Newspaper column: Why education spending should be cut

Teachers are walking out of classrooms in Colorado and Arizona, demanding higher salaries and more education funding. Lawmakers are rushing to meet their demands.

Here in Nevada all the candidates for governor are kowtowing to the demand for more education funding.

Republican Attorney General Adam Laxalt has declared, “We must continue to move forward, not backward, in the areas where we’ve made great strides. In particular, Nevada policymakers have implemented a series of programs designed to address a critical area — improving early literacy. I’ll continue to champion these promising new programs. I pledge that under my leadership, these programs and our entire public education system will be properly funded — we will never go backwards from our current levels of education spending. I repeat: I will not scale back public education funding.”

His Republican opponent Treasurer Dan Schwartz has said he wants to find a way to wrest the $750 million in tax money earmarked for a Raiders football stadium and redirect it to fund education.

Democratic candidates and currently Clark County Commissioners Steve Sisolak and Chris Giunchigliani have both called for more education spending.

“Every child in Nevada deserves the opportunity to succeed and that starts with strong public schools,” Sisolak states on his campaign website. “Steve supports investing in Nevada schools so they have the resources to provide a safe and effective learning environment for all of our kids. He believes that in order to strengthen our schools we need to raise teacher salaries and lower classroom sizes.”

On her website Giunchigliani declares, “Every Nevada child deserves an opportunity to get a quality public education, regardless of their zip code, parents’ salary or ethnicity. As a public school special education teacher for 30 years, I know the difference a quality public education can make in a child’s life. But too many of our kids are in underperforming schools and we’ve failed to bring urgency to this issue. One of my top priorities as governor will be to fix the school funding formula. We need to increase educators’ salaries and reduce class sizes.”

Recently Clark County School Board members held a press conference calling on the governor to call a special session of the Legislature in order to raise taxes to increase education spending. Board member Carolyn Edwards was quoted by the press as saying, “We need to be able to pay our teachers and our employees the raises they deserve.”

Juxtapose that quote against the fact that in January Education Week magazine’s annual “Quality Counts” survey of state-by-state K-12 education ranked Nevada 51st among the 50 states and the District of Columbia. Only 31 percent of Nevada fourth graders are proficient in math and reading. The raises they deserve?

Pardon us for allowing a heretic to sound a sour note in the choir, but George Mason University economics professor Bryan Caplan has just published a book that — gasp! — says education funding should be cut, because the vast majority of it is wasted. The book is called “The Case Against Education: Why the Education System Is a Waste of Time and Money.”

Caplan estimates that our government agencies alone spend $1.1 trillion in tax money a year on education. That is $3,600 for every person in the country, not every student, every person. He estimates that half of the money doesn’t buy our students any enhanced skills, but merely something he calls “signaling.”

Caplan contends that a high school or college diploma does not mean someone has learned much of anything worthwhile — other than rudimentary literacy and numeracy — but instead signals to potential employers that one is capable of spending long hours doing stultifying menial tasks and conforming to expectations.

To buoy his claims about the inadequacy of the American education system, Caplan cites the General Social Survey of adults that asked 12 elementary true-false science questions. Only 60 percent could answer correctly, when 50 percent should be possible by merely guessing.

“Accounting for guessing, the public’s scientific illiteracy is astonishing,” Caplan writes. “Barely half of American adults known the Earth goes around the sun. Only 32% know atoms are bigger than electrons. Just 14% know that antibiotics don’t kill viruses. Knowledge of evolution barely exceeds zero; respondents would have done better flipping a coin.”

Perhaps there are better things on which we could spend a half a trillion dollars a year.

A version of this column appeared this week in many of 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.

 

Newspaper column: Education savings accounts would increase public school funds

Nevada’s education savings account (ESA) law is in dire straits thanks to a convoluted state Supreme Court ruling that said ESAs are constitutional but the funding mechanism devised by lawmakers was not and the fact that this year’s roster of lawmakers, who could fix that funding flaw, includes a majority of Democrats in both the Assembly and state Senate. Not a single Democrat voted for the ESA law in 2015.

