The fate of Gov. Brian Sandoval’s tax plan rests in the hands of the Assembly Republican caucus this weekend, leaving plenty of uncertainty for the governor and supporters of the measure.
The caucus is known for its varying tax ideologies and infighting. That dysfunction draws questions about whether there are 15 votes to undermine the two-thirds constitutional majority to pass new revenues. Assembly Republicans say there are 9 to 12 no votes on the plan. That leaves around six swing votes to pass or kill the measure. Of the 42 members of the Assembly, 25 are Republicans and 17 are Democrats; 28 votes are needed to hit the two-thirds mark.
Those still undecided are making it difficult for lobbyists, lawmakers and the governor to count votes on the plan and comfortably predict if there will be a special session to fund Sandoval’s $7.3 billion budget proposal once the session ends June 2.
Those swing votes are the subject of intense lobbying efforts by the governor’s staff, the gaming industry and the Las Vegas Metro Chamber of Commerce. Supporters of the tax plan may do some horse trading to get what they want. Some of the Republican bills that are in-limbo — measures on collective bargaining, campus carry, abortion, voter ID and others — may sway a nay to a yea vote.
A Republican exchange for votes is likely, said Ira Hansen, a Sparks Republican opposed to new taxes.
He said some of his GOP colleagues "have clearly compromised on where they were when they were running for election or re-election."
The current mood in the building has brought comparisons to the 2003 session, a time when a steadfast group of lawmakers opposed a similar tax plan endorsed by gaming. That session saw a core group of 15 no-votes that didn’t budge until one Republican folded after a series of special sessions that lasted until July. Those swing votes bring a frantic unease about which way the tax plan will go. Some say the tax is dead on arrival when it comes to vote on the Assembly floor. Others are optimistic. Some have no idea.
"Whether or not it will pass the floor is a minute-by-minute change,” Carole Vilardo, president of the Nevada Taxpayer Association, said. "Whether or not there will be two-thirds: Some people say no problem. Then you talk to another group an hour later and the votes aren’t there."
The measure, AB464, is Sandoval’s second attempt at raising taxes to bolster the state’s bottom-tier education system. His first bill, SB252, passed the Senate but never moved in the Assembly. The governor has been the loudest champion of raising new funds and was one of at least 10 Republican governors this year calling to raise taxes. But far-right members of his party have not made them easy to pass. The new measure is the cornerstone of his plan to raise and extend $1.1 billion of revenues over the next two years The tax is a hybrid levy to expand the state’s tax base and would generate more than $500 million every two years. It would increase the state’s business license fee to $500 for most businesses, boost rates on the payroll tax and raise revenue from the gross receipts of businesses.
Sandoval has deflected criticisms that the gross receipts portion of the plan is similar to the margin tax initiative voters defeated in the November election. Jeremy Aguero, the architect of the tax plan, addressed those concerns when the bill had a hearing in the Assembly Ways and Means Committee. Studies done by Aguero suggested the margin tax would raise more than $700 million a year. The margin tax had a flat 2 percent rate. The rates on Sandoval’s plan range between .059 and .331. The margin tax did not expand the tax base. The new bill taxes out-of-state companies on the revenues they earn in Nevada. Nevada is one of a handful of sates that currently doesn’t tax out-of-state companies.
There is a concern from businesses that a gross receipts tax will scare away new businesses from coming to the sate. There is support for increasing the business license fees and payroll tax. But Assembly Republicans say the gross receipts section of the bill doesn’t have any traction.
"I don’t see the votes being there,” said Assemblyman Jim Wheeler, R-Gardnerville, and majority whip.
There is also a measure to make permanent the $996 million in “sunset” taxes. The bill, SB483, moved to the Assembly floor on Thursday and will also see action this weekend.
Wheeler, whose leadership role requires him to track votes, was not optimistic about passing the sunset taxes.
“… I think you will see enough votes to hold strong against taxes," Wheeler said.
The Las Vegas Metro Chamber has historically opposed gross receipts taxes but teamed up with gaming this week to support the measure. The chamber, which represents 4,000 businesses in the region, had been criticized this session for not taking a position. This week chamber officials lobbied alongside gaming industry representatives.
“We are hopeful that as the Legislature winds down this compromise plan is approved by lawmakers,” Cara Clarke, chamber communications director, said. "We need to make some substantial investments in education reform.”
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