Friday, July 04, 2003

Happy Independence Day

Annoy a bureaucrat. a bluenose, or anyone else who fails to appreciate what this anniversary means.

Seeds of compromise?

Kenny Guinn caves (a little), saying he'll accept $783 million in new taxes for the next biennium. That's roughly $200 million less than the benchmark he set ... the one that's deadlocked the state budgetary process for the past five weeks. But it would still constitute the largest tax increase in state history by more than a factor of two. (And depending on which taxes lawmakers raise, and how much of these new revenues are backloaded, the hike could go much higher.)

Leaders of both houses and both parties are set to convene Saturday to decide what batch of new levies can get the two-thirds approval needed to pass constitutional muster and to keep the state Supreme Court on the sidelines. The political establishment, still whipped by the gaming industry, keeps pushing for a variation of the gross receipts tax on non-gaming companies. But no proposal incorporating that tax has received a two-thirds majority in either house this year. A modest payroll tax would fill the bill -- and for the first time, Guinn has said that would be "broad-based" enough to meet his mandate to expand the reach of the tax code on businesses. Again, it all boils down to who blinks first.

Follow the money, again

A report compiled by the state Legislative Counsel Bureau on lobbying expenditures during the legislative session shows an interesting pattern: Pro-tax Republicans and freshmen legislators tended to get the most lobbying dollars.

For instance, state Sen. Ray Shaffer, who switched parties from D to R during the session, headed the list, receiving $1,016 from lobbying groups. Shaffer was a reliable enemy of the taxpayer all spring. No. 2. with $841 in "contributions," was freshman GOP Assemblyman Josh Griffin, who voted for every tax and spending increase during the regular session (only to be threatened with removal from his assistant minority leader post during the special sessions; then he remembered which party he presumably belonged to).

Lobbyists left those who balked at orgiastically higher taxes (or those whose stances were well-known) alone: Anti-tax Republican Sens. Barbara Cegavske and Ann O'Connell didn't receive a dime; nor, for that matter did pro-tax Democratic Sen. Joe Neal, but Neal's position on taxes has always been clear: Stick it to the casinos. On the Assembly side, tax resisters Ron Knecht, Lynn Hettrick and Bob Beers received $57 between them. The lobbyists aren't dumb: Why throw good money after bad?

The governor everyone loves to hate

Poor Kenny Guinn. The affable, grandfatherly political pro -- re-elected with 68 percent of the vote last November - has gotten no respect this entire legislative session. Now The Wall Street Journal piles on, again, with a July 2 editorial titled "The Republican Gray Davis." (Link courtesy of Americans for Tax Reform.) Seems that all those charges of "cowardice" and "heartlessness" Guinn was cavalierly tossing around to attack lawmakers who were resisting a stickup of state taxpayers have come back to haunt him. Oh well. Guinn will get 80 percent or more of his tax increases passed along, and then he and Dema can slink off into retirement ... at their resort home in California, where they'll never have to pay the taxes they fought so hard to pass. Maybe the Guinns can strike up a friendship with the Davises.

Tuesday, July 01, 2003

See ya Monday

The Nevada Supreme Court gives parties until 5 p.m. Monday, July 7, to file briefs in the budget dispute. Advantage: tax resisters. Meanwhile, the Clark County (Las Vegas) School District concedes it has enough in the till to operate until the new school year opens in late August. So what's the rush?

Deadlock! Stalemate! Huzzah!

For the first time since 1867, the Nevada Legislature has failed to start a new fiscal year with a balanced budget. Fifteen Assembly Republicans held firm, denying (by a one-vote margin) Gov. Kenny Guinn and the bipartisan Carson City establishment the record-setting $1 billion-plus tax increase they demanded.

Guinn has now asked the state Supreme Court to intervene, but where that will lead is anyone's guess. Last week, the governor showed his tenuous connection with the knowledge of how government actually works -- separation of powers and such -- by suggesting that the justices might unilaterally impose a tax plan. (Talk about your high court!) There's also the theory that the court could force the Legislature to stay in session until the budget is balanced, but with the constitutional necessity of getting a two-thirds majority for any tax increase, it's not exactly clear how the justices could coerce reluctant lawmakers to vote against their will.

The most likely (and least constitutionally suspect) resolution for the immediate impasse would be for the justices to allow state funding for government departments, including school districts, to resume at the level anticipated by the Economic Forum, the group that handles revenue forecasting. (This would mean that government spending would immediately increase by 11 percent.) The state is continuing to collect taxes, after all.

Such an outcome would be disastrous for Guinn and the establishment, who seek a 33 percent spending hike (as oppposed to the Assembly Republican anarchists who are wiling to stomach a 30 percent rise). If the court mandated this outcome, the sky would not be falling. Government departments would continue to operate. The average Nevadan who's not a member of a public employee union would barely be inconvenienced. Stay tuned.


Meanwhile, in the rest of the country ...

State governments will cumulatively reduce spending by 0.1 percent, according to the National Governors Association.

Money quote:

The latest Fiscal Survey of the States indicates the combination of plunging revenues and the explosion in health care costs have forced states to make major spending reductions for the last three years. These spending cuts are the largest in the 27-year history of the Fiscal Survey. Actual state spending growth was up only 1.3 percent and 0.3 percent in 2002 and 2003 respectively, and is expected to be down 0.1 percent in 2004. It also forced states to increase revenues by $8.3 billion in 2003 and governors are proposing revenue increases of $17.5 billion in 2004. End-of-year balances also declined to 0.3 percent of spending in 2003.

And Kenny Guinn wants Nevada spending to increase by one-third over the biennium. California, here we come, indeed.