Disturbingly, the argument being foisted by the opponents of ESAs is a bald-faced lie.

The opponents posit that letting parents keep a small portion of their tax money to allow them to take their children out of public schools and spend that money on private schooling, tutoring or even home schooling reduces the funds to support public education. In reality, the exact opposite is the case. Per pupil funding would actually increase.

Under the law, parents who opt out of sending their children to public schools would be given an education savings account that would equal a portion of the statewide average the state spends per public school pupil, currently that is about $5,700. Low-income parents and parents with special needs children would get 100 percent of that amount, while all others would get 90 percent, or about $5,100 currently.

Thus far, about 8,000 families have applied for ESAs.

This past month ESA opponents sent a letter to state Attorney General Adam Laxalt and state Treasurer Dan Schwartz demanding Schwartz stop accepting applications for ESAs while the law is in limbo.

In an accompanying press release, UNLV law professor Sylvia Lazos, policy director for Educate Nevada Now, one of the litigants that challenged the ESA law, declared, “It’s time for Treasurer Schwartz to face the fact that ESA vouchers were declared unconstitutional because they would have drained tens of millions of dollars from Nevada’s public schools, with Clark County schools losing over $30 million in the first year alone. By blocking this program, we’ve prevented further cuts to public school budgets, which would have increased class sizes and reduced essential programs for students, including English language learners and other students in need of additional supports.”

The problem with this is that the ESAs are earmarked only to state funding — and only 90 percent of that in the vast majority of cases — and have no impact whatsoever on public school funds derived from local taxes and federal revenue.

According to National Education Association’s most recent figures, Nevada public schools spend nearly $9,000 per pupil on average. So, for every pupil who takes the $5,100 savings account, there is about $3,900 more in funding for public education for those who remain — in less crowded classrooms.

In fact, the impact is far greater in many rural counties where the ratio of local funding is even greater due to mining related tax revenue and other factors. According to data for fiscal year 2014 provided to lawmakers by the Legislative Counsel Bureau, local revenue accounts for more than 80 percent of public school funding in Eureka, Humboldt and Lander counties, while the state provides only 10 percent or less.

The state provides about half or more of the K-12 funding in Churchill, Lincoln, Lyon, Mineral, Nye, Pershing and White Pine. Statewide, federal revenue accounts for more than 9 percent of funding.

This discrepancy is even more pronounced when one takes into account that state funding for each school district is adjusted to account for lower local revenue and higher costs, such as transportation in rural areas.

The distributive school account approved in 2015, for example, sets aside for Esmeralda County $24,331 per pupil; Lincoln, $10,534; White Pine, $7,799; Eureka, $9,633; Mineral, $8,980; Clark $5,512; but Lander gets only $4,374.

But the education savings account in each of those counties is still only 90 percent of the statewide average, or $5,100.

Thus, when public schools have fewer pupils to teach, transport and feed, there is more money for those remaining.

So, when lawmakers meet in Carson City in the coming weeks they should take the opportunity to increase K-12 per pupil funding by finding a constitutional funding source for education savings accounts.

It is simple math.

A version of this column appeared this week in many of 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.

 

Future of Faraday Future’s Nevada manufacturing plant looking bleak

Faraday Future pro type

“No company has had such an experience, a simultaneous time in ice and fire. We blindly sped ahead, and our cash demand ballooned. We got over-extended in our global strategy. At the same time, our capital and resources were in fact limited.”

— Jia Yueting, head of Faraday Future and other businesses, in memo obtained by Bloomberg News

Gullible Nevada lawmakers in a special session in 2015 on blind faith alone agreed to dole out $215 million in tax abatements and credits to entice Faraday Future to build an electric car factory at Apex in North Las Vegas, though at the time it did not even have a prototype vehicle. The prototype it has since unveiled appears to have only one seat.

The state also promised $120 million in infrastructure that includes water, rail and road improvements that may include widening I-15 and improving the freeway interchange near the Apex industrial park.

