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Nevada should be wary about ‘the deal’

You know, I was thinking this weekend while reading Las Vegas Sun owner/editor/publisher/columnist Brian Greenspun’s piece coming out squarely against The Education Initiative, “boy, I sure am glad we have two newspapers in this town with two different ideological voices!”

Oh, wait.

Then it occurred to me that some people would probably say that when the Las Vegas Sun and the Review-Journal agree on something, it must be the right position, because they so rarely agree on anything.

But that conclusion omits the entirely plausible possibility that both newspapers are wrong, albeit for very different reasons. And I believe that’s the case when it comes to The Education Initiative, a 2 percent margin tax on businesses that earn $1 million or more, which will appear on your November ballot as Question 3.

As much as we like to think that the RJ is the conservative/Republican newspaper (it’s actually very much more a libertarian orientation, conservative on fiscal issues, liberal on social issues) and the Sun is the liberal/Democratic newspaper (when it even bothers to pen a local editorial that can be categorized), the fact is, on The Education Initiative, both newspapers embrace the Establishment position. And the Establishment (think the Las Vegas Chamber of Commerce, the Nevada Resort Association, and many associated other groups) has declared this tax is Bad for Nevada.

But that doesn’t mean the RJ and the Sun are in sync. While the RJ wants the tax dead for the simple reason that its a tax that could burden business, Greenspun seems to want it dead in favor of a murky possibility of another tax to be enacted at some point in the future. Consider:

That is why the Las Vegas Global Economic Alliance has taken the lead to bring every stakeholder to the table in trying to craft a plan that will grow our public school system into what we need to be a 21st-century competitor. And it appears the alliance is having success.

Yes, it has been a quiet endeavor the past few months. How else can you get small businesses, larger businesses, the gaming industry, mining, chambers of commerce as well as teachers unions and administrators to come to the table to find the common ground? Everybody wins if the deal can be made, and everybody continues to lose if it can’t.

Assuming the teachers and business can find the common ground — and it sounds like they can — the next people we need are the elected leaders. None of this works unless those who are empowered to make it happen will join the people of this state and commit to doing just that!

Ah, yes, “the deal,” an agreement in which teachers and business and everybody comes together and does the right thing for the state of Nevada. We don’t need that stinky old Education Initiative! We’ve got “the deal” right here!

But before I sign on, I have just a couple of questions for Greenspun and the mysterious cabal working so diligently behind the scenes to find a solution to the education funding problem (and yes, there is one).

First question: Why has it taken so long? Where have all these wonderful people of goodwill been for the last 50 years, as study after study warned about Nevada’s broken tax structure, as the Clark County School District has struggled to keep up with growth, an influx of ELL students and growing poverty that prevents many kids from learning? Where were they then?

We know where they were in the early 2000s: fighting the teachers union net profits tax in court. We know where they were in 2003: fighting Gov. Kenny Guinn’s gross receipts tax. We know where they were during the recession: yelling “now isn’t the time to raise taxes!” I’m told they were considering maybe possibly supporting a much lower margin tax at the end of the 2011 session, but those business tax supporters are like unicorns: I’ve heard they exist, but I’ve never actually seen one.

Why now? Greenspun would have us believe that the business community has finally seen the light, realized that our schools are underperforming and finally embraced education as the only real hope for Nevada economic development. I happen to be a bit more cynical and believe they just don’t want to pay taxes, and are using the fanciful promise of “a deal” to induce voters to reject the only real chance they have had to impose a corporate income tax in Nevada. But let’s put that nasty cynicism aside, and assume that the people involved in “the deal” are honestly working toward a workable solution that has the support of all parties. That leads us to the next question.

Second question: What is this deal? Whenever I have heard talk of it — and I have been hearing about it for months — I ask that question and am told the details are still under discussion. Is it a corporate income tax of some kind? Is it a package of taxes, say a sales tax on services? (Lots of businessmen like that one, since they don’t pay it so much as collect it and get a little skim off the top for their trouble.) Is it revenue neutral, or does it increase revenue to the general fund (which is kind of an important point; there’s little upside for schools in revenue-neutral taxation)? Is it dedicated to education, or not? And does it include school reforms? If so, what are they?

All good questions, and questions that must be answered before Election Day, if voters are to have a real choice. (Greenspun seems to agree: “That means coming out arm-in-arm — business, labor and politicians and whoever else is necessary to make this happen — and make the commitments to the voters before the vote,” he wrote. “If that is done, and soon, then voters are smart enough to vote ‘no’ on Question 3 because they will give the Legislature this last chance to do the right thing.”)

But more often than not, I hear an opposing view on when “the deal” should be unveiled. That view holds that as soon as the idea is unveiled, it will be subject to attack from critics, and it will be picked apart and criticized the way opponents have been doing with The Education Initiative for months. (And some of those criticisms are even true!) So, this camp says, let’s keep it under wraps until after Election Day. That requires the voters to simply trust that a.) there actually is a deal, b.) it’s a good deal, and c.) it will actually happen once the threat of The Education Initiative is gone.

Sound reasonable to you? Yeah, I didn’t think so.

Third and final question: What makes you think that this time is different in Carson City, and that the Legislature will actually enact whatever deal is worked out? Sure, Gov. Brian Sandoval will have been safely re-elected to a second and final term, and will be focused on legacy. Sure, a Republican majority may have taken over the Senate, and will be ready to produce results to show it can govern. (Irony alert! Democrats in control for years produce nothing, but Republicans take over and pass a tax plan! Chuck Muth’s head is about to explode!) Democrats know they made mistakes and lost opportunities in the past, and may be ready to fix that now. (My colleague Jon Ralston has outlined such a scenario in a column that foreshadows fond hopes for the next session.)

But again, my cynicism forces me to declare the same forces of inertia and ennui that have plagued the Capitol for years are still there. And now, reluctant lawmakers will have a powerful argument to boot: voters who listened to those proffering “a deal” will have just said no to The Education Initiative, and why should politicians agree to any tax on business given that mandate?

And as far as “the deal,” what motive will the business community have to pursue “a deal” once the threat of taxation by initiative is removed from the table? Business leaders have invaded the legislative building every two years with the simple goal of stopping taxation, just for the next biennium, and they’ve succeeded for decades in two-year bite-sized chunks of time. A defeat of the Education Initiative will be seen as yet another in the long string of their victories, not as a call to surrender.

No, in the contest between reality and hope, between what is, and what might be, history suggests Nevada would be foolish to agree to “a deal” (especially sight unseen), relying on the word of people who have always fought taxation to do the right thing.

Even Greenspun agrees with that: “If this deal-in-the-making doesn’t get done? I know some smart people who will vote for the margin tax even though they acknowledge it could be destructive to our economy. That tells me the ‘experts’ who say it will fail are wrong and the people will head to the polls to vent their wrath.”

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