Tax Day in Carson City about to change the debate

CARSON CITY

It’s Tax Day at the Nevada Legislature.

This afternoon, Gov. Brian Sandoval will present his much-debated business license fee proposal to the Senate Revenue and Economic Development Committee. All other Senate and Assembly hearings have been canceled, to allow lawmakers from both houses to attend.

Sandoval will personally pitch his idea to turn the state’s $200 business license fee into a progressive tax based upon gross revenue, ranging from $400 up to more than $2 million. It’s his preferred alternative to pay for nearly a billion dollars worth of increased spending on education.

The hearing in Room 1214 of the Legislative Building is guaranteed to be packed. Among the guests: Former Govs. Robert List (1978-1982), Richard Bryan (1982-1988) and Bob Miller (1988-1998). Missing will be the late Gov. Kenny Guinn (1998-2006), the last governor who tried to get a gross-receipts tax plan through the Legislature. His plan was rejected.

Before today’s hearing, a group of business and community leaders including the Las Vegas Global Economic Alliance, the Asian Chamber of Commerce, the Latin Chamber of Commerce, Barrick Gold Corp., the Clark County Education Association, the Council for a Better Nevada, Nevadans for the Common Good and HOPE for Nevada will hold a news conference to announce their support for the business license fee plan.

It has all the makings of a typical Carson City stage production, but this is no ordinary event. Sandoval is endlessly earnest about his goals and his methods, to say nothing of his intent to fight for some kind of tax plan that fixes a problem that existed long before he ever set foot in the capital as a young assemblyman way back in 1994.

But Sandoval won’t have the stage all to himself on Wednesday. Three Democratic state senators — Pat Spearman of North Las Vegas, David Parks of Las Vegas and Mo Denis of Las Vegas — have introduced Senate Bill 378, an alternative tax idea. It imposes a 0.465 percent gross receipts tax on business revenue after a $100,000 exemption, eliminates the modified business (aka payroll) tax, leaves the business license fee at $200 and fully funds Sandoval’s budget.

Spearman had boldly promised an alternative tax plan before the revenue committee earlier this month, a promise that left many observers skeptical. The odds of her plan supplanting Sandoval’s seem long, especially with the accelerated pace of legislating preferred by Senate Majority Leader Michael Roberson, R-Henderson. But Roberson has pledged to review all tax plans, and he’ll surely give the Spearman-Parks-Denis alternative a look in a future hearing. Plus, no one can accuse Democrats of not having a tax plan of their own from this point out.

But the question at this point isn’t only which plan is best, since everything thus far proposed has some significant flaws. The question also is, what plan can pass both houses of the Legislature with a two-thirds supermajority, given the objections of some Republicans to any kind of tax increase whatsoever and the defeat in November of the Education Initiative. (That measure, a 2 percent tax on business revenue, wasn’t as attenuated as Sandoval’s proposal, nor was it paired with education reform programs, but it went down to defeat by an overwhelming 80 percent to 20 percent margin.)

Still waiting to be heard from is the state’s largest industry. The Nevada Resort Association has intentionally kept a low profile (a contrast from 2003, when it strongly backed Guinn’s gross receipts tax). But it has submitted its 2015 Gaming Fact Book as an exhibit for the business license fee hearing, an unsubtle reminder to lawmakers of the economic clout of the gambling industry. And the Las Vegas Metro Chamber has said it’s waiting to hear the bill — along with alternative proposals — before taking a stand.

No matter what else happens, today’s hearing joins the battle over taxes. After a day that’s sure to be unlike any we’ve seen in the capital, the debate shifts to the merits of Sandoval’s plan, and to his challenge to critics to identify a better, more viable idea. It’s Tax Day in Carson City, and every day that comes after this will be all about that issue.

Steve Sebelius is a Review-Journal political columnist who blogs at SlashPolitics.com. Follow him on Twitter (@SteveSebelius) or reach him at 702-387-5276 or SSebelius@reviewjournal.com.