Las Vegas Sun

By David McGrath Schwartz

Tue, Nov 30, 2010 (2 a.m.)

When Brian Sandoval left the federal bench to run for governor last year, GOP moderates, Democrats and members of the establishment shrugged off his “no-new-taxes” campaign pledge as an act of political expediency: To survive a Republican primary against fiscal conservative Gov. Jim Gibbons, Sandoval had to appear equally conservative, even if his background and advisers suggested a more moderate philosophy.

When, after winning the primary, he continued to maintain that he would not raise taxes, the same people again shrugged. Sandoval was doing what he had to match the conservative mood, including the Tea Party.

Wait until after the election, some said, then his true colors will emerge. Sandoval was tight with the Guinn/Raggio wing of the GOP — whom critics derided as RINO’s, or Republicans in Name Only, for their moderate views.

Now, with the election over and Sandoval talking to state agency chiefs, the budget director and appointing senior staff, here’s a surprise for the establishment: Sandoval is sticking by his promise not to raise taxes.

Echoing Republican governors across the country, Sandoval has emerged as the state’s unlikely premier anti-tax warrior, even though his past reflects a more moderate approach to governing.

Sandoval has remained firm in the face of protests that cuts to balance the state’s $3 billion deficit in funding needed to maintain existing services will harm education, health and human services and the long-term well-being of the state.

Sandoval was no political newcomer when he entered the governor’s race. He had a track record as an assemblyman, attorney general and gaming regulator. During that time he developed a reputation as a moderate. As an assemblyman in the 1990s, Sandoval voted to raise taxes.

He is an ally and friend of Republicans like the late Republican Gov. Kenny Guinn (overseer of the largest tax increase, at the time, in state history). He was mentored by state Sen. Bill Raggio, ousted as leader of his caucus partly for his willingness to compromise on taxes.

Sandoval’s closest advisers during the campaign advised Guinn and represent in the Legislature many of the industries, such as gaming and mining, that advocate higher business taxes.

Since Sandoval was elected this month, he has selected top staff from the moderate wing of the Republican Party, including those who have supported raising taxes in the past.

His anti-tax fervor has pleasantly surprised conservatives, but puzzled the rest of the political class, as they theorize about his sincerity, his ambition and ideology.

“This is not the Brian Sandoval we thought we knew,” said Fred Lokken, a political science professor at Truckee Meadows Community College.

Chuck Muth, a conservative political consultant and keeper of the anti-tax pledge (which Sandoval refused to sign), said Sandoval is still viewed warily by conservatives.

“It’s the ‘trust but verify’ thing with him,” said Muth, referring to Ronald Reagan’s Cold War axiom.

Muth compared Sandoval to Dean Heller, who had a populist, moderate reputation as secretary of state, but has played to the conservative base with his voting record in Congress, easily earning a third term representing the state’s rural district.

Muth called Sandoval’s fiscal position “a victory for movement conservatives, the Tea Party movement ... There are successes in new Republicans moving to the right, in both their campaigns and how they govern.”

On Monday, though, Sandoval once again sent a signal that seemingly conflicts with his rhetoric. He named Steve Hill, a prominent member of the Las Vegas Chamber of Commerce, to head his economic diversification transition team.

Hill, past president of the chamber, supported the tax package passed in 2009, after Democrats agreed to concessions on public employee pensions, benefits and collective bargaining.

Hill said he hasn’t changed his political philosophy. He urged patience in drawing conclusions about Sandoval’s approach.

“I think it’s important, with the new governor on board, to wait for the opportunity to view his budget” in January, he said.

In the interview with the Las Vegas Sun, Sandoval said business leaders, including Somer Hollingsworth of the Nevada Development Authority, have told him the worst thing he could do is raise taxes.

Sandoval also cited a two-day session at the Hoover Institution in California, a free-market think tank.

Why has Sandoval taken on the strident tone of an anti-tax ideologue? There are several theories.

Theory 1: He truly believes it.

Nevada has the most distressed economy, the highest unemployment rate, the most foreclosures in the nation. Raising taxes takes money from private businesses that they would or could otherwise use to hire people.

