Sandoval tweaks tax plan to squeeze more votes out of Assembly

CARSON CITY — Administration officials Saturday presented to the full Nevada Assembly an amendment to Gov. Brian Sandoval’s compromise tax plan that seeks to assuage concerns of some Republicans and win enough votes to assure passage.

Assembly Bill 464 is a cornerstone of Sandoval’s plan for $1.1 billion in new or extended taxes to fund his $7.3 billion budget, with much of the new revenue going to support education.

The second-term Republican governor is trying to squeeze enough votes from tax-hesitant Republicans to secure the two-thirds majority, or 28 votes, needed to send the bill to the Senate with two days remaining in the 2015 session.

Assemblyman Derek Armstrong, a Henderson Republican who is chairman of the Assembly Taxation Committee, presided over the hearing before the full body and said no vote was planned Saturday.

But some conservative Republicans grilled administration officials and compared the commerce tax to a margins tax proposal soundly defeated by voters in November.

Representatives of trucking, retail, contractors and manufacturing industries said that while they support two provisions of the bill, they are against the commerce tax.

“We support two-thirds of the revenue package,” said Paul Enos of the Nevada Trucking Association, adding, “we oppose the amendment that does include the commerce tax.”

Several conservative Republican lawmakers who have pledged to oppose any tax hike complained the measure would hurt small businesses and create a bloated government bureaucracy.

But the proposal drew support from a breadth of Nevada industries and business groups, including gaming, mining, hospitals and utilities.

“I don’t know if this is a perfect tax bill. I don’t know if there is a perfect tax bill,” said Billy Vassiliadis, representing the powerful Nevada Resort Association.

Vassiliadis reiterated familiar arguments, that availability of a trained workforce and quality of life are key factors when companies consider relocating to Nevada.

“This is the first step toward achieving those two goals,” he said.

Mike Willden, Sandoval’s chief of staff, told Assembly members the revised proposal meets the governor’s goal to restructure the tax system, broaden the base of taxpayers and capture more revenue from out-of-state businesses.

The amended version would generate about $255 million a year, about $7 million less than the governor’s previous compromise plan, Willden said.

Sandoval was forced to scrap his first proposal to tie business license fees to gross receipts and industry type after it passed the Senate but hit a formidable roadblock in the Assembly.

A proposed “commerce tax” has replaced that component but is still tied to gross revenue. Under the revised plan, the first $4 million would be revenue is exempt, up from $3.5 million outlined previously.

Jeremy Aguero, an economic analyst advising the governor, said more than 90 percent of Nevada businesses fall below that revenue threshold and wouldn’t pay the tax.

Business license fees would remain a flat $200 instead of jumping to $300, while corporations would pay $500 a year under the late-session amendment.

That move won over some Republicans including Armstrong, who said one of his main concerns was to protect small businesses. Armstrong said Saturday he supports the new proposal.

The amendment also would raise the modified business tax assessed on payroll to 1.475 percent for general businesses, up from the current 1.17 percent. Mining and financial institutions would pay 2 percent. An existing exemption for $85,000 in quarterly wages would be reduced to $50,000.

The measure also would allow the payroll tax rate to be lowered to no less than 1.17 percent if combined commerce and payroll tax collections exceed projections by 4 percent or more.

Companies subject to the commerce tax could also deduct 50 percent of what they pay from any payroll tax liabilities.

The other piece of Sandoval’s tax plan is Senate Bill 483, which would make permanent a handful of taxes that were supposed to expire in 2011 but have twice been extended. That bill also would raise cigarette taxes by $1 a pack to a total of $1.80.

SB483 is estimated to generate $966 million over the upcoming two-year budget cycle that begins July 1.

With two days left in the legislative session, floor votes are expected on both tax bills Sunday.

Contact Sandra Chereb at schereb@reviewjournal.com or 775-687-3901. Find her on Twitter: @SandraChereb.