Bloomberg reports that Nevada Treasurer Dan Schwartz is still balking at issuing bonds needed to advance the project due to doubts about Jia’s ability to raise funds — doubts expressed by Jia himself — but Schwartz’s office wasn’t available for comment outside of normal business hours.

Bloomberg also said Jia’s memo “singled out the car division for its profligacy, saying it had already spent 10 billion yuan in early development.”

The LA Times reported two weeks ago that Faraday Future hasn’t been paying its bills and still owes on a $75 million performance bond to the state of Nevada.

The newspaper quoted Schwartz as saying, “My questions are all about how they finance this. … I’m afraid it will never be financed and implode in the middle.”

He noted, “The stock is worth [about] half of what he started with.”

 

Newspaper column: Supreme Court right to expedite education savings account hearing

There is a reason the courts routinely expedite cases involving children. If the cases were handled in the usual mañana fashion the children would have children of their own by the time the case is resolved.

The state Supreme Court has rightly refused an effort by the American Civil Liberties Union to further delay the hearing of its suit to block enactment of the education savings account (ESA) law passed by the 2015 Legislature, which would allow parents to keep a portion of their taxes — about $5,100 a year in most cases — in a savings account to pay for private schooling or homeschooling.

Thus far about 6,000 students have applied for funding under the law but their applications are on hold, pending a ruling from the justices of the state Supreme Court.

The court has scheduled hearings for the morning of July 29 for both the ACLU case — Duncan v. State, which challenges the law as a violation of a constitutional prohibition against using state funds for sectarian purposes — and another case — Schwartz v. Lopez, which claims the law impermissibly diverts funds from the Distributive School Account (DSA).

The ESA is under the auspices of state Treasurer Dan Schwartz, who had hoped to make funding available by January 2016, but now the suits make it impossible for funding to start by the beginning of the new school year in the fall. Another delaying wrinkle is that the law requires eligible students to have been enrolled in public school for 100 consecutive days prior to receiving the funds. Who knows how many more parents could step forward in the future if and when the law is upheld?

The Schwartz v. Lopez case will be heard at 10 a.m. on July 29. In that case a Carson City judge blocked the state from carrying out the provisions of the law, saying it is unconstitutional under that Article 11, Section 6.2 of the state Constitution. He determined that “appropriation” means “to set apart for or assign to a particular purpose or use in  exclusion of all others” and therefore using part of that appropriation for ESAs violates the state Constitution.

Attorney General Adam Laxalt, representing the state, has countered that the DSA is not, as the plaintiffs allege, a lock box from which no funds may be diverted, but rather funds public schools on a per pupil basis. If a student moves out of a district or transfers to a private school or homeschooling, the per pupil funding is affected in the same manner.

The case of Duncan v. State will be heard at 11:30 a.m., after Schwartz. This case raises the question of whether ESAs violate the Constitution’s prohibition against sectarian funding by noting that ESAs could be used to send children to religion-based schools.

Clark County Judge Eric Johnson, writing on the religious separation argument, said, “The United States Supreme Court’s ‘decisions have drawn a consistent distinction between government programs that provide aid directly to religious schools, and programs of true private choice, in which government aid reaches religious schools only as a result of the genuine and independent choices of private individuals.’ … Where a school aid program, such as the ESA program, is neutral with respect to religion, and provides assistance available directly to a wide spectrum of citizens, or as in this case, essentially all parents of Nevada school children, who, in turn, direct the financial assistance to religion affiliated schools ‘wholly as a result of their own genuine and independent private choice, the program is not readily subject to challenge …’”

Judge Johnson also dismissed speculative claims that some private schools might discriminate by writing, “Whether illegal discrimination occurs and a school may participate under the program can be dealt with in the specific context of the facts of an actual controversy rather than in the hypothetical.”

The sooner this is resolved, the sooner parents and children can get on with education plans. May the court come down on the side of freedom to choose.

A version of this column appeared this week in many of 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.

