Tax sunsets rising

CARSON CITY — It was looking so promising for the anti-tax caucus.

For the first time in nearly a decade, it appeared the Nevada political faction that believes taxes are always bad was poised to win the day.

They lost in 2003, when a pro-tax Gov. Kenny Guinn tried but failed to pass a gross-receipts tax. While his idea was quickly dismissed, the debate in the 2003 session was about which other taxes to raise and by how much.

They lost in 2009, despite the fact that the most anti-tax governor in Nevada history — Jim Gibbons — was not shy about using his veto power. Gibbons vetoed a record number of bills, including taxes, but was overridden. Again, the debate was about which taxes to raise and by how much.

But in 2010, things started looking up for the anti-tax crowd.

Although Gibbons’ career was dead, the two candidates vying to replace him were just as anti-tax as he was. Republican Brian Sandoval ran to Gibbons’s right, and even Democrat Rory Reid stuck to anti-tax rhetoric.

Not only did Sandoval win easily, but the Democrats lost their veto-proof majority in the Assembly and a seat in the state Senate. That meant getting the two-thirds majority needed to raise taxes would be so much harder. And a new crop of anti-tax lawmakers rode a tea party wave to Carson City.

Democrats called the same plays: pointing out flaws in the governor’s budget and railing about its consequences. They waited until the last month of the session to propose a package of taxes, including a sales tax on services, a margin tax on corporations and the extension of supposedly temporary sales taxes.

But despite their best efforts, despite sad stories about the impact of cuts, despite the concurrence of some Nevada businesses, the taxes passed only on party-line votes, which meant they didn’t have two-thirds. And Sandoval met frequently with any Republican lawmaker who even thought about compromising on taxes.

The endgame was set: Democrats were riven by factions forced to choose between surrender or stalemate. Sandoval and the anti-tax crowd were going to win.

And then came Clean Water Coalition v. M Resort v. State of Nevada.

In 2009, Democrats had essentially stolen $62 million that had been raised by the coalition, a special government agency formed to build wastewater infrastructure. The coalition sued, claiming the seizure was unconstitutional, and the state Supreme Court ultimately agreed.

Although that decision directly affected only $62 million, the implications of the ruling were dire. The anti-tax Sandoval had decided the state needed more money than it was allowed to spend. But because he’d pledged not to raise taxes, he did what plenty of other governors and Legislatures had done before him, and grabbed money from various local governments. He took it from school district bond reserve fund. He redirected property tax money from Clark and Washoe counties. He took room tax money.

The upshot? A total of $656.7 million might not be available for use, thanks to the court decision.

Suddenly, anti-tax Sandoval was talking taxes. Although the administration was asking the state Supreme Court for clarification of its ruling at week’s end, it was also preparing to extend some of the sunset taxes to cover the budget hole.

"To take $656 million from those budgets is not acceptable to the governor," adviser Dale Erquiaga said.

The anti-tax caucus still stands opposed. They argue the sunsets aren’t necessary and that cuts can still be madet. They blame Sandoval for breaking his no-tax promise.

But the governor is just fulfilling a more important promise, the one implicit in his oath of office, to do the right thing, regardless of ideology. And that means the anti-tax caucus, once so close to victory, will lose again.

Steve Sebelius is a Review-Journal political columnist and author of the blog SlashPolitics.com. Follow him on Twitter at www.Twitter.com/SteveSebelius or reach him at (702) 387-5276 or ssebelius@reviewjournal.com.