The governor’s refusal to compromise

Andy Matthews

Every week, NPRI President Andy Matthews writes a column for NPRI's week-in-review email. If you are not getting our emails, which contain our latest commentaries and news stories, you can sign up here to receive them.

We’re down to the final days of the Legislative Session and one thing is clear: Gov. Brian Sandoval is not interested in compromising on three key issues.

As he gave his State of the State address, Sandoval laid out three priorities that he actually campaigned against during his run for re-election: the largest tax increase in state history, passing a modified version of the margin tax and a massive expansion of government.

Those three issues are obviously interrelated, and Sandoval has refused to compromise on any of them.

Rather than pare back his initial $1.3 billion tax-increase proposal, which would have been the largest tax increase in state history, Sandoval has actually called for even higher taxes than he first proposed. Once the Economic Forum dropped revenue projections by $150 million due to transferable tax credits, Sandoval ally and Senate Majority Leader Michael Roberson proposed raising the cigarette tax by $1, rather than the 40 cents per-pack increase Sandoval originally wanted. Combined with the Uber/taxi cab tax increase, total tax hikes will be around $1.5 billion, which is close to what the margin tax would have raised.

Sandoval hasn’t compromised. He’s doubled down.

Once it became obvious that Sandoval’s original gross-receipts tax proposal, SB252, was doomed, the governor came up with a new plan to introduce gross-receipts taxation. We’ve outlined the numerous structural and constitutional problems with his new plan, but here’s the most interesting and telling part.

The new gross-receipts tax, called the “commerce” tax, would net only $60 million in the next biennium. That would make it Nevada’s 12th largest tax source and account for less than 1 percent of Nevada’s general fund spending.

So why not compromise and eliminate the gross-receipts tax?

The subtle and not-so-subtle rumblings in the legislative building are that gaming companies want some form of a gross-receipts tax passed this session. The amount doesn’t matter as much, because those powerful lobbyists think they can expand it in upcoming sessions to the benefit of gaming institutions.

One wag even cracked that the special session will go as long as gaming wants it to go.

Once again, Sandoval has shown his loyalty to powerful special-interest groups, rather than to average families and businesses. He has refused to compromise on implementing a gross-receipts tax.

Sandoval’s recommended $7.3 billion budget has been trimmed “all the way down” to around $7.25 billion, but with “emergency” spending requests it will likely end up being greater than he originally proposed.

Last week a list of preferred spending levels from Assembly Republicans leaked, showing that just two Assembly Republicans wanted spending as high as the governor desired.

Has the governor compromised? Nope.

The governor is asking Assembly members to compromise their values and break their campaign promises, rather than do what is best for Nevadans.

On the three biggest fiscal issues of the session, compromising is simply something that the governor has refused to do.

That leaves two unappetizing scenarios: Either lawmakers capitulate to Sandoval or there’s going to be a special session.

If there is a special session — and right now that’s the best-case scenario for taxpayers — it will happen because Sandoval continuously refused to compromise.

The five on the fence still need to hear from you. Let them know your stance on the largest tax increase in state history and that there are so many Nevadans counting on them — other than just the lobbyists in Carson City.

Your elected representatives need to hear from you now more than ever.

Thanks for reading, and I’ll see you next time.

Andy Matthews
NPRI President

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