weather icon Clear

Court ruling crafts new political realities for Sandoval

A new day has dawned in Nevada.

No matter the contours of the budget deal GOP Gov. Brian Sandoval works out with Democratic leaders of the Legislature, the state can no longer freely grab pots of local government money to balance its budget, thanks to a Nevada Supreme Court decision.

And state leaders may be forced to consider broadening Nevada’s tax base beyond gaming, mining and sales tax on goods instead of patching holes in a leaky spending plan every two years, observers across the political spectrum said Friday.

"This changes the way government does business," said Billy Vassiliadis, a longtime lobbyist for the Nevada Resort Association. "They’ve tried to manage through crisis by reaching into certain funds, which I’ve always thought was a little short-sighted. Ultimately, a good thing can come out of this."

Former GOP Sen. Bill Raggio, author of the 2009 tax package, said he had long questioned the wisdom of the state siphoning local funds, yet lawmakers were previously told the sweeps were legal.

"I guess I’m one of those who said, ‘I told you so,’ " Raggio said, adding that he had also warned that the 2009 taxes might need to be extended if the economy didn’t recover enough. "Some of that has been forgotten with all the political posturing going on. I think the governor will have to be prudent."


Sandoval, who campaigned on a pledge not to raise taxes, might pay a political price with the conservative right if he lifts some of the June 30 sunsets on a 2009 tax package to fill a budget gap of up to $657 million that suddenly yawned as the result of the high court ruling Thursday.

Yet the popular new governor might be more widely seen as a statesman who worked with Democrats to avoid a deeper crisis by crafting a budget that puts the state’s welfare and support for education and social services ahead of his election promise. Backing from most of the business community, which pushed to extend the 2009 taxes for education, provides him cover, as well.

"Obviously, the governor thinks he can withstand any political challenges from the right," said Robert Uithoven, a GOP consultant who worked with former Republican Gov. Jim Gibbons, who also opposed new taxes yet lost support when he refused to work with opposing lawmakers.

Sandoval is under intense pressure to quickly revise his budget and negotiate a deal with lawmakers, who have just nine days left to work until the 120-day session is constitutionally scheduled to end. The governor will have to rally GOP caucuses in the Senate and Assembly to back him if he extends some taxes after months of supporting his no-tax-hike pledge. And Sandoval must get Democrats to sign on to his bare bones $6.1 billion budget that’s short of their $7 billion proposal.


Most Republicans are expected to go along with Sandoval, especially if he also can negotiate some money-saving reforms. And Democrats appear ready to compromise after dropping efforts this week to pass two new taxes — a transaction fee on services and a margin tax on businesses — that would have raised another $570 million over two years. It was part of an overall $1.2 billion tax package, which included lifting the June 30 sunsets, that was introduced late in the session with zero GOP support.

Assembly Ways and Means Chairwoman Debbie Smith, D-Sparks, was in tears at a hearing on Wednesday as Democrats cut budgets after giving up on raising more revenue with new taxes.

On Thursday, Smith was ecstatic after hearing the surprising high court decision that is forcing Sandoval to finally consider lifting some sunsets on the 2009 tax package.

"Wow. What a difference 12 hrs makes," Smith tweeted. "Compromise at last?"


The Nevada Supreme Court ruled the state couldn’t use $62 million it grabbed from a dedicated Clark County clean water fund. The funding shift had been approved by lawmakers in both parties during a special session in February 2010 to help fill a budget shortfall caused by shrinking state revenues.

As a result of the ruling, Sandoval must remove the $62 million from his budget. And the former judge and his legal advisers said it also means the state probably cannot use another $247 million in school construction bond reserve money for school operations, $225 million in a voter-approved diversion of room taxes and about $83 million in property tax diversions.

"The Supreme Court decision … has far-reaching implications for how Nevada governors and legislatures will do business from this date forward," Sandoval said in a statement Thursday.

And that would be a positive change, said fiscal experts who have long said Nevada’s narrow tax base has resulted in a boom-bust economy that’s too unstable and must be reformed.

"Immediately, this is Sandoval’s problem, but every governor going forward is going to face the same problem. Now is the time to broaden the tax base," said Robert Lange, director of Brookings Mountain West, a think tank. "If there’s ever a moment where the field has changed so radically that there’s opportunity for structural reform, this is it."


Even the Nevada Policy Research Institute, a conservative think tank, has argued in favor of broadening the state tax base by imposing a levy on services — but in exchange for lowing the overall sales tax rate and in a revenue-neutral way so Nevadan’s aren’t paying more for government.

Steven Miller, vice president of NPRI, said it would be "bizarre" if Sandoval breaks his pledge not to raise taxes, despite the high court ruling because there is still too much wasteful spending now.

"Extending the sun-setting taxes will further hamper Nevada’s economic recovery and discourage job creation," Miller said in a scathing statement attacking Sandoval.

Jan Gilbert of the Progressive Leadership Alliance of Nevada, however, makes the case that the Nevada economy has started to improve even with the 2009 taxes in place. She praised Sandoval for moving to extend some of the taxes, although she said his budget still comes up far short.

"This highlights the problem with our revenue structure, which has made us rely on budget gimmicks for a decade," Gilbert said. "We’ve never taken the bull by the horns and said we have a revenue problem. Now, there’s no denying it."

