A massive, $864 million tax increase needed to balance Nevada's $5 billion budget failed by one vote to win approval late Friday, despite warnings that lawmakers will face a state Supreme Court petition to force them to act.
The vote for SB6, which focuses on business-related levies and higher"sin"taxes on liquor and cigarettes, was 27-15, one short of the 28 votes that represents the mandatory two-thirds'majority needed for any tax measure.
The Assembly's Democratic leaders used a procedural move to rescind the vote, to allow for more time to negotiate with the anti-tax Republicans and get one of them to switch over the weekend.
During debate on the measure, Assembly Majority Leader Barbara Buckley, D-Las Vegas, said the tax opponents shouldn't"shield some businesses from finally paying one of the lowest taxes in the country"
"Step forward and do the right thing,"said Buckley, adding,"Otherwise we're in court on Tuesday."That's the start of the next fiscal year _ and the point at which lawmakers will have failed to meet a constitutional duty to properly fund the state budget.
Assemblyman Tom Collins, D-North Las Vegas, said legislators need to adequately fund government services and shouldn't worry about voter reprisals, adding,"Let's forget about the political crap ... It's obvious we're driving a broken-down car."
Assembly Minority Leader Lynn Hettrick, R-Gardnerville, who led the fight against the tax plan, appeared to choke up when he said he resented the suggestion the tax opponents were"protecting corporate America."
"We can say big business will pay (if the plan is passed) but in the end the reality is that consumers pay all the taxes,"he said.
Hettrick was backed by Assemblyman Ron Knecht, R-Carson City, who termed the tax plan and budget"profoundly wrong."
Assembly Speaker Richard Perkins, D-Henderson, said earlier that Republican Gov. Kenny Guinn, who favors a tax increase, would petition the Nevada Supreme Court to compel lawmakers to act. He also said the Clark County School District, the state's largest district, has said it will file a lawsuit.
The Assembly's vote was on a revised version of an $873 million tax boost plan that won approval on a 15-5 vote Thursday in the Senate.
The Assembly's amendments reduced the tax increase to $864 million, still enough to balance the record $5 billion budget. That's the goal of lawmakers now meeting in their second special session since the regular 120-day session ended June 2.
The legislators are trying to avert a constitutional crisis that would result if the fiscal New Year opens on Tuesday and there's still an inadequate revenue source for the budget that covers government operations for the next two fiscal years.
The Senate's tax plan includes a 1 percent payroll tax and a bank franchise levy, higher room taxes and casino levies, and increased"sin"taxes on cigarettes and liquor. Their plan also imposes a cap on how much the state budget can grow in the future.
The Assembly cut the payroll tax to 0.6 percent, kept the bank franchise levy and added a franchise tax on other businesses, revised the"sin"taxes and scrapped the room tax and the cap on budget growth.
The Assembly and Senate agreed on a 0.5 percent tax increase on Nevada casinos and a 10 percent live entertainment tax, and were close on a real estate transfer tax.
If the amended measure manages to get enough votes in the Assembly this weekend, differences between the two plans will have to be worked out by Senate and Assembly conferees.
During upper house debate on Thursday, Raggio said he resented"misinformation that is constantly being thrown out to the public"by the anti-tax hard-liners. He said anyone who thinks no tax hikes are needed are"living off this planet."
Senate Minority Leader Dina Titus, D-Las Vegas, voted for the proposal but said she's counting on amendments in the Democrat-controlled Assembly to make it a better bill.
Titus said she favored a broad-based tax, such as a levy on business receipts, rather than the payroll levy, and also opposed the cap on budget growth, which could keep Nevada at the bottom of numerous quality-of-life indexes.
"We're a prosperous state,"Titus said."We should not operate like a Third World country."
Opponents included Sen. Sandra Tiffany, R-Las Vegas, who warned that lawmakers are"going to hear from your constituents"once the full impact of the record tax increase is felt. She also said there hadn't been"a real genuine discussion"of the proposal.