Democrats introduce tax bill to fund education

CARSON CITY - Hours after Democrats proposed a $255 million increase in payroll taxes Monday Gov. Brian Sandoval and Republican leaders declared the plan dead on arrival.

“I always said my door was open for any alternatives and here we are, with 20 days left in the session, and all we have is an increase in the MBT (Modified Business Tax or payroll tax), which is a job killing tax which is exactly the opposite of what we’re trying to accomplish,” Sandoval said.

Sandoval and Senate Minority Leader Michael Roberson, R-Las Vegas, also ridiculed the $50 million Democrat plan introduced last week that would set an 8 percent entertainment and admission tax on movie tickets, shows and sporting events. Sandoval said he would veto both tax bills, should they reach his desk.

Sandoval said the state must “grow itself” out of recession, not raise taxes.

In tax debates, Republicans hold the upper hand. While Democrats hold an 11-10 margin in the Senate and a 27-15 advantage in the Assembly, taxes cannot be imposed without at least two-thirds support in both houses. It also takes a two-third vote to override a veto. Thus Democrats need the votes of at least three Senate Republicans and one Assembly Republican to pass any tax.

In an angry speech on the Senate floor, Roberson said the payroll tax plan, Senate Bill 514, would only kill job creation and won’t get one Republican vote. The other measure he called a misguided tax on family fun.

“I had great hopes things would be different this session,” said Roberson. “I thought we could buck the trend of Washington-style partisan politics and work together on reasonable solutions. Expanding the tax on payroll is no way to help a struggling economy.”

In an earlier news conference, Senate Majority Leader Mo Denis, D-Las Vegas, acknowledged he has no Republcan support but expressed hope of gaining it.

Denis said the money would go to education programs such as class-size reduction, full-day kindergarten and English learning classes.

“It is like you do with anything,” he said of the key to passing tax increases. “Open discussions. Open dialog.”

Assembly Speaker Marilyn Kirkpatrick, D-North Las Vegas, said the Republican response “highlighted the clear difference between Democrats who are trying to strengthen the middle class by funding education, and Republicans, who want to maintain an unacceptable status quo that shortchanges our children while protecting political interests at every turn.”

SB 514 would boost the modified business or payroll tax on mining to 2 percent, up from 1.17 percent. That would take the current tax bite on the industry-average annual pay of $90,000 from $1,053 to $1,800, a $747 increase on the state’s 12,100 metal ore mining jobs.

For most other businesses, the tax rate would go to 1.5 percent, or $750 per year on a job paying $50,000, a $165 increase.

A company’s first $250,000 in payroll would be exempt, so smaller businesses would avoid it entirely. In his budget, Sandoval proposed exempting $350,000 in payroll.

The governor also would extend the current payroll and sales taxes until July 2015. Failing that, the payroll tax would soon drop to 0.63 percent on June 30.

Meanwhile, the state sales tax rate of 6.85 percent would be reduced by 0.35 percentage points.

Denis said the payroll proposal is only part of a long-range plan to properly fund publc education. A bill to provide long-term education funding will be introdued later, he said.

Denis also indicated that Democrats will push for a corporate profits tax that might go to voters in November 2014.

While Denis called the payroll tax increase temporary, lasting through 2015.

Throughout the session, there has been bipartisan agreement that we need to do more for education, and this is the only proposal that immediately solves our funding shortfall,” Denis said. “If we want to truly address our education crisis, there is no justification in not supporting our proposal.”

Roberson and five other Senate Republicans on Monday introduced Senate Bill 513, which would place a 10 percent net profits tax on mining before voters next year. If approved, the measure would generate $300 million a year for education, they argue.

The Republican tax on mining is an alternative to a 2 percentage point business margin tax proposed by the Nevada State Education Association in a petition drive. This tax will appear on the November 2014 ballot.

Sandoval also opposes the union tax plan and vowed Monday to campaign “aggressively” against it.

Gaming industry lobbyist Billy Vassiliadis and mining lobbyist Jim Wadhams expressed doubt that Democrats can secure enough votes for their tax plan.
Tim Crowley, president of the Nevada Mining Association, also criticized the tax plan.

“Our industry should be encouraged to keep supplying some of the state’s best jobs at these salary levels instead of being singled out for additional taxation,” Crowley said.

Contact reporter Sean Whaley at swhaley@reviewjournal.com or 775-687-3900.