CARSON CITY — Two key elements of Gov. Brian Sandoval’s $1.1 billion tax package cleared major legislative hurdles Thursday, winning endorsements from Assembly committees.
Passage of the so-called “sunset bill” and Sandoval’s compromise tax proposal that includes a gross receipts tax signals lawmakers are plowing forward with the governor’s plans to fund his $7.2 billion two-year budget. Legislators face a deadline of midnight Monday to adjourn or face a special session.
Both bills now move to the Assembly floor, where they will face opposition from conservative members of the GOP and pressure from various lobbying groups to amend them.
The Assembly Committee on Taxation approved Senate Bill 483, the “sunset bill” that makes permanent a handful of taxes enacted in 2009 that were supposed to expire in 2011.
But those levies were twice extended as Nevada tried to claw out of recession, and Sandoval this year said it’s time to end the ruse and make them a permanent source to fund state government.
SB483 keeps intact a 0.35 percent sales tax increase that supports schools and makes permanent the 1.17 percent payroll tax paid by nonfinancial institutions. Higher fees attached to vehicle registrations also would remain.
Another provision raises cigarette taxes by $1 a pack, for a total of $1.80. Assemblyman Pat Hickey, R-Reno, suggested reducing the increase to 40 cents, as originally proposed by the governor. But Assembly Taxation Chairman Derek Armstrong, R-Henderson, scuttled that idea.
“I think it’s my intent at this point to leave the fiscal portions of this bill and send it out as is,” Armstrong said.
The sunset bill generates $996 million in revenue over the upcoming two years, with $377 million earmarked to schools.
Later Thursday night, the Assembly Ways and Means Committee, in an 11-4 vote, passed Assembly Bill 464, amended to include Sandoval’s compromise tax plan after his initial proposal tying business license fees to gross receipts fizzled in the Assembly.
That measure, projected to raise $262 million a year, has three prongs — business license fees, modified business taxes and a “commerce” tax based on industry type and revenue.
Annual business license fees would increase to $300 annually for most businesses, and to $500 for corporations.
Nevada’s modified business tax, or MBT, would rise to 1.475 percent for general businesses, up from the existing rate of 1.17 percent. Mining and financial institutions would pay a rate of 2 percent. Additionally the current exemption of the first $340,000 in annual payroll would be cut to $200,000, meaning more businesses would be subject to the levy that is assessed on payroll. Employers would retain a deduction for employer-paid health care expenses.
It was the commerce tax that drew the most opposition. The industry-specific tax would be imposed on businesses with revenue of $3.5 million or more. But companies would be able to apply 50 percent of that tax as a credit against the modified business tax.
Assemblywoman Marilyn Kirkpatrick D-North Las Vegas, said after he committee has already signed off on agency spending plans for the next two years, it’s only appropriate that lawmakers provide revenue needed to fund them.
Republican Assembly members Chris Edwards of Las Vegas; Derek Armstrong, Henderson; Robin Titus, Smith; and Jill Dickman, Sparks, voted against the bill. Assemblyman Randy Kirner and Pat Hickey, both Reno Republicans, supported the bill.
Contact Sandra Chereb at firstname.lastname@example.org or 775-687-3901. Find her on Twitter: @SandraChereb.
See all of our coverage: 2015 Nevada Legislature.