Plenty of time?

In fact, the Democratic presentation unveiled Thursday — the 88th day of the session, with just 32 left to go until the constitutional deadline — showed a series of tax studies dating to 1960 that all said the same thing: Nevada’s tax base must be broader.

The so-called “sunset taxes” set to expire in June (sales, car registration, payroll, business license fee)? Debated and approved in 2009. Extending the sales tax to services? Discussed and vetted. A franchise tax? Something very similar was debated in 2003, although the Legislature rejected the idea.

So while the Democratic proposal may have come late in the game — a practical, tactical judgment on the part of leaders who felt it was necessary first to dismantle Gov. Brian Sandoval’s budget proposal before rolling out their own — it’s not as if the ideas are new.

“We have been thoughtfully exploring these elements for months in the (Senate) Revenue and Taxation (committees) and for years in this state,” said Senate Majority Leader Steven Horsford. “We have plenty of time.”

That’s why Democratic leaders still think there’s a chance to write the proposal into bill form, hold hearings, and persuade certain Republican lawmakers to their cause, all in time to pass the plan, watch the governor veto it and then hold an override vote.

Will that happen? It’s still a very long shot, given the unusual loyalty that Republicans have shown to Sandoval’s budget. But the Democratic proposal seems to have been designed precisely for the purpose of appealing to business leaders and, through them, to Republican lawmakers.

First, it can hardly be argued that the “sunset” taxes are harming the economy when Sandoval himself said Monday that an “economic recovery is taking hold.” Unless the governor wants to argue that this nascent recovery is the result of individuals and businesses increasing economic activity in anticipation of being freed from the yoke of these taxes on June 30, even Sandoval must admit the economy is getting better in spite of the “sunset” taxes. Thus, continuing those taxes will certainly not cause economic harm.

Second, in exchange for extending the sales tax to services, all Nevadans will see a decrease in the overall tax rate. Currently, it’s 8.1 percent in Clark County, and that would drop by 1 percent by the time the Democratic plan is fully implemented. (It must be noted, however, that we’ll pay that lower sales tax on more things.)

Third, the adopting of a franchise tax (with a $1 million exemption designed to help small business) would be a trade for eliminating the hated payroll tax, which, in a bit of historical irony, was adopted in lieu of a gross receipts tax in 2003. That’s an incentive that will appeal to Nevada businesses.

And while the price of the Democratic package has been pegged at $1.5 billion, that’s misleading. Democrats will add that much to the budget, to be sure. But $303 million of that is money produced under the current tax system, without any new taxes at all. Another $626 million comes from the “sunset” taxes, which Nevadans are already paying. The new sales tax on services and franchise tax will generate $571 million.

Some Democrats have suggested that, if their plan is rejected, they will adopt the governor’s budget and lay blame for the suffering it causes on him, while pushing their tax proposals on the ballot in 2012. But Horsford rejects that idea.

“I’m not prepared to even speculate if that could happen. I’m focused on the plan that we submitted (Thursday),” Horsford said. “I’m not leaving here until we complete the job that we were elected to do.”

 

Steve Sebelius is a Review-Journal political columnist and author of the blog SlashPolitics.com. His column appears Sunday, Tuesday, Wednesday and Friday. Reach him at 387-5276 or at ssebelius@reviewjournal.com.