony by three former governors — Democrats Bob Miller and Richard Bryan, and Republican Bob List — who echoed Sandoval’s call for a stable tax structure and commitment to education.
“For too long we have pursued the holy grail of low taxes,” said Bryan, who urged legislators to “seize the opportunity.”
List said Nevada’s education system is an embarrassment.
“This is not about your next election,” he told lawmakers. “This is about the next generation.”
Miller called on lawmakers to “step up to the plate” and “hit it out of the park.”
Sandoval, elected overwhelmingly to a second term in November, has proposed a $7.3 billion general fund budget that relies heavily on $1.1 billion in new or extended taxes, most targeted to improve Nevada’s public schools.
The cornerstone of his agenda is Senate Bill 252, the focus of Wednesday’s hearing. The bill would replace Nevada’s business license fee with a tiered rate system based on industry category and gross receipts. Administration officials estimate it would generate $250 million a year.
Critics have compared the measure to previous failed margins tax proposals. Most recently, voters overwhelmingly rejected Question 3 in November.
“Senate Bill 252 is not those proposals,” Sandoval said, saying his measure has lower rates, distinguishes between business types and is easy to apply.
“We have a duty to take this challenge on now rather than leaving it for future legislatures, future governors and the next generation of Nevadans,” Sandoval said.
“It is my heartfelt belief that we have a once-in-a-lifetime chance to define who we are and what Nevada will be.”
Sandoval has made economic development a focus of his administration and vowed to change the state’s economy from largely dependent on leisure and hospitality to high-tech — a sector that demands a highly educated and skilled workforce.
Sandoval said Nevada weathered the Great Recession and double-digit unemployment by cutting budgets and making do, but with the economy on the upswing, it’s time to invest in its future.
Nevada’s education system has consistently ranked at the bottom of national rankings and graduation rates.
Sandoval said the graduation rate jumped 9 percent from 2011 to 2013. “However, even with these gains our graduation rates continue to lag the nation,” he said.
Sandoval said there is universal support among Nevada businesses to invest more in education.
“The biggest disagreement is how we fund education while also build a revenue structure that meets the demands of a growing state,” he said.
Earlier Wednesday, a coalition of business, civic and education groups held a press conference to support Sandoval’s plan and education priorities.
Glenn Christenson with the Las Vegas Global Economic Alliance said the state’s “drastically underfunded” education system has kept many businesses from moving to Nevada. He said about 35 percent of companies that looked at locating in the Silver State last year decided not to because of its poor education system.
“It’s not good enough to endorse the programs without a way to pay for them,” Christenson said.
Sandoval’s plan does not have universal support, however, and it could be a tough sell in the Assembly, where a group of conservative lawmakers has taken a no-tax stance.
Assemblyman Jim Wheeler, R-Gardnerville, said some among the 25-member GOP caucus are willing to hear Sandoval make his case, but added, “it still has a hill to climb.”
“We’ve taken some straw polls and it’s very close,” he said. “We will listen to everything he has to say and all his reasonings for it, and we’ll make some decisions from there.”
If the 17 Assembly Democrats support the plan, Sandoval will need at least 11 GOP votes to reach the magic number of 28 to get a two-thirds majority needed for passage in the lower house. Sandoval is nearly assured the 14 votes needed in the Senate.
Assembly Majority Leader Paul Anderson, R-Las Vegas, said the caucus has not taken a position on the tax proposal.
“It’s a big bill,” Anderson said. “There are a lot of parts and pieces to go through.”
Sandoval early in the year said he welcomed anyone to come up with a different idea that is fair and equitable. He reiterated that Wednesday and commended Sen. Pat Spearman, D-North Las Vegas, who introduced her own bill Tuesday.
Some Assembly Republicans also are planning to introduce a plan next week.
The Retail Association of Nevada, too, has historically opposed moves to tax businesses based on revenue and opposes Sandoval’s plan. The association prefers reforming the state’s modified business tax, which is based on payroll, saying it is a reliable, stable revenue source that is easy to figure.
Sandoval said he invites the debate to fix an “antiquated” tax system prone to volatile economic swings and heavily dependent on discretionary spending.
“It simply is not 1960 anymore,” the governor said.
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