Gov. Sandoval gives State of the State speech. (AP photo)
It is called bait and switch.
Just over two months after the voters of Nevada rejected by a 79 percent majority a margin tax on gross receipts of businesses that its backers claimed would raise $800 million in tax revenue, this past week in his State of the State address Gov. Brian Sandoval announced plans to increase taxes by nearly $600 million a year with a third of that coming from what the governor euphemistically called a “graduated” business license fee.
Though Sandoval never used the phrase “gross receipts” in his speech, media reports prior to the speech said the license fees would be tied to gross receipts. This means the governor’s plan has the same business stifling flaws that he and others decried so convincingly about the margin tax.
And those media reports said Sandoval intends to raise the modified business tax, or payroll tax, to 2 percent for mining, the same as banks pay, though others pay 1.17 percent. This disparity in tax burden is one of the very things the Tax Foundation criticized Nevada for in its recent study. Sandoval never mentioned the mining tax, nor did he talk about plans to hike the cigarette tax from 80 cents to $1.20 per pack.
Those taxes that were supposed to sunset four years ago? They won’t, if the governor gets his way. His proposal is to spend $7.3 billion over the next two years on the general fund. The state actually will spend a total of $23.5 million when everything is accounted for, including $7 billion in federal funding for things like Medicaid.
Sandoval is proposing a 12 percent budget increase though the state’s population has fallen and inflation is less than 1 percent.
Most of this new general fund revenue — nearly $900 million — is slated for education.
The governor did not mention any cuts, though he singled out collective bargaining reform three times. No details were given.
About the only thing the governor proposed that might really improve education is spending $30 million on making sure students can read by the third grade and not promote them if they can’t.
Most of the things the governor plans to spend money on have not proven all that beneficial when tried elsewhere.
In fact, the so-called Zoom Schools for English learners that he plans to spend $100 million on have not succeeded in Clark County, which spent nearly $40 million on 14 Zoom Schools and not one of them improved in the statewide academic five-star ranking. Four actually lost a star.
He plans to spend $50 million to give digital devices to middle school students throughout Nevada. The Los Angeles city school system shut down its program to give every student an iPad due to cost and the embarrassing fact the students immediately hacked the restrictions on the devices and started using them for fun and games instead of school work.
Another $36 million is being earmarked to hire social workers to put in schools to curb bullying and $2 million for free breakfasts that already are frequently thrown in the trash.
In addition to all those taxes and futile spending efforts, Sandoval plans to hit local property tax payers by allowing expired school capital improvement bonds to be extended without voter approval.
The governor also plans to take over poor performing schools statewide and have them run by the superintendent that Washoe County just fired.
“Teachers and principals who lead our schools also deserve our support through investment and accountability,” Sandoval vowed, while being long on monetary support and short on specifics for accountability.
Speaking of bait and switch, Switch, the company that operates a huge computer data hub in Las Vegas, is expanding to Northern Nevada with a $1 billion investment and is planning a 1 million square-foot new data center in Las Vegas, for a total of $2 billion.
“This will make Nevada the most digitally connected state in the nation,” the governor crowed, while failing to mention what bait he used to catch the Switch expansion.
The company will get a reduction of its sales tax to 2 percent and a 75 percent cut in property taxes for 15 years. How much tax revenue the state would forgo is not yet known.
The Tesla Motors battery plant being built in Storey County and an Apple facility in Reno also got huge tax breaks.
The Nevada Constitution clearly states: “The Legislature shall provide by law for a uniform and equal rate of assessment and taxation …”
The governor’s plan is hardly uniform and equal on several fronts.
A version of this column appears this week in the Battle Born Media newspapers — The Ely Times, the Mesquite Local News, the Mineral County Independent-News, the Eureka Sentinel and the Lincoln County Record — and the Elko Daily Free Press.