Democrats in Senate propose tax incentives

CARSON CITY — Democratic senators said Tuesday that they want to offer tax incentives to induce employers to hire the unemployed, lure movie companies to Nevada and repair roads and bridges.

But they refused during a news conference to say whether they will have to raise taxes to cover the revenue the state general fund budget could lose through their incentive programs.

Senate Majority Leader Mo Denis, D-Las Vegas, said the Legislature first needs to take an organized look at state tax revenue and spending before he can answer whether tax increases are needed.

He noted the Legislature’s top goal is creating jobs.

Their tax incentive plan would take about $150 million in highway funds and use the money to cover a bond issue to raise money to fix roads and bridges.

Gov. Brian Sandoval, however, wants to use the same funds to balance his proposed $6.55 billion general fund budget.

Mary-Sarah Kinner, Sandoval’s press secretary, questioned the Democrats’ job creation plans Tuesday.

“The governor offered a balanced budget that increased funds for schools and roads,” she said. “This proposal creates a hole and shifts money from education and health and human services, with no suggestions as to how to fill the hole.”

Sandoval has pledged to veto any new taxes, other than continuing
$649 million in sales and business taxes that otherwise would expire on July 1. Democrats are four votes shy of the two-thirds majority needed to pass tax increases and overcome a veto.

Geoff Lawrence, a lobbyist for the conservative Nevada Policy Research Institute, called the jobs plan “a retread of state and failed government programs.

“None of the items introduced by the Senate Democrats addresses the core factor that hinders economic growth — the obstacles that Nevada government places in the way of private entrepreneurship,” Lawrence said.

Sen. Kelvin Atkinson, D-North Las Vegas, said the highway fund revenue — fees paid by residents to register their motor vehicles — was supposed to be spent on highway repairs, not on the general fund. He wants to use the highway fund money to cover a $325 million bond issue. For each $100 million, the federal government estimates 3,006 jobs would be created.

“We need to put the money back where it is supposed to go,” Atkinson said. “Everyone knows Nevada infrastructure is in desperate need of repair.”

Sen. Debbie Smith, D-Sparks, said she wants to use the 1.17 percent modified business payroll tax to induce companies to hire unemployed workers.

For an employee making $50,000 a year, the business would save $585 in payroll taxes. Businesses would not have to pay any payroll taxes for one year for every one unemployed person they hired. In the second and third years that the worker remains on the job, half of the payroll taxes would be deductible. To qualify for a tax break, a business would have to hire people out of work for at least six months.

Smith also wants to add another $10 million to the $10 million that Sandoval wants to use to create a Knowledge Fund, a plan in which universities would work with businesses to design educational programs that meet their job needs.

“Our investment needs to be more significant,” she said. And Sen. Aaron Ford, D-Las Vegas, wants to offer movie and TV companies a 23 percent credit on their expenditures if they film in Nevada.

But last week, Steve Hill, director of the Governor’s Office of Economic Development, questioned whether incentives work because many states now have them, and bidding war often result.

Michigan and New Mexico, in particular, offer lucrative deals to attract movies. But Michigan, according to news accounts, is questioning whether its tax credits lead to more than a small number of new jobs. Michigan spent $100 million in the 2009-10 fiscal year to generate $59.5 million in revenue, news reports indicate.

Nevada rejected a film tax credit bill in the 2011 Legislature.

Sen. Ruben Kihuen, D-Las Vegas, who chairs the Revenue Committee, said that legislators have begun their tax review as they promised voters and that they will develop tax proposals if they are needed.

Kihuen noted there are 150,000 unemployed Nevadans.

“Nevadans need jobs right now,” he said.

Contact Capital Bureau Chief Ed Vogel at evogel@reviewjournal.com or 775-687-3901.