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 attentionThe 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

Will Republican lawmakers ridicule this budget proposal, too?

When 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, he was ridiculed and shouted at. Not enough detail he was told.

Now Assembly Majority Whip Jim Wheeler, state Controller Ron Knecht and a few other conservative Republicans have presented their “Balanced Plan for Growth: A Budget for the New Nevada,” an alternative to Gov. Brian Sandoval’s $1.3 billion increase in general fund spending and taxes.

Knecht said the plan spends almost all of what Sandoval wants on education, but eliminates the need for the business license fee/margin tax and allows “sunset” taxes to actually sunset.

The plan still calls for spending $6.92 billion, which is more than the $6.3 billion that the Economic Forum forecast will be available to spend under current tax law.

Wheeler and Knecht explain how their budget reaches some of that extra spending:

“Holds employer contributions to employee pensions constant at current rates and requires all employees to contribute to their own retirements.It redirects $334 million in projected savings from this measure as a revenue source for public education.”

Additional savings, they save, comes from funding education programs through block grants instead of usual appropriations.

“The Plan is our attempt to move the process forward and avoid a Legislative stalemate by providing a work-in-progress budget between current spending and the Governor’s proposed budget,” said Knecht in a press release.  “Our proposal is not the final word, but instead a constructive Plan that is conciliatory and fully respectful of the roles of the Governor and the Legislature.”

Budget Plan for Growth press release

Balanced Plan for Growth Budget details

bjt plan

Spending plan from Wheeler and Knecht continues from one page the next

bjt spending 1

bjt spending 2

Many of the line items are the same as the governor’s. One notable exception is the GOED — Governor’s Office of Economic Development.

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.

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

 

Rural Nevada voters help paint the state red

It may have been a Republican rout across Nevada,  but it was voters in rural counties who turned out in greater numbers and helped turn the state Republican red.

While turnout in Clark County, where more than two-thirds of the state’s population resides, was only 41 percent, turnout in many rural counties topped 60 percent, hitting 83 percent in Lander and 80 percent Eureka.

The dreaded mining tax constitutional amendment, Question 2, which would have removed the 5 percent cap on the net proceeds tax on minerals, went down to defeat by less than a percentage point, or 3,300 votes. The measure won with 56 percent of the vote in Clark County, where the state’s largest newspaper, the Review-Journal, endorsed passage of the amendment, but was defeated by huge margins in the rural counties, where most newspapers editorially opposed the change. Voters opposed the measure by more than 80 percent in Elko, Esmeralda, Eureka, Lander and White Pine counties.

Brian Sandoval

The rural counties also played a role in the Republican sweep of statewide offices on the ballot — Brian Sandoval for governor, Mark Hutchison for lieutenant governor, Adam Laxalt for attorney general, Barbara Cegavske for secretary of state, Ron Knecht for controller and Dan Schwartz for treasurer.

Sandoval, Hutchison, Schwartz and Knecht won in every county, despite the fact Schwartz’s opponent was endorsed by the Reno and Las Vegas newspapers and despite the fact Knecht’s opponent for backed by the Reno paper.

Adam Laxalt

Barbara Cegavske

The biggest difference made by the rurals may have been the somewhat surprising win of newcomer Laxalt over 12-year Secretary of State Ross Miller by less than 1 percentage point statewide. Democrat Miller carried the endorsement of the Las Vegas and Reno newspapers and won in Clark by 6 points and in Washoe by less than 2 points. Laxalt won most of the others counties with double-digit margins, by more than 52 points in Eureka, by 44 points in Lincoln and Elko counties.

Cegavske won in every county expect Washoe and Mineral.

The Battle Born Media newspapers — The Ely Times, Lincoln County Record, Eureka Sentinel, Mineral County Independent-News and Mesquite Local News — endorsed the Republican slate, except for Sandoval whose race was never in doubt.

Dan Schwartz

Cresent Hardy

Another race that many considered an upset was determined by rural voters — Congressional District 4, in which Democrat freshman incumbent Steven Horsford was defeated by Mesquite Republican Cresent Hardy by nearly 3 percentage points.

In the portion of Clark County in the district Horsford, who was endorsed by the Las Vegas newspaper, won by less than 2 points. Hardy carried Mineral by only 1 point, but won by double digits in the rest of the counties — 46 points in Esmeralda, 51 in Lincoln, 37 in Lyon, 21 in Nye and 30 in White Pine.

In a reversal of fortunes, Republicans now control majorities in both the state Assembly and Senate, taking 25 Assembly seats and leaving Democrats with just 17. All the Democrats in the Legislature are from either Clark or Washoe. None is from a rural county.

So, yes, your votes counted.

Ron Knecht