Editorial: Bets placed on Tesla, Faraday looking like long shots

Rendering of Faraday Future plant at Apex.

There was an interesting quote in the Las Vegas newspaper recently from Steve Hill, executive director of the Governor’s Office of Economic Development (GOED), the office that gives your money to others in hopes that they will create jobs, improve the economy and generate more tax revenues. Sounds a bit like playing roulette.

“Trying to predict whether a company is going to succeed or flourish, or even say what they’re going to do is … you’re going to be wrong at times, maybe as often as you’re right,” Hill was quoted as saying.

Or perhaps you’re going to be wrong every time?

Treasurer Dan Schwartz

Hill’s comment came in response to concerns raised by Nevada Treasurer Dan Schwartz about the ability of Chinese-backed company Faraday Future to actually finance a proposed $1 billion electric car factory in North Las Vegas.

In a special session lawmakers agreed — at the urging of Gov. Brian Sandoval — to dole out $215 million in tax abatements and credits to entice the company to build its factory in Nevada, though at the time it did not even have a prototype vehicle. The state also promised $120 million in infrastructure that includes water, rail and road improvements that may include widening I-15 and improving the freeway interchange near the Apex industrial park.

Schwartz, who had just returned from a trip to China, told the Los Angeles Business Journal that he had doubts about whether Faraday Future’s billionaire backer, Jia Yueting, could raise the money needed. Schwartz said the state is asking the company to put up $70 million to ensure Nevada’s infrastructure investment.

“I spoke with several members of the Chinese corporate and financial communities who are familiar with and know Leshi (Jia’s Chinese company) and Mr. Jia,” Schwartz told the Journal. “What they all agreed on is he doesn’t have the money. … If you look at the financials, (Jia) isn’t making any money. He certainly isn’t making any money to fund a billion-dollar car facility.”

Hill told the Journal Nevada taxpayers should be protected so long as Faraday puts up the $70 million to secure the state’s general obligation bonds to pay for infrastructure.

The Faraday deal was a replay for the special session in which lawmakers agreed with Sandoval’s plan to provide $1.3 billion in tax exemptions and credits to Tesla Motors if it invests $3.5 billion in a new battery factory east of Sparks. The state also agreed to spend $100 million to build a highway linking the site to U.S. Highway 50 in Lyon County.

So far Tesla is coming up short on its projections.

Tesla planned to have the first two phases of construction complete by the end of 2015 and have a third phase underway. Only one phase is complete. It had projected spending $1 billion by now but has spent only $400 million. It also said it would employ 700 workers by the end of 2015 and hire another 1,000 in 2016. Only 300 are employed.

Hill has been quoted in the press as saying the risk for taxpayers is minimal, though he admitted the state could have to pay for the promised Tesla infrastructure improvements.

Tesla has until 2024, to invest its promised $3.5 billion. The company is still losing money on every electric car it sells.

As if those gambles were not risky enough, just this past week the GOED doled out another $400,000 to rooftop solar panel installer SolarCity, even though the company nearly two months ago laid off 550 workers and stopped installation work in Nevada because the Public Utilities Commission changed the rate structure for solar customers, making such installations financially unfeasible.

This brings to $800,000 the amount of tax money handed to the company out of a promised $1.2 million. The company’s stock has fallen from more than $60 a share to less than $20. Both Tesla and SolarCity are helmed by billionaire Elon Musk.

Whenever lawmakers and the governor gamble with our tax money, we are the ones left holding the marker. Perhaps, they should just bet on black. The odds might be better.

A version of this editorial appeared this past week in many of the Battle Born Media newspapers — The Ely Times, the Mesquite Local News, the Mineral County Independent-News, the Eureka Sentinel,  Sparks Tribune and the Lincoln County Record. It ran as a column in the Elko Daily Free Press.

Only four state senators vote against governor’s margin tax lite

Only four state senators had the gumption today to vote against the governor’s margin tax lite, which taxes businesses based on their gross receipts in the same way as the proposal on November’s ballot, which was defeated by voters by a 4-to-1 margin.

