Nevada lawmakers hear testimony on tax bills

CARSON CITY — Lawmakers on Saturday heard hours of testimony on Democratic proposals to increase taxes on business and consumers to avoid cuts to state funding for education and social programs.

The proposed business margin tax in Senate Bill 491 and service trans­action tax in Assembly Bill 569 are part of a Democratic plan that would spend about $920 million more than what Republican Gov. Brian Sandoval included in his $6.1 billion general fund budget for the next two years.

Much of the testimony before the Assembly Taxation and Senate Revenue committees was in favor of the taxes and came from teachers, state workers and others who stand to lose under Sandoval’s plan.

“The university is teetering on the verge of financial collapse,” said John Farley, a physics professor at the University of Nevada, Las Vegas and member of the Nevada Faculty Alliance.

Farley said previous rounds of funding cuts have already made it difficult for colleges and universities to retain faculty. A trickle of departing faculty would become a flood if more cuts are enacted, he said in support of AB 569.

The bill includes a 1 percent tax on a broad array of services, everything from lawyers and plumbers to haircuts and car repairs. It includes a short list of exemptions for health care, residential rent, utilities and Internet access.

“No one minds paying taxes and paying your fair share, it is looking at all the people who don’t have to pay that makes you mad,” organized labor lobbyist Pat Sanderson said testifying in support.

Others questioned whether the tax would make it harder for businesses and consumers to make ends meet.

Commercial real estate agent Brenda Lovato testified from Las Vegas and said property owners are already struggling with high vacancy rates .

“We cannot afford one more thing,” Lovato said.

Dayton Food Pantry volunteer coordinator Freida Carbery testified in favor of SB491, which contains the 0.8 percent margin tax on business revenue and extends $626 million worth of existing taxes set to expire July 1.

Carbery said she fears cuts to social programs or public worker layoffs will increase demand at the food pantry, which already has seen the number of its clients triple during the recession.

Democrats say the extra spending is needed to avert pay cuts for teachers and other state workers and reduced service levels in social programs.

Republicans, including Sandoval, say Nevada’s recession-battered economy is too fragile to risk raising taxes and cutting into private sector spending.

“One percent is the beginning,” Assembly­man Pete Livermore, R-Carson City, said during the hearing on the proposed service tax. “In future sessions you will see this 1 percent ratchet up.”

The debate over the Democratic tax bills comes as lawmakers enter the final three weeks of a legislative session set to conclude June 6 looking for an opportunity to break the partisan stalemate.

Democrats hold a majority in both chambers and can block Sandoval’s budget but don’t have the two-thirds majority they need to raise taxes unless they can peel away two Assembly and three state Senate Republicans.

In recent days, leading lawmakers behind the scenes have reached across political lines seeking compromise, a break from the isolation of the first three months of the 120-day session.

Democrats have indicated they’re willing to listen to government spending reforms Assembly Republicans want in order to discuss tax increases.

“We’re actually now talking about how close we are and how far we are,” said Assembly Speaker John Oceguera, D-Las Vegas.

So far, state Senate Republicans have refused to trade reforms for new taxes and Democrats aren’t willing to strike laws covering collective bargaining and benefits for public workers, construction defect liability and prevailing wages.

“I think reforms are in order,” Oceguera said. “I’m not going to go to the level of abolition of some of these statutes.”

Contact reporter Benjamin Spillman at
bspillman@reviewjournal.com or 702-477-3861.