Contact Laura Myers at lmyers@reviewjournal.com or 702-387-2919.

Don't miss the big stories. Like us on Facebook.
Politics Videos
Assemblywoman Daniele Monroe-Moreno hosts BBQ - Video
Assembly Woman Daniele Monroe-Moreno hosts BBQ to bring the community together to hear about the candidates up for election and for people to gather and have fun.
Democrat Virtual Caucus - Video
Elizabeth Warren visits Las Vegas
Senator Elizabeth Warren made a campaign stop at the East Las Vegas Community Center on Tuesday July 2, 2019. (Mat Luschek / Review-Journal)
Aaron Ford Speaks About Bill AB431
AB431 is a bill sponsored by Nevada Assembly Speaker Jason Frierson to restore the right to vote for formerly incarcerated individuals. Attorney General Aaron Ford spoke at the AM&E Church in North Las Vegas about the bill, on Monday, July 1, 2019. (Mat Luschek/Las Vegas Review-Journal)
The Right Take: Biden's Racially Questionable Comments
Joe Biden has uttered racially charged statements for years. Now that he’s the frontrunner for the Democrat presidential nomination, he may finally face prolonged scrutiny for them.
Christopher Rufo Discusses Homelessness In The USA - VIDEO
Christopher Rufo discusses homelessness in the United States and how politicians can work to improve conditions for those with drug addictions.
Clark County 2019 Election Results - Video
The 2019 Elections wrap up in Clark County including an upset in the Boulder City Mayor race.
Olivia Diaz talks about her win in Ward 3 - VIDEO
Las Vegas City Councilwoman-elect Olivia Diaz talks about her election win in Ward 3 and what lies ahead for her.
Greene discusses Read by 3 and Opportunity Scholarships - VIDEO
The Nevada Legislative Session is over and the results are mixed for Nevada students, according to Tom Greene, Senior regional legislative director, Excel in Ed in Action.
Bernie Sanders visits Las Vegas
Sen. Bernie Sanders made a stop at Roy W. Martin middle school on Thursday, during his campaign trail.
Kamala Harris campaigns in Las Vegas
Democratic Sen. Kamala Harris castigated President Donald Trump’s merit-based immigration plan, saying it was “short-sighted” and overlooked the cultural significance of family, during a campaign stop in Las Vegas. “We cannot allow people to start parsing and pointing fingers and creating hierarchies among immigrants,” Harris told Asian Pacific Islander leaders at a Chinatown restaurant, one of two appearances she made Thursday.
The Right Take New Education Funding Plan - VIDEO
On Monday, Senate Education Committee chair Mo Denis, D-Las Vegas, released a new education funding formula. For years, many Democrat politicians have criticized the current education funding formula, called the Nevada Plan. They claim it’s old and outdated. Their biggest beef is that it doesn’t allocate more money for students who are English Language Learners or live in poverty. The theory is that it’s harder to educate those students and so they need additional services, which costs additional money.
Kamala Harris campaigns in Nevada
California Senator Kamala Harris meets with One APIA Nevada, a nonprofit organization that advocates for policies empowering Asian Pacific Islander Nevadans. (Michael Quine/Las Vegas Review-Journal)
Ben Carson talks housing (Audio only)
Ben Carson discusses housing with the Review-Journal editorial board on Thursday. (Audio only)
Ben Carson visits the RJ (Full Audio Only)
Ben Carson discusses housing with the Review-Journal editorial board on Thursday. (Audio only)
Former Vice President Joe Biden campaigns in Nevada
After campaigning at the International Union of Painters and Allied Trades District Council 16 in Henderson, former Vice President Joe Biden spoke with the Review-Journal.
Student serenades Mayor Carolyn Goodman at swearing in
Students from the school she founded, The Meadows School, serenaded Las Vegas Mayor Carolyn Goodman during a swearing in ceremony for her third and final term. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
Al Gore Speaks At UNLV About Climate Change - Video
Former Vice President of the United States Al Gore talks to an audience at UNLV about the effects of Climate change and how to switch to renewable sources of energy.
Forum on Wages and Working People Highlights - VIDEO
Presidential candidates Elizabeth Warren, Beto O'Rourke, Kamala Harris, Amy Klobuchar, Julian Castro, and John Hickenlooper speak in Las Vegas, Nevada.
Nevada Politics Today Valerie Weber - VIDEO
Valerie Weber sits down with Victor Joecks to discuss her policies and why she is running for Ward 2 of the Las Vegas City Council.
Cory Booker speaks at UNLV
US Senator Cory Booker speaks at UNLV during a Young Democrats meet and greet on Thursday, April 18, 2019. (Mat Luschek / Review-Journal)
May-Brown describes why some with disabilities need the subminimum wage - VIDEO
Eliminating the subminimum wage will end training and work opportunities for some members of the disabled community. Instead of doing something productive, they would be relegated to adult day care. That’s according to Tracy May-Brown, Opportunity Village’s director of advocacy, board and government relations.
Commission’s decision will delay Red Rock Canyon development
The Clark County Commission Wednesday rejected a developer’s request to approve a preliminary plan for 3,000 homes overlooking Red Rock Canyon before a federal agency grants permission for a roadway leading to the site.