EDITORIAL: Tax hikes would be folly during budget crisis

Gov. Steve Sisolak last week did an about-face and refused to rule out tax hikes during the special legislative session he’ll call to address the state’s gaping budget chasm. That was a colossal mistake. Rather than kowtowing to public-employee unions, the governor needs to dig deep for some fortitude and start doing the job he was elected to do.

Simply put, asking Nevada’s private-sector workers and their employers to reach further into their wallets during this time of economic devastation and uncertainty would be an outrage and should constitute political suicide for elected officials. Neither the state’s business community nor those it sustains are in any position to take a further financial hit, what with the tourism and travel industry on the rack and unemployment at record highs. Particularly when public employees — at both the state and local levels — have been asked to bear so little of the sacrifice.

Let’s keep in mind that, according to U.S. census data, Nevada local government workers in 2017 earned, on average, 31 percent more than the private-sector workers who pay their salaries, the highest disparity in the nation. In 2019, Nevada governments spent more than $2 billion on worker pension contributions alone.

The state’s jobless rate hit 28.2 percent in April, the highest in the nation. The carnage almost exclusively reflects job losses in the private economy, as thousands of workers sit at home and struggle to pay the bills. While the gradual reopening of the economy has eased their burden somewhat, the destruction is likely to continue for many months as beleaguered firms determine whether they can survive in the new reality of limited capacities and lukewarm consumer enthusiasm.

Meanwhile, state and municipal workers have felt minimal discomfort. The city of Las Vegas last week gave the one-finger salute to taxpayers and inexplicably approved bonuses for hundreds of employees, regardless of whether they were working during the virus shutdowns. Clark County officials seamlessly balanced their current budget with extremely modest concessions from employee unions. Gov. Sisolak’s prescription so far — one-day-a-month furloughs for state workers, no merit pay and just 50 layoffs out of a payroll of nearly 18,000 — ignores the stark reality on the ground and will result in only minimal savings.

There’s nothing wrong with striving to limit public-sector job losses, layoffs or furloughs. Nobody favors indiscriminately sending people to the unemployment line. But it sends a clear message about overstuffed coffers if such a goal can be accomplished during these times of cratering tax revenues while barely touching generous wages and benefits and making only token personnel reductions.

The state faces a deficit of $1.3 billion for the fiscal year starting July 1, a number that is likely to increase. Republicans have the votes in the state Senate to block tax hikes during the special session. They must stand united in that regard. But lawmakers who even utter the word “taxes” before they consider a whole range of options when it comes to personnel costs will be guilty of professional malfeasance.

Gov. Sisolak needs to make clear that higher or new taxes are dead-on-arrival and that government employees must shoulder a much more significant weight when it comes to covering coronavirus shortfalls. If that entails using emergency powers to impose compensation adjustments and layoffs — or even freezing pension payments — so be it. Nothing should be off the table, including a re-evaluation of current tax distribution formulas, which have long favored local governments at the expense of state government.

The coronavirus lockdowns ravaged private employers and left thousands of Nevada workers in despair. The future remains uncertain and long-term economic projections indicate that the ramifications of the shutdowns could linger for a decade. To argue that public-sector wage earners should largely be shielded from the fallout verges on the obscene. Government workers cannot expect an exemption from the repercussions that many of their private-sector counterparts have endured for more than three months now — and the governor and lawmakers shouldn’t pretend otherwise. It’s long past time that Nevada’s well-funded state, county and city governments and their employees remember who works for whom.