BUSINESS SURVEY: Budget woes divide Nevadans

Among local business owners and managers, there's no clear consensus on how Nevada's legislators should approach the state's budget shortfall when they begin their 2011 session on Feb. 7.

That's the result of a new Review-Journal survey asking area professionals how they'd like to see lawmakers handle the state's finances during the upcoming Legislature.

Nearly half, or 49.7 percent, of survey respondents said they'd prefer that legislators implement a combination of spending cuts and higher taxes to make the state's budget work. The next-largest group, at 40.1 percent, suggested cutting funding exclusively. The smallest share, at 8.6 percent, said they preferred raising taxes alone.

Most survey participants also came out against establishing a corporate income tax in Nevada, with 50.3 percent opposing such a levy and 24.4 percent giving it a nod. Another 23.5 percent said they weren't sure about the idea.

For Ryan McPhee, owner and manager of RPM Construction and Development in Las Vegas, the difference between Nevada's projected income and lawmakers' spending plans -- a gap pegged right now at $1 billion or more over two years -- is simply too big to close with spending cuts or higher taxes alone. His solution? Increased levies on gaming and mining.

With the state's tax on gross gaming revenue set at a maximum of 6.75 percent and similar taxes in other jurisdictions running considerably higher, casino operators in the Silver State could afford a "modest increase" of perhaps a couple of percentage points in the rate, McPhee said.

As for mining operations, they pay a tax of up to 5 percent on their net proceeds. But oil companies in Alaska pay a base of 25 percent on the new fields they bring online, and McPhee said he hopes Nevada's lawmakers consider that rate as a starting point for mines here.

"These are resources they take out of the ground of our state, and I think we are certainly entitled to revenue there," he said. "I think 20 percent to 25 percent is reasonable."

McPhee said he also hopes lawmakers will consider reining in public workers' pay and benefits, compensation packages that he said are "very excessive in comparison to the private sector," especially in hard times.

Betty Judah, owner and president of the Dyslexia and Learning Disability Center in Las Vegas, agreed that a blend of higher taxes and spending cuts would prove the best way to close the gap between Nevada's income and lawmakers' spending plans. But Judah said she hopes one area will stay off-limits during discussions on spending decreases.

"I definitely don't want them to cut education. They've already cut everything out, even the arts, and it's well-known in the field of education that the arts lead to high intelligence and the ability to succeed in life," Judah said. "They've cut so many areas of education down to the bare minimum."

For many other business owners, the emphasis should rest on spending cuts exclusively.

Sales have plummeted 27 percent during the recession at Hi-Lites Salon and Beauty Store inside the Las Vegas Outlet Center at Las Vegas Boulevard South and Warm Springs Road, said shop owner Rob Mullaney. To accommodate the lost business, Mullaney said he's cut his payroll, pared weekly work hours for his employees and asked his stylists to handle more tasks, such as checking in and ringing out guests at the front desk.

"Everyone has been affected by the economy, including myself and my team. We've had to take the hit," Mullaney said. "If the state is not generating the kind of revenue it was, it's fair that everyone be involved in making it work. We've lost so many jobs in this state, and everyone has to be a part of the solution to this."

All three respondents gave the thumbs-down to any kind of broad-based business or corporate income tax.

One of the reasons Judah said she moved from California to Las Vegas was to flee business taxes in the Golden State. Instituting additional corporate taxes in Nevada could hurt its reputation as a business-friendly state at precisely the moment it needs to draw new companies to diversify its economy, she said.

Added Mullaney: "We are trying to create jobs in Nevada. Any kind of broad-based business tax would not encourage businesses to move here. It's totally the wrong move in this economy. If we need to create jobs, business taxes will have the opposite effect."

But taxes and spending aren't the only issues on the minds of survey participants as the Legislature prepares to kick off.

Respondents said they weren't always sure what legislators could do to address their top concerns, but they said they hoped certain key topics would somehow get attention as lawmakers meet.

Judah said she believes a lottery would help close some of the state's funding gaps.

"I literally know probably 50 people who drive to the California state line to buy lottery tickets," she said. "The lottery has been a magnificent money-maker for California."

Judah said she'd also like to see teacher tenure addressed in Nevada, following recent media reports that some educators in the state earn the job-security measure after as little as one year on the job.

While she said she's worked with many exceptional teachers who "bend over backwards" to help the special-needs kids she works with, many others won't accommodate her clients' disabilities.

"I hear horror stories from parents where the teacher is so in the way of my client," she said. "I think we need an examination of tenure rules."

And though she admits it "sounds so altruistic," she said she'd also like to see a mechanism that would allow private volunteers to coordinate with nonprofit groups or agencies to provide free services -- think local businesses and residents supplying labor and materials to build a park so that the budget onus wouldn't fall on the city, county or state. Such a clearinghouse could help curb public expenditures, Judah said.

Mullaney's priorities would include boosting the number of international flights into McCarran International Airport. The dollar's weakness makes it the perfect time for Las Vegas to bolster its fortunes with international travelers from countries with relatively stronger currencies, and he knows from his business that there's solid demand for more nonstop international flights, in particular from countries such as Brazil and Saudi Arabia. The city already welcomes direct service from airports in Mexico, Canada, the United Kingdom and Germany.

"I think the international guest is primed," he said. "I talk to them all the time. They want to come here, but a lot of them say they have to fly through Miami or Houston or Los Angeles to get here. If somehow the state could work with the Las Vegas Convention and Visitors Authority to make more of these flights happen more quickly, it will help bring us business."

McPhee's legislative wish list is a little simpler.

"I think it's really the private sector that will bring us out of this economy," he said. "I think it will just take time, and it's better for the Legislature to just do no harm in the way of new laws, rather than having them write laws and try to work our way out of it by taxing and spending."

Contact reporter Jennifer Robison at jrobison @reviewjournal.com or 702-380-4512.