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Sandoval tax proposal needs its own overhaul

Gov. Brian Sandoval’s grand plan for education reform confronts many of the issues that are giving Nevada a black eye.

His plan to fund that vision, however, has left the business community reeling. In fact the proposal to raise, in effect, $1.2 billion in new money seems to have taken the breath away from all those who had spoken so eloquently on behalf of reforming the state’s education funding mechanism.

Nobody seems to want to be the first to cast doubt on Sandoval’s approach.

Allow me to step into that void.

There are two fundamental issues here, both involving perceptions as much as fact:

1) Making the “sunset taxes” permanent isn’t something that should be done casually. The Legislature made a promise to residents that these taxes — $580 million from taxpayers’ pockets — would be temporary, a necessary evil in a time of economic crisis. That position was reasonable and stifled both opposition and debate. The economy has improved. The promise should be kept. The taxes should expire. If this new Republican-led Legislature wants to advance a similar stew of fees and taxes as new business, so be it. But assuming the debate starts with this revenue in the till is intellectually dishonest. Let that debate begin fresh.

2) Asking business to pay what amounts to all of the additional $882 million for the laundry list of educational improvements just sets a bad precedent. Beyond that, taking that big a bite from business could be enough to slow the state’s economy. The education system is of vital import to everyone, whether you have children of school age or just would like the store clerk to make change accurately. And we all need to share in the burden of funding the system. If the governor or legislators want to argue that business hasn’t been paying its fair share, then make the case. But whatever we do should be done in the bright light of day with a goal of sharing the burden.

So if not Sandoval’s plan, then what?

Let’s start on the expense side.

The need for education reform is urgent. But many of Sandoval’s proposals involve seismic changes. These need to be handled carefully, with deliberation and perhaps litigation. Certainly some planning is needed. It’s going to take awhile to implement all this. Maybe we don’t need ALL that money immediately.

There’s also room to debate spending levels. An aggressive anti-bullying program, for example, could be mounted for far less than the $36 million requested. On the other hand, $50 million for technology upgrades statewide seems thin.

The point is there is room to refine the plan to reflect economic reality.

And that economic reality would argue forcefully that levying $1.2 billion in new taxes is bad policy at a time when the state’s economy is just barely poking its head above water for the first time in seven years.

The business community has spoken clearly that it wants education reform and is willing to pay its fair share. I didn’t hear anybody say they were willing to foot the bill for the largest tax hike in state history.

One approach to finding equilibrium between program goals and revenue would be to handle that monster $437 million hike in business licensing as a two-step process — half now and half in the next biennium. That would deliver the funding long term while providing a gentler ramp up and four years of certainty to business budgeting. A state could do a lot worse than knowing where its next revenue hike is coming from and when.

All that brings us back to the public’s role in all this. User fees like vehicle registration charges and cigarette taxes seem a cost of living in a state without an income tax. But it might make sense to roll back the sales tax hike encompassed in the “sunset taxes” and look for other ways to collect a fair share from the citizenry.

Sandoval and the legislative leaders have spoken of a willingness to take on difficult core issues. That’s good. Start by looking at raising the property tax a bit. It’s the classic source of funding for public education and, despite the howling that will ensue, a bump still will leave our tax bills well below those in our neighboring states and won’t dissuade anyone from moving to Nevada.

Long term, Nevada needs all revenue sources on the table, not just business levies.

Love it or hate it, that’s the way I see it. Now is the moment to add your voice to the discussion. Tell us how you see it. This page is a forum for debate. Write a letter to the editor (OK, more practically an email to nbell@BusinessPress.Vegas) or propose a guest column for use in the space below.

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