Off to a fast start, the 2015 Legislature still faces big challenges

Republican Gov. Brian Sandoval, amid hugs, applause and tears of triumph from school administrators and lawmakers, signed Senate Bill 207 Wednesday that allows school districts to roll over bonds for 10 years to build and repair schools.

“It took some courage to get here,” Sandoval said. “It took leadership.”

And it took a lot of open partisan warfare and an internal GOP battle that led to a physical confrontation in the stairwell of the Legislative Building.

Five weeks into the 2015 legislative session, with the first quarter of the scheduled 120-day meeting over, the biennial lawmaking and budgeting event has been marked by early political fisticuffs like never before.

Republicans, who won majority rule in both the state Senate and the Assembly in the surprising Nov. 4 election, have set a fast pace and put a priority on issues the GOP has long sought to address, such as construction defect law, the state’s prevailing wage statute and gun legislation.

Democrats have responded by trying to tap the brakes, accusing their Republican colleagues of not deliberating enough and of not protecting the middle class, instead looking out for big business and themselves.

The standoff doesn’t bode well for quick agreement on a taxing-and-spending plan as they consider Sandoval’s proposed $7.3 billion general fund budget and $1.1 billion tax package.

“We just spent five weeks fighting over something that could have been done in five days,” Senate Minority Leader Aaron Ford, D-Las Vegas, said in an interview, referring to the school bond legislation. “That just shows you what going fast does. … Clearly, the Republicans aren’t watching out for the middle class.”

Asked if he thinks the session could go into overtime if partisan battles persist, Ford said it doesn’t matter if law­makers meet past June because Democrats won’t concede any issue.

“I don’t care how long it takes,” Ford said. “We can get done in 110 days or we can be here until December. … Just because the political power has changed doesn’t mean our priorities have changed.”

In contrast, state Senate Majority Leader Michael Roberson, R-Henderson, is watching the clock so lawmakers can finish the session on time without waiting until the final days to pass a budget.

“I do feel a sense of urgency,” Roberson told Sen. Pat Spearman, D-North Las Vegas, on Thursday when she discussed tax proposals as he chaired the Senate Revenue and Economic Development Committee. “You are correct. We need to get tax reform right. It’s impossible to get anything meaningful done if we wait too long in the session.”

“We’re running out of time. We truly are,” Roberson added.

MONEY MATTERS

Sandoval tentatively is scheduled to personally present his tax plan March 17 to a joint hearing of the Senate revenue panel and the Assembly Taxation Committee.

The main new component of his tax plan is to increase a flat $200 annual business license fee and assess it based on a company’s gross annual revenue. It would range from $400 for small businesses to as high as $4 million, although no Nevada company is making enough now to have to pay the top fee. It would raise about $250 million a year.

In an interview, Sandoval said he believes his business fee hike plan is the best option because every company would have to pay it.

“I still feel it’s the broadest, fairest and simplest,” Sandoval said as he prepared to leave his office to sign the bond rollover bill. “Of course, I’m open to other proposals.”

Sandoval said he is pleased with the fast pace of the session under GOP leader­ship, a contrast to the last session when Democrats were in charge and he had signed only a handful of bills by day 100.

Asked whether the partisan fights are harmful, the governor said the Legislature is managing to work despite the skirmishing.

“Unlike Washington, they’re getting things done,” Sandoval said. “Given the pace that we’re on, I’m confident we can get it done within 120 days.”

But Democrats are taking their time in coming up with their own tax plan. Ford has Spearman crafting a proposal, yet is keeping his options open by taking care to say it will be her plan, not an official “Democratic plan.”

“There is no ‘Democratic’ tax plan,” Ford said. “We said from day one there are concepts worthy of being considered. … We wanted the governor’s plan vetted. The best plan will be one we will support, make no mistake about it. No tax plan can pass without a two-thirds vote.”

Indeed, Sandoval’s plan — or any tax the Legislature considers — must win at least 14 votes in the 21-seat state Senate and 28 votes in the 42-seat Assembly. The GOP has an 11-10 edge in the Senate and a 25-17 advantage in the Assembly.

