Democratic options narrowing as session nears end

CARSON CITY

Suddenly, the endgame for the 2013 Legislature has become clear. The Democrats must surrender.

A system that’s rigged against tax increases, a pair of stillborn tax plans and a resolute governor promising a veto have combined to put the Democrats on the defensive, notwithstanding the fact that they control both the Assembly and Senate. But with just 20 days until the constitutional end of the session, it seems the Democrats are out of room to maneuver. In fact, sine die may be the political equivalent of the mercy rule, as the negative reactions to the twin Democratic tax proposals mounts.

Last week, Assembly Speaker Marilyn Kirkpatrick unveiled her Nevada Entertainment and Admissions Tax, which would impose an 8 percent levy on admission to concerts and movie theaters, golf course fees and even going to the gym.

On Monday, Senate Democrats proposed increasing the Modified Business Tax, otherwise known as the payroll tax. Mining companies would join banks in paying a 2 percent levy on their payrolls, while other businesses would see the tax increase from 1.17 percent to 1.5 percent on all payroll of more than $62,500 per quarter.

The announcement drew immediate scorn from Senate Minority Leader Michael Roberson, R-Henderson.

“We have waited patiently for the majority party to fulfill their promise of an open and honest debate about the future of this great state,” Roberson said on the Senate floor. “But after promising an early and open discussion this year — Day Two if you’ll recall — on Nevada’s tax structure, the majority party has once again waited until the last possible minute to impose job-killing — yes, job-killing — taxes upon Nevada families and business.

“I’ve seen this movie before. I know how it’s going to end,” he added.

Less than two hours later, Republican Gov. Brian Sandoval held a news conference to outline the $489.5 million in new spending on state schools, including more money for full-day kindergarten, English Language Learner programs and class-size reduction in kindergarten.

As for the entertainment and payroll taxes? Sandoval flatly declared his opposition and promised to veto both in the unlikely event they reach his desk. (The state’s constitution requires a two-thirds vote in both houses to raise taxes, and if all Republicans hang tough, Democrats won’t have the votes.)

Senate Majority Leader Mo Denis, D-Las Vegas, repeatedly made the point Monday that Democrats want more than Sandoval has offered. They want full-day kindergarten in every school, not just the 199 schools targeted in the governor’s budget. They want greater class-size reduction. They want to end social promotion if a student can’t read by the end of the third grade (a goal first outlined by Sandoval, in fact).

But in order to raise the $310 million above what Sandoval has put in his budget, they need a tax increase now, Denis says.

“We looked at something new,” Denis told me in an interview. “The problem is, you have to start with our premise. Our premise is our kids need help today. The only way to get to that, and to get to a substantial amount that is worth doing, is to do it through the MBT.”

Denis candidly admitted the tax came at the suggestion of business interests, which like the payroll tax because it’s predictable and controllable. That’s because businesses can lay off employees (or not hire them in the first place) to reduce the tax liability.

Denis insists the tax would be a temporary levy while a permanent, long-term solution is worked out. What that would be, however, is anyone’s guess.

The dispute over education funding levels is a legitimate debate. But there’s no debating the present situation: Democrats don’t have the votes for either tax, and they don’t have time to build support. That leaves them fighting a fight they simply can’t win. We all know how this movie ends.

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