Vegas economic development group backs Sandoval’s business tax

The organization that boosts economic development in Southern Nevada is backing Gov. Brian Sandoval’s proposal to impose new business licensing fees to fund education despite the potential impact that would have on attracting companies to the state.

The board of directors of the Las Vegas Global Economic Alliance passed a resolution of support Wednesday a month after the group voted to support the governor’s education initiatives.

The resolution was based on a study showing that Sandoval’s business license reform plan would be least impactful on business among three revenue-generating proposals.

The governor’s measure, Senate Bill 252, a 200-page document, was introduced Wednesday afternoon.

Sandoval and members of his Cabinet were in the back of the Senate chambers when Majority Leader Michael Roberson, R-Henderson, introduced it.

The Republican governor, who was re-elected to a second term in November, will detail his proposal March 18 during a joint hearing of the Senate Revenue and Assembly Taxation committees.

Sandoval wants to impose license fees based on a business’ gross receipts, from a minimum of $400 per year up to a potential $4 million, though no current business qualifies for the maximum threshold.

Administration officials said Wednesday there are no substantive changes in the bill from what the governor outlined when he first announced the plan earlier this year.

“We know that high-wage businesses overlook Southern Nevada because we lack a highly educated workforce,” said Ray Specht, who leads the alliance’s board.

“The LVGEA recognizes that it is imperative to start at the beginning and both reform our K-12 education system and pay for programs that will create a workforce that will be competitive in the 21st century global economy,” said Specht, vice chairman of Toyota Financial Savings Bank.

The board commissioned a study by Susanne Trimbath, chief economist of Omaha, Neb.-based STP Advisory Services, that analyzed the impact of three education-funding proposals Sandoval considered.

Trimbath’s study determined that the graduated business license fee program was better for businesses and for economic development than expanding the state sales tax to services and augmenting the modified business tax.

The study concluded that the proposed business license fee will have a negligible negative impact on economic development and diversification efforts in Southern Nevada. The board concluded that Sandoval’s proposal — as outlined in his State of the State address and in subsequent documents — is a sound means to pay for proposed education programs.

The administration estimates the business fees will raise $250 million a year. They are a cornerstone of Sandoval’s $7.3 billion general fund budget proposal that includes $1.1 billion in new or extended taxes.

But not all industry groups are supportive. The Retail Association of Nevada is opposed to imposing fees based on gross receipts and instead favors tweaking Nevada’s modified business tax, a levy that is assessed on payroll.

The tax now generates about $68 million a year, but some economists predict it could raise an additional $400 million annually by eliminating exemptions and increasing the tax rate for all businesses to 2 percent.

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Find him on Twitter: @RickVelotta. Contact Sandra Chereb at schereb@reviewjournal.com or 775-687-3901. Find her on Twitter: @SandraChereb.

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