This is Sandoval’s favorite line, repeated in an interview last week.

“I’ve been very consistent: The worst thing we can do in this economy is raise taxes,” he said. “Businesses can’t afford to pay more. Raising taxes would just worsen the unemployment rate. We must reduce spending in the state, particularly at a time when we’re trying to attract new businesses.”

Many mainstream economists say cutting government spending during a recession also hurts — noting Herbert Hoover’s reaction during the Great Depression. But most research on the effect of government policy on economies has focused on the federal government, which unlike Nevada can run deficits.

Theory 2: He believes it, but doesn’t understand what it entails.

It’s easy to say no new taxes. It’s harder to prepare a budget that does that.

Democratic leaders, in the Assembly in particular, have maintained that once Sandoval gets into the nitty-gritty of the state budget, and the suffering some cuts would cause, he will see the light and hedge on his pledge.

Ten percent cuts, which the Gibbons administration ordered, would lead to some distasteful things such as eliminating home health assistants for the disabled.

“When the governor talks to the budget office, the fiscal guys, it’ll take 20 minutes to realize what the problem is,” new Assembly Speaker John Oceguera said shortly after the election. “When you take $3 billion out, even hard-core Republicans cannot stomach what those cuts are.”

Theory 3: He believes in conservative principles, but is willing to compromise.

This is a negotiation. Liberal Democrats, public employee unions, teachers and higher education are on one side, clambering for more money. Hard-core conservatives are on the other.

Somewhere in the middle are Republican leaders, from Raggio to new Senate Minority Leader Mike McGinness and Assembly Minority Leader Pete Goicoechea, who have said they don’t believe the budget can be balanced without at least extending the taxes scheduled to sunset next year.

Under this scenario, Sandoval wrings out a bunch of concessions from the Democratic majorities on public employee pensions, health benefits and collective bargaining — reforms that would bring long-term taxpayer savings. Sandoval somehow goes along, perhaps promising to let the budget become law without his signature.

That, however, would still leave him vulnerable to a “read my lips” attack. He has been adamant about not allowing the sunsetting taxes to be renewed, and on Monday he said he would not replace that revenue with anything.

Theory 4: He has an eight-year plan.

Republicans who vote for tax increases don’t get re-elected. Guinn’s first term was about cutting, finding efficiencies and privatizing. When he ran for re-election, against only nominal opposition, Guinn made no promises on taxes. After winning re-election, and with the cover of an independent tax study, he backed a tax hike.

Gov. Charles Russell, another Republican, had the same playbook in 1950, when he won his first term. After getting re-elected, he ended up supporting and advocating for the state’s first sales tax, of 2 percent.

Theory 5: He’s pandering politically for a promotion.

Republicans who raise taxes don’t get re-elected, or elected to higher office.

Sandoval served brief stints as assemblyman, gaming regulator, attorney general and federal judge. This has given him a reputation for being ambitious.

In this scenario, Sandoval is merely parroting the popular talking points to apply for another job. U.S. Senate in 2012 or 2016? A Republican vice presidential nominee?

Sandoval said he left his lifetime appointment on the federal bench “because I love my state. I am dedicated to my state.”

He committed to serving out his four-year term.

“The people elected me to serve as governor for the next four years,” he said. “That’s what I’m going to do.”

Theory 6: Oops.

Sandoval is a moderate guy, with practical principles and common sense. Does he think raising taxes is the answer? No. But does he believe government should provide a minimum of services to take care of those who can’t take care of themselves and provide an opportunity for education? Yes.

That would require a combination of cuts and taxes. But then the Republican primary came along. Sandoval was pitted against a fiscal conservative, Gibbons, whose one ticket was that he had kept his promise to fight for lower taxes even though he failed.

Sandoval refused to sign a no-new-tax pledge, leaving room to make some sort of compromise with the Legislature in the beginning. Then came the questioning of Dawn Gibbons, former first lady, on her radio program.

Dawn Gibbons: “Is there any situation in which you would consider raising taxes?”

Sandoval: “No.”

That and other statements have put him in a box with little room to negotiate. And there’s no clear path on how he gets out of it.

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