The four were Republicans Pete Giocoechea, Donald Gustavson, Scott Hammond and James Settelmeyer. That means seven Republicans and all the Democrats voted for Senate Bill 252, making the final vote 17-4. It now goes to the Assembly, where its fate is unknown.

State Treasurer Dan Schwartz and Controller Ron Knecht jointly sent out a press release calling on the Assembly to reject the bill. Press release on SB252

“To propose a tax that has been explicitly rejected by Nevada voters displays a blatant disregard for the democratic process. The Governor has called for alternatives. Those have been provided. They should be considered along with reprioritizing several proposed expenditures,” said Schwartz.

Assembly member Michele Fiore sent out an email pointing out that SB252 has 1,811 unique tax brackets based upon gross receipts. (The state Constitution states: “The Legislature shall provide by law for a uniform and equal rate of assessment and taxation …”)

She noted that the unemployment rate is still 7.1 percent in Nevada and “the last thing the Legislature should be doing is taking money out of the private sector, where it’s needed to create jobs, and transferring it to the public sector so that government can continue to spend beyond its means.”

Nevada Policy Research Institute’s Executive Vice President Victor Joecks commented:

“The voters of Nevada made clear in November that they do not want to impose a gross-receipts business tax, yet today the Senate passed a similar tax. Unlike the 17 Senators who voted in favor of SB252, Nevada voters recognized that raising taxes on businesses that are struggling or even losing money will only hurt families and parents throughout Nevada.”

Actually, as a survey reported by NPRI points out, Nevada voters apparently aren’t paying any attention. The poll, conducted by Google Consumer Surveys in March, found 89.4 percent either did not know Sandoval supports the largest tax increase in Nevada history or mistakenly thought the governor supports keeping taxes low.

Gov. Brian Sandoval has said the so-called business license fee based on gross receipts will eventually rake in $250 million a year. The Nevada Registered Agent Association commissioned a study that says his figure is off by $65 million. NRAA Study

When Texas launched its margin tax it was expected to bring in $5.9 billion a year, but only netted $4.45 billion its first year and $4 billion the next.

Never mind that most of what Sandoval plans to spend on improving education will not work and has not worked when tried elsewhere.

Giocoechea

 

 

 

 

 

 

 

 

 

Gustavson

Hammond

Settelmeyer

Newspaper column: And you thought your vote counted?

“Elections have consequences …” President Obama likes to tell Republicans, especially after he just won one.

But not in Nevada. Not any more.

The voters of Nevada swept into office a majority of Republicans in both the Assembly and state Senate, as well as all constitutional statewide offices — many of whom pledged to not raise taxes. Instead, the Republican governor has proposed the biggest tax hike in history — $1.3 billion — for the $7.3 billion general fund. It appears a majority of those Senate and Assembly Republicans will meekly go along with him.

Raising taxes will require a two-thirds vote in both houses of the Legislature, but there does not appear to be enough votes to stop it.

To add literal insult to injury, several Republicans are ridiculing anyone who dares suggest anything even slightly less draconian than the governor’s plan.

Brian Sandoval (R-J photo)

When Republican Treasurer Dan Schwartz suggested the state could get by with raising the general fund budget only 4.6 percent instead of the 12.3 percent proposed by Gov. Brian Sandoval, Senate Majority Leader Michael Roberson barked at Schwartz, “I’m in shock and dismay that you would be here today proposing this. I’m embarrassed for you, sir.”

Sandoval’s Chief of Staff Mike Willden, who has had his snout in the public trough for 40 years, including several as head of the state Department of Health and Human Services, said to Schwartz that he was “insulted” by his criticism of the budget.

The governor himself sniffed to a Las Vegas television reporter, “As I said, I’d invite anybody to make their presentation, but again, it’s gotta be thoughtful.”

Actually, total state spending under Sandoval’s budget — which includes transportation expenditures and other special budgets — increases 16.5 percent, from $20.17 billion to $23.5 billion. Willden’s former HHS division grows by 28.5 percent under the governor’s budget to $9.6 billion, probably due mostly to expanded Medicaid under ObamaCare. Education spending increases by 15.8 percent under the governor’s budget.