Last week, Spearman told Roberson’s committee her plan will be done soon and could include a corporate income tax, which lawmakers considered in 2003 as a gross receipts tax. The failed issue went to court, and it took lawmakers two special sessions to finally pass a replacement temporary tax package, including levies long overdue for sunset.

Sandoval and lawmakers extended the sunsets in 2011 and 2013, and Sandoval has suggested making them permanent. That includes the Modified Business Tax, or payroll tax, that raises $800 million over the biennium. But exemptions allow 96 percent of Nevada’s 330,000 companies to avoid paying the tax of 1.17 percent on most businesses and 2 percent on financial institutions.

Spearman said her main goal is to replace the payroll tax, which critics say discourages hiring because it’s based on employee headcount. She said her revenue plan will cover Sandoval’s budget as well as “other imperatives” lawmakers identify during the session.

“We have to be open to new ideas,” Spearman said. “But we must get rid of the MBT. … In my plan, the MBT will be gone.”

Sandoval and Roberson also have criticized the payroll tax. But Senate Assistant Majority Leader Ben Kieckhefer, R-Reno, has noted that ditching the MBT opens an $800 million state budget gap.

“The gap is not insignificant,” Kieckhefer told Spearman, who said her plan also would fill that budget hole.

Kieckhefer, who also sits on the revenue committee and chairs the Senate Finance Committee, dismissed complaints about the fast pace of the session and accusations Republicans don’t care about the middle class.

“The Democrats have chosen to operate as if there’s still a political campaign going on,” Kieckhefer said, adding that such partisanship makes it far more difficult to legislate. “Getting legislation out of this building is not always easy.”

DEEP DIVISIONS

Partisan battle lines were laid down as soon as the session began Feb. 2. Within three weeks, Sandoval had signed a bill that reformed the construction defect law, which the GOP had sought for years.

Assembly Bill 125 passed both houses on a strict party-line vote: 25-17 in the Assembly with all Democrats opposed, and 11-8 in the Senate with two Democratic lawmakers absent.

Called the Homeowner Protections Act by supporters, the legislation restricts the definition of a home defect and repeals allowing attorney fees and costs in a home defect judgment, among other changes.

Democrats argued the bill went too far in restricting the legal rights of homeowners. Ford called it the “homeowner rejection” act.

The most heated wrangling so far has been over the school bond rollover, which had broad support in light of a major classroom shortage in Clark County and older buildings in need of repair in Washoe County.

But Republicans wanted to exempt school construction from Nevada’s prevailing wage law, a union-backed policy that foes say boosts construction costs. Proponents say it provides a living wage for workers and protects projects from being underbid by companies outside Nevada.

GOP leaders introduced Senate Bill 119 which included both the bond rollover and the prevailing wage exemption. It passed the Senate on a party-line vote with one Democrat absent, then got stuck in the Assembly Government Affairs Committee with Democrats objecting to linking the issues. They were joined in opposition by conservative Republicans who favored a two-year rollover, not the decade in the bill.

A committee motion to move SB119 to the Assembly failed 8-6 when two freshman lawmakers, Glenn Trowbridge and John Moore, both R-Las Vegas, voted “no.” A day later, after much angst and infighting, the two switched their votes, sending the bill to the Assembly.

In the interim, a frustrated Roberson introduced a stand-alone school bond measure, SB207, so the Legislature could move quickly and allow school construction to start this year.

Meanwhile, Moore told the Legislative Police that Assembly Majority Leader Paul Anderson, R-Las Vegas, threatened him by calling him out of committee to pressure him to approve SB119.

“He took me to the stairwell and made threats against me and intimidated me,” said Moore, who nonetheless gave in to the pressure.

As a result, lawmakers had two separate bills to consider: AB207 to roll over school bonds and AB119 with the prevailing wage provision added.

SB207 passed first on a 15-4 vote in the state Senate, with four Republicans voting against the measure because of the 10-year time period.

