Hope for new taxes fading, legislators still negotiating ‘sunsets’

CARSON CITY – Democratic leaders in the Nevada Legislature may be giving up hope they can convince Republicans to deliver the votes needed to create about $571 million in new taxes.

The Senate Finance and Assembly Ways and Means committees are planning to re-open budgets for K-12, higher education and several categories under health and human services.

Those budgets had been closed at levels well above what Republican Gov. Brian Sandoval, and, apparently, Republicans in the Legislature are willing to pay for.

A Democratic source said re-opening the budgets is an acknowledgement there’s no hope three Senate and two Assembly Republicans would defy Sandoval and vote in favor of a proposed .8 percent business margin tax and a 1 percent tax on services.

Still on the table are about $626 million in taxes that were supposed to expire, or “sunset” on July 1.

Democrats and Republicans in the Assembly are still negotiating on a potential compromise that could deliver Republican votes to postpone the sunset dates.

Republicans have pared back their original five demands to reform public worker collective bargaining, public employee benefits, education, construction defect lawsuit liability and prevailing wage.

But it might still not be enough, especially after a slight economic recovery resulted in more than $400 million in additional tax revenue added to Sandoval’s original $5.8 billion budget.

“It’s looking more and more like that’s not going to happen,” said Assemblyman Mark Sherwood, R-Las Vegas, of a sunset deal. “(Sandoval’s budget) works.”

Prospects for a budget deal that includes any new taxes or delays the expiration of taxes are even bleaker in the senate.

Republicans have steadfastly refused to budge on Sandoval’s promise to oppose tax and fee increases.

“The governor put forward a balanced budget and we’re sticking with it,” said Sen. Barbara Cegavske, R-Las Vegas.

Sandoval’s most recent budget contains about $6.1 billion in proposed spending. Legislative Democrats had hoped to spend about $7 billion, with about $1.2 billion coming from extending the sunsets and the proposed new taxes.

Democrats are still peeved by another $500 million or more in one-shot revenue, such as borrowing against future insurance premium taxes to raise $190 million and diverting another $250 million or so of school district construction bond reserves into education operating accounts.

The Legislature is scheduled to conclude June 6.

Democrats don’t have enough votes to get the two-thirds bloc needed to raise taxes. But Republicans are in the minority and without Democrats can’t approve Sandoval’s budget plan.

So even if Democrats concede they won’t get new taxes, they would still need to vote to approve Sandoval’s budget or risk going home June 7 with no state budget at all.

That would likely result in a special session, called by Sandoval, before the June 30 end of the fiscal year.