Meanwhile, Nevada’s Department of Employment, Training and Rehabilitation reported that weekly wages in Nevada increased half a percent in a year, while inflation for all of 2014 was 1.6 percent, meaning taxpayers lost ground — before taxes.

Two of Gov. Sandoval’s proposals were specifically rejected by the voters in November — a tax on gross receipts and increasing the tax on mining.

Despite this, Sandoval proposes a business license fee based on, you guessed it, gross receipts. He also proposes increasing the modified business tax on mining from 1.17 percent of payroll to 2 percent. Voters rejected the gross receipts tax by four to one, and one the loudest opponents was Brian Edward Sandoval.

The governor also advocates making permanent a package of temporary taxes that were supposed to sunset in 2011. Despite promises to the voters by the governor to allow those taxes to sunset, he extended them in 2011 and 2013 and now says they should be permanent, sucking nearly $600 million out of the taxpayers over the next two years.

Lawmakers now have passed and the governor has signed a bill that rolls over school bonds for 10 years beyond what the voters approved, meaning property taxes will not decrease as they would otherwise.

According to Nevada Policy Research Institute, this will cost taxpayers as much as an additional $4 billion in higher property taxes, especially in Clark and Washoe counties, where voters have in recent years rejected school bond issues at the ballot box.

A compromise proposal to extend the school bonding for only two years and put the matter on the ballot in 2016 never got any traction.

To further add insult to voter injury, Sandoval has even proposed that local school boards be appointed and not elected.

“Based on recent events, I have concluded that local school boards should be appointed, not elected,” the duly elected governor said in his State of the State speech. “Although well intended, some of these boards have become disconnected from their communities. I will therefore support legislation to provide for the appointment of members of local school boards.”

As a poke in the eye of the duly elected Washoe County school trustees, Sandoval then announced that he was naming the superintendent they had just fired to be Superintendent in Residence with the Nevada Department of Education.

And you thought your vote counted. Democracy in Nevada was a nice experiment while it lasted.

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.

Editorial: Governor’s proposed tax hike is unnecessary

Both the state’s newly elected Republican controller and treasurer have come out against Republican Gov. Brian Sandoval’s plan to raise taxes by $1.3 billion over the next two years, primarily to fund education.

State Controller Ron Knecht in what he is calling his first monthly report flatly states that the contention that tax revenue is not keeping up with the state’s needs is simply wrong. “In the last ten years alone, state spending has grown 10 percent more than Nevadans’ incomes,” he writes, “proving that the problem is spending, not revenues. By slowing economic growth, excess spending has reduced incomes from what they would have been with better public policy, and it will continue to do so until we rein it in. If new spending is needed, it should be financed by cutting less meritorious spending, not by tax increases.”

Knecht dug into the state’s finances and discovered that, relative to the Nevadans’ incomes, spending for Health and Human Services in the state has grown 37 percent and K-12 public education spending has increased 23 percent in the past decade — with no corresponding improvement in student test scores or graduation rates.

He looked into the entire state budget, which is more than $20 billion, not just the general fund and notes that the increased taxpayer burden is not due to inflation or population growth. He also said Nevada’s tax burden now ranks 25th or 26th in the nation, depending on how it is measured.

State Treasurer Dan Schwartz noted that Knecht’s “statistics raise questions both of priorities and ‘value for money.’ The report reminds us that throwing money at a problem will not solve it. Though a common belief in the political world, sadly, that is rarely the case in the real world.”

The words of both the controller and the treasurer echo those of French economist Frederic Bastiat who pointed out that government spending simply diverts money that could otherwise have been used in the productive sector.