In the Assembly, the clean SB207 passed 27-14 with Assemblywoman Michele Fiore, R-Las Vegas, excused because of illness.

Sandoval’s team quickly set up the school bill signing Wednesday.

The next day, however, Republicans managed to pass SB119 with the prevailing wage provision through both houses, sending it to Sandoval for his signature. It was a mostly party-line vote, passing the Senate 11-9 and the Assembly, 23-19, with all 17 Democrats opposed.

After all the drama, Moore and Anderson announced they had made up, leaving their confrontation just the latest clash within the GOP Assembly caucus, which before the session held several votes to pick a leader, with conservatives pressing for more power. In the end, moderates won, and Assemblyman John Hambrick, R-Las Vegas, became caucus leader and Assembly speaker.

A well-liked, low-key legislator, Hambrick seems to take the GOP infighting in stride, saying Republicans agree on key matters. He supports Sandoval’s budget and raising revenue, a position that prompted a recall effort.

“We always had a split,” Hambrick said of a GOP Assembly caucus long divided between conservatives and moderates. “Some (Republicans) are very passionate. And some have blisters, including me. We’ll come together in the end.”

Fifteen votes are needed to block any tax bill in the Assembly, so Hambrick said he thinks a plan boosting revenue through higher taxes and fees will win in the end. And he praised GOP chairmen for moving fast to get a lot of things done.

“I’ve been astounded by the speed,” Hambrick said before joking, “Maybe we’ll get done in May.”

Then he noted that “as I said on the first day, we’re here to do the people’s business.”

GOP SPLIT

Fiore, who leads a conservative wing of six to eight lawmakers, said she’s just as confident of mustering enough votes to block any tax hike.

Fiore said observers should look at the vote on SB207, the school bond bill conservatives disliked. She said she would have voted “no” if she had been on the floor. Her vote would have made it 27-15 — just enough to kill it.

“Yeah, I’ve got the votes,” Fiore said, referring to the outcome on SB207. “That’s exactly how it’s going to come down.”

One major unknown is whether the Democratic minority sides with any GOP tax plan that would achieve that party’s long-sought goal of spending more on education. Sandoval likely will need every Democrat he can get to win two-thirds in both houses.

Former Assembly Speaker Marilyn Kirkpatrick, D-North Las Vegas, suggests cooler heads will prevail and lawmakers will find a way to boost education funding so Nevada schools no longer finish in last place.

“I believe business wants to be a partner for education and that business license fee gets them that,” Kirkpatrick said, adding that it’s too soon to endorse any one plan. “At the end of the day, nobody gets the credit if we’re still here in August and kids can’t go to school. We have to continue to fight for the middle-class folks.”

“Most of us want to do what’s right for the state,” she added.

No business groups have endorsed Sandoval’s plan or any other, although they have publicly supported more money for education.

“We’re waiting for the details,” said Paul Moradkhan, of the Las Vegas Metro Chamber of Commerce.

Pete Ernaut, a longtime lobbyist and Sandoval adviser, said this session will be marked by GOP attempts to tie spending to reform much as the school bond measure was linked to the prevailing wage challenge.

Ernaut cautioned against reading too much into individual skirmishes.

“It’s like a weekend in Las Vegas,” Ernaut said. “It’s not what you win on Friday. It’s what you leave with on Sunday.”

As for Sandoval, he’s the eternal optimist. Now in his second term, the governor said he meets constantly with business groups and with leaders and lawmakers on both sides of the aisle to make his case for reform.

On Sandoval’s desk sits a plaque with the saying, “It CAN be done.” He said the late president and GOP icon Ronald Reagan had the same saying on his desk.

“I’m not going to sit in judgment of their tactics,” Sandoval said of his GOP allies, including the loyal Roberson, who pushed the school bill. “What’s important to me is the results.

“They got it done. They have to work it out.”

Contact Laura Myers at lmyers@reviewjournal.com or 702-387-2919. Find her on Twitter: @lmyerslvrj.