Tax proposal for education funds not on Legislature’s agenda

CARSON CITY — Legislators must decide by Friday, the 40th day of the 2013 session, whether they are going to approve or just punt on the Nevada State Education Association’s petition to raise $800 million a year through a 2 percent business margins tax.

Expect them to punt.

The initiative petition has not even been placed on the agendas for this week’s Assembly Taxation Committee and Senate Revenue Committee meetings.

Neither Taxation Chair­woman Irene Bustamante Adams nor Senate Revenue Committee Chairman Ruben Kihuen, both D-Las Vegas, have been willing to say they simply will ignore the petition signed by 152,000 voters last year.

If the lawmakers do nothing, the petition automatically will go before voters as a ballot question in the 2014 election.

If Democrats, who widely support the proposal, somehow found the votes to approve the petition now, then it would go into effect this year.

A Retail Association of Nevada poll found the business tax would win approval 58 percent to 39 percent, but when residents were asked if they would back the tax even though businesses might fail and unemployment would increase, they split, 48 percent to 48 percent.

“I haven’t decided yet,” said Bustamante Adams, when asked Friday whether she intends to act on Initiative Petition 1.

A day earlier, Kihuen declared: “We have 150,000 people who want us to do something.”

The Democratic majority loses nothing by letting the petition move forward on its own. Republicans have vowed not to back new tax increases and the Democrats lack enough votes to approve the petition without some Republican support. And by not passing the petition, the Democrats don’t incur the wrath of business owners who angrily protested the teachers’ tax plan during the sole hearing Tuesday.

“I don’t have a crystal ball about what they will do (this week). But we are very confident if it is on the ballot, then it will pass,” education association Executive Director Gary Peck said.

As it stands now, Senate Republicans have been the first legislators to announce a plan to raise taxes. In a dramatic reversal of their previous stance, Senate Minority Leader Michael Roberson, R-Las Vegas, said they will back mining tax increases because they are needed to properly fund public education.

But their plan won’t help education now. Instead they will support Senate Joint Resolution 15, a proposed constitutional amendment drawn up by Democrats in 2011.

This amendment, if approved by the Legislature this year, also would be placed before voters in 2014. With that approval, lawmakers in 2015 could tax the gross revenue mining companies receive by any rate they choose.

While Republicans did not say how much more mining should pay, they issued a statement that if mining were taxed at the same 6.75 percent rate as the gaming industry, then education would reap an additional $780 million during the next two-year budget period.

To accomplish that objective — and to kill what Roberson called the “job killing” teachers tax — the Republicans would place an alternative to the 2 percent margins tax before voters.

This proposal would spell out how they would increase education funding by taxing the mining industry more. If it received more votes than the teachers’ tax plan, as long as it is more than 50 percent, then it would become law.

Almost immediately after the mining tax announcement, Republican Gov. Brian Sandoval and Assembly Republicans announced their opposition.

“That tells you something,” Peck said.

But Roberson said Friday he remains confident that before the Legislature adjourns June 3, legislators and the governor will support the mining tax ballot alternative. “What other choice do they have?” he asked.

Roberson also said he is not concerned that mining companies might retaliate against legislators who sign on to his plan by refusing to contribute to their campaigns.

A check of the contributions made by Barrick and Newmont, the two largest mining companies, shows they give many thousands of dollars to candidates of both parties, to the parties’ party political action committees and to Sandoval’s re-election PAC. Roberson himself received a $5,000 contribution.

“That’s not what we are here for,” said Roberson in response to questions about whether mining contributions could sway members.

But Peck argued that metal prices inevitably will go up and down and the Senate Republican plan would not provide a stable revenue source for education.

The business margin taxes, in contrast, would provide stable sources of revenue for increase, according to his analysts and the National Education Association.

Roberson’s only purpose in bringing out a mining tax plan was to kill the margins tax proposal and free other businesses from paying their fair share of taxes to help education, Peck said. Mining should pay more taxes, but he maintains general businesses also must step up and properly fund education.

“Business now and has been for a long time the cause of the problem,” Peck said. “They never stepped forward to talk about any broad-based business tax on them. They say our tax will be the end of the world for businesses, that they will close and flee the state and ‘Oh my, by the way, don’t tax us.’ It won’t be good enough this time.”

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