Knecht put it this way: “If public-sector over-reach had been restrained, we wouldn’t have endured as much slowing of economic growth in recent decades as we have, nor the poorest recovery since the Great Depression during this last six years. So, aggregate incomes and human well-being would be significantly higher than they are today. As long as government excess continues, we will fall further and further behind where we should be, regardless of what feel-good public programs we add and expand. The damage to economic growth caused by the continuing and growing excesses of government taxing, spending and regulation overwhelms any good that such new spending and programs can do. Hence, people who understand how the world works and care about our children’s futures want to restrain the growth of government.”

Schwartz even suggested one place where the budget could be cut, something Sandoval never touched on in his State of the State speech where he outlined his tax hikes. Schwartz estimated $50 million could be saved by cutting the expenses of the state’s more than 200 boards, agencies, commissions and other non-essential legacies.

For his part, Knecht suggested eliminating collective bargaining for local government public employees and repealing the prevailing-wage law that increases the cost of public projects by as much as 20 percent.

Both attacked the governor’s plan for a graduated business license fee based on gross receipts, a plan that is the same as, though smaller than, the gross receipts tax the voters rejected in November by a vote of four to one with the governor himself in vocal opposition.

In an email Knecht said, “The governor’s business margins tax should be rejected.  It’s unnecessary and one of the most destructive tax proposals seen in quite a while.  I also think the sunset taxes should … sunset.”

Both Knecht and Schwartz had the temerity to suggest that perhaps the taxes on the tourist driven gaming industry — “the lowest among major gaming venues,” as Knecht noted — could be raised.

Nevadans spoke loud and clear in saying “no” to a gross receipts tax. Even the governor opposed the idea only 120 days ago. Now he proposes it in his budget? That makes no sense to us.

Gov. Sandoval is going to have to explain his thinking more convincingly than he has so far.

A version of this editorial 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.

Taxpayers are the one’s being insulted here

So, various lawmakers and government employees sneered and jeered when state Treasurer Dan Schwartz had the temerity to suggest the state would not sink into chaos if its general fund budget was increased by merely 4.6 percent instead of the governor’s proposed 12.3 percent.

Sandoval’s Chief of Staff Mike Willden, who has had his snout in the public trough for 40 years, said he was “insulted” by Schwartz’s criticism of the budget. In 2013 Willden was paid nearly $150,000 in salary and benefits as the state director of Health and Human Services.

Senate Majority Leader Michael “Moderate” Roberson said to Schwartz, “I’m in shock and dismay that you would be here today proposing this. I’m embarrassed for you, sir.”

At least he called him sir.

Treasurer Dan Schwartz, right, confronts lawmakers. (R-J photo by Sean Whaley)

But it is the taxpayers who are being insulted, because almost no one, including Schwartz, is proposing any ways to substantially cut state spending. Schwartz suggested saving a few million by cutting back on industry regulating boards and commissions.

But if you go the bottom line, the governor is not really proposing a 12.3 percent increase, because that is just the general fund. The total state spending increase is actually 16.5 percent — from $20.17 billion to $23.5 billion, with nearly 13 percent of that listed as going to salaries such as that drawn by the insulted Willden. And there may be more money for salaries under some of the other headings.

Willden’s former HHS division grows by 28.5 percent under Gov. Brian Sandoval’s budget, from 36.76 percent of the state’s spending to 40.7 percent or $9.6 billion, probably due to expanded Medicaid under ObamaCare.

Education spending increases by 15.8 percent under the governor’s budget.

Meanwhile, taxpayers are asked to give more to the state while they are getting less and not even keeping up with inflation.

In a press release today, Nevada’s Department of Employment, Training and Rehabilitation revealed, “Weekly wages in Nevada increased slightly, averaging $840 during the third quarter of 2014, the second highest third quarter reading on record. This compares to $836 a year ago, a gain of just 0.5 percent,” then noting that inflation for all of 2014 was 1.6 percent, meaning workers lost ground. Weekly wages increase

But the release does not explain why an August 2014 press release said Nevada’s weekly wages for the first quarter of 2014 were $867. Always look on the bright side, particularly when the state wants more of those wages.

Perhaps, someone should whisper that those state employee wages could be frozen, or gasp, even trimmed.

