Sandoval’s business tax advances to Senate floor

CARSON CITY — Gov. Brian Sandoval’s plan to raise hundreds of millions of dollars for education by tying state business license fees to gross receipts was approved Tuesday by a Senate committee on a party-line vote.

The Senate Revenue Committee amended and approved Senate Bill 252 on a 4-3 vote. The measure now moves to the Senate floor, where getting votes needed for passage becomes more difficult.

“Today’s vote on Senate Bill 252 is an important step forward for the children of our state,” state Sen. Michael Roberson, a Henderson Republican and chairman of the committee, said before the vote was taken.

“I would ask all members of this committee to put aside partisanship and fear. We’re on day 58 of a presumably 120-day session. Now is not the time to be timid or indecisive. Now is not the time to dither or delay.

“It is time to lead and it is time to act,” said Roberson, the Senate majority leader.

The three Democratic senators on the committee withheld their support, arguing that other measures were still being vetted and they were reaching out to business leaders for input.

State Sen. Aaron Ford, the Democratic minority leader, said it’s not right to ask business owners for their opinion on one day “and a few days later say never mind, your input doesn’t matter to us.”

“There are countless numbers of Nevadans and business owners we haven’t heard from,” Ford said.

State Sens. Ruben Kihuen, D-Las Vegas, and Pat Spearman, D-North Las Vegas, agreed.

“We have several proposals before the Legislature to raise the necessary funds to improve Nevada’s education system,” Kihuen said, adding, “We applaud the governor for starting this conversation.”

He said more time was needed to consider the measures.

“These are a billion-dollar decision that we are talking about,” Kihuen said.

The bill now moves to the Senate floor, where it cannot pass without support from at least some Democrats because of the two-thirds supermajority vote required to increase taxes or impose fees. Republicans hold an 11-10 majority in the upper chamber, and 14 votes are needed.

SB252 would establish a tiered business license rate depending on type of industry and gross revenue. It would replace a flat $200 annual levy currently paid by companies big and small. Under the measure, business license fees would range from $400 up to $4 million annually, though no existing business currently meets the revenue threshold to pay the highest amount.

The measure is the cornerstone of Sandoval’s $7.3 billion general fund budget proposal that includes $1.1 billion in new or extended taxes to finance an aggressive education agenda. The administration says overhauling the business license fee schedule is the fairest way to raise revenue and would bring in $250 million a year.

But his is not the only tax plan on the table. Senate Bill 378, introduced by Spearman and fellow Las Vegas Democratic state Sens. David Parks and Mo Denis, would impose a gross receipts tax on all Nevada businesses with gross revenues of more than $100,000 annually.

It would also abolish Nevada’s modified business tax assessed on payroll, a levy critics say penalizes employers for hiring more workers. Sandoval’s budget would continue the payroll tax for some businesses.

Spearman said her plan would raise $1.3 billion over a two-year budget cycle and includes a tax rate of “less than half a penny.”

But with the committee’s passage of Sandoval’s plan, the odds of Spearman’s bill advancing are slim.

A separate tax plan introduced by Republican leadership in the Assembly would establish a flat business license fee and expand and raise the modified business tax.

Assembly Bill 464, sponsored by Speaker John Hambrick, Majority Leader Paul Anderson and Taxation Chairman Derek Armstrong, would raise the modified business tax to 1.56 percent from the current 1.17 percent. All three lawmakers are from Las Vegas.

Businesses with less than $200,000 a year in payroll would not pay the tax and financial institutions would actually see a rate reduction from the 2 percent they pay now.

The business license fee in the Assembly bill would rise to $500 a year, from $200 for corporations and to $300 for non-corporate businesses.

Along with several other changes, the tax play would bring in $544 million in new revenue and would exceed Sandoval’s 2015-17 budget by just under $62 million, proponents said.

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