Tax petition a compromise killer

The new school year started last week with fewer teachers, bigger classes, no money to spare and no hope that things will change anytime soon.

No one's happy about the situation, and no one's more aware of that than the dozens of legislative candidates knocking on doors around the Las Vegas Valley and the rest of the state. They're getting an earful from the voting public, who want better schools for their kids.

But there's little chance that a grand bargain, enacting broad education reforms in exchange for higher funding levels, will come out of the 2013 Legislature - and no chance at all if the Nevada State Education Association succeeds in qualifying an initiative petition to create a 2 percent margins tax on businesses.

The NSEA is collecting signatures for a tax hike that, according to the teachers union's estimates, will take an additional $800 million per year out of Nevada's battered private sector. If the union can collect 72,234 valid signatures from registered voters by Nov. 13, the plan will be forwarded to the Legislature next year. The tax would be applied on all business revenue beyond $1 million, with some deductions allowed.

No one expects the Legislature to approve the petition, if the initiative makes it to Carson City. I haven't spoken with a single lawmaker or legislative candidate who supports the petition, and even NSEA officials are predicting it will be rejected or ignored.

That would put the tax before voters in November 2014. If it's approved, it would take effect Jan. 1, 2015.

That date seems a long way off, but it's a compromise killer with huge, immediate ramifications for the state's weak economic recovery.

When the 2013 Legislature finishes its business in late spring, one way or another lawmakers will pass a two-year budget that funds state services through June 30, 2015. They'll build that budget knowing that businesses could be hit with a huge tax increase covering the final six months of that spending plan.

That uncertainty would kill any chance of lawmakers from either party supporting tax increases beyond extensions of the temporary levies enacted in 2009 and renewed in 2011.

Republican Gov. Brian Sandoval says he will build those extensions into the budget he'll forward to the Legislature, and many Republican lawmakers and legislative candidates have said they'll provide the votes to reach the two-thirds supermajority required to pass them. Such a budget would keep K-12 spending essentially flat, meaning no additional teaching jobs and perhaps more position eliminations, especially if the Clark County Education Association keeps winning unsustainable pay raises for local teachers through arbitration.

So where are the Democrats? Running scared, of course. While Democratic lawmakers say they desperately want to throw more money at our schools, they won't introduce, campaign on or commit to any sort of tax plan. They either profess that "everything needs to be on the table" (except education reforms), or they claim they won't support any tax hikes "at this time."

They're not stupid. They know they can't win election in swing districts promising higher taxes. And they also know that if they raise taxes, and the NSEA's margins tax is piled on top of those increases in 2015, they'll be dead ducks come re-election time.

The path to an improved education system in Nevada has always been pretty straightforward (unlike our politicians). Democrats want more spending money, and Republicans want reforms. Because neither party has full control of Carson City, neither will get what it wants without some kind of deal.

I can think of several ways to improve our schools without raising taxes - vouchers, a stronger charter school law, collective bargaining reforms, ending social promotion, and on and on - but the reality is Democrats oppose all of them, and Democrats own the Assembly in perpetuity. Money alone won't fix our schools (see my April 1 column, "Our best-funded schools are the worst"), yet it will take money to win Democratic support for reforms. Neither side wants to admit that to their respective bases, but it's true.

But the NSEA petition blows up that scenario. The union was apoplectic over the decidedly minor education reforms enacted as part of the 2011 budget compromise: changes to tenure, layoff criteria and teacher evaluations. It eviscerated several union-loyal Democratic lawmakers in an extremist, widely mocked post-session report card. The NSEA wants reforms and accountability off the table.

And what of the businesses that would be required to pay this tax? Imagine trying to formulate a plan for the immediate future, involving investment and potential expansion, knowing full well you might get clobbered with a massive new tax liability come Jan. 1, 2015. Would you start hiring? More likely, you'd spend the bulk of 2013 and 2014 holding the line.

Just what a state with 12 percent unemployment, and 22 percent real unemployment, needs: more uncertainty.

The petition might very well be thrown out by the courts. Businesses successfully killed the initiative once before, for violating the state law that requires petitions to be limited to a single subject. The Committee to Protect Nevada Jobs has sued to block the newest version as well.

The margins tax is a brutal, job-killing levy that would hit even those businesses that aren't profitable. While I'm a big defender of the right to petition, this particular initiative is poised to subvert the 2013 Legislature.

If you want a fighting chance at having better schools, a better economy and a better Nevada next year, don't sign it.

Glenn Cook is a Review-Journal editorial writer. Follow him on Twitter: @Glenn_CookNV.