Remember what I told you about state workers crying crocodile tears.

Never let the facts get in the way of a good sob story, and trust those folks from the government to look out for you and be frugal with your money, right?

 

 

 

 

 

 

 

 

 

 

State money handlers say governor’s tax hike unnecessary and damaging

Both the state’s newly elected Republican controller and treasurer have come out against Republican Gov. Brian Sandoval’s plan to raise taxes by $1.2 billion over the next two years, primarily to fund education.

Ron Knecht

State Controller Ron Knecht in what he is calling his first monthly report flatly states that the contention that tax revenue is not keeping up with the state’s needs is simply wrong. “In the last ten years alone, state spending has grown 10% more than Nevadans’ incomes,” he writes, “proving that the problem is spending, not revenues. By slowing economic growth, excess spending has reduced incomes from what they would have been with better public policy, and it will continue to do so until we rein it in. If new spending is needed, it should be financed by cutting less meritorious spending, not by tax increases.”

Knecht dug into the state’s finances and discovered that, relative to the Nevadans’ incomes, spending for Health and Human Services in the state has grown 37 percent and K-12 public education spending has increased 23 percent in the past decade — with no corresponding improvement in student test scores or graduation rates.

Dan Schwartz

He looked into the entire state budget, which is more than $20 billion, not just the general fund and notes that the taxpayer burden is not due to inflation or population growth. He also said Nevada’s tax burden now ranks 25th or 26th in the nation, depending on how it is measured.

State Treasurer Dan Schwartz noted that Knecht’s “statistics raise questions both of priorities and ‘value for money.’ The report reminds us that throwing money at a problem will not solve it. Though a common belief in the political world, sadly, that is rarely the case in the real world.”

Both the controller and the treasurer came close to using the words of French economist Frederic Bastiat — of the famous broken window aphorism — who pointed out that government spending simply diverts money that could otherwise have been used in the productive sector.

“A careless person will applaud when government ‘creates’ jobs,” says Cato Institute’s Dan Mitchell in a weekend blog posting on Bastiat’s admonitions. “Sober-minded analysts, though, will wonder about the private jobs destroyed by such policies.”

Knecht put it this way:

“If public-sector over-reach had been restrained, we wouldn’t have endured as much slowing of economic growth in recent decades as we have, nor the poorest recovery since the Great Depression during this last six years. So, aggregate incomes and human well-being would be significantly higher than they are today. As long as government excess continues, we will fall further and further behind where we should be, regardless of what feel-good public programs we add and expand. The damage to economic growth caused by the continuing and growing excesses of government taxing, spending and regulation overwhelms any good that such new spending and programs can do. Hence, people who understand how the world works and care about our children’s futures want to restrain the growth of government.

“The erroneous notion that more public-sector activity and spending serves the public interest is the problem: When government is already too big – as it is – the public interest is served by paring it back, not by doubling down on the failed practices of the past. If meritorious new spending is proposed, it should now be financed by cutting less meritorious spending, not by tax increases.”

Schwartz even suggested one place where the budget could be cut, something Sandoval never touched on in his State of the State speech where he outlined his tax hikes. Schwartz estimated $50 million could be saved by cutting the expenses of the state’s more than 200 boards, agencies, commissions and other non-essential legacies.

For his part, Knecht suggested eliminating collective bargaining for local government public employees and repealing the prevailing-wage law that increases the cost of public projects by as much as 20 percent.

Both attacked the governor’s plan for a graduated business license fee based on gross receipts, a plan that is the same as, though smaller than, the gross receipts tax the voters rejected in November by a vote of four to one with the governor himself in vocal opposition.

In an email Knecht said, “The Governor’s business margins tax should be rejected.  It’s unnecessary and one of the most destructive tax proposals seen in quite a while.  I also think the sunset taxes should … sunset.”

Both Knecht and Schwartz had the temerity to suggest that perhaps the taxes on the tourist driven gaming industry — “the lowest among major gaming venues,” as Knecht noted — could be raised.

Controller’s report

Treasurer statement