Governor Sends Lawmakers Home; Legislature to Reconvene June 25

Nevada Budget Crisis
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CARSON CITY (AP) -- The Assembly and Senate shut down a special session Thursday as an impasse over a record Nevada tax plan continued, and Republican Gov. Kenny Guinn told the lawmakers to start another session June 25.

"I'm very disappointed that the work of the people of Nevada remains unfinished," Guinn said in a statement, adding the legislators "could not agree upon the most important item before them - funding the education of our children."

Guinn limited the upcoming session to tax and fee plans that can plug an $860-$870 million hole in the state's record $5 billion budget for the coming two fiscal years, plus bills dealing with school funding and casino work cards - measures that weren't passed during the regular 2003 session which shut down June 2.

The first special session, in its 10th day, started closing down Thursday with the Assembly's adjournment. Several hours later the Senate did the same, with Senate Majority Leader Bill Raggio, R-Reno, saying, "Frankly, at this point, we have run out of options, and it would serve no purpose for us to continue to stay in session."

Raggio said that after long discussions he couldn't get the necessary two-thirds majority support for a tax plan. He said the effort was worthwhile but "there were a lot of external pressures" that blocked a solution.

Late Wednesday, the Senate's nearly $860 million tax proposal fell one vote short of the necessary majority because a political deal was slipped into one of its nearly 200 sections.

In adjourning the Assembly, Speaker Richard Perkins, D-Henderson, declined to blame any particular senators for the new wording in SB5 that caused it to lose. Fourteen votes were needed in the 21-seat Senate on tax measures, and the tally was 13-8.

Senate Minority Leader Dina Titus, D-Las Vegas, got State Senator Mark Amodei, R-Carson City, to acknowledge he inserted language that would have let some gambling licensees relocate to neighborhoods where gambling is currently prohibited.

Titus said Sen. Mike Schneider, D-Las Vegas, wanted the new wording. While Schneider said the change would help properties that sell time-shares in their rooms - including a Las Vegas property in which he had once invested - there was nothing inappropriate or secretive about his proposal.

Titus said the incident showed what can go wrong when lawmakers try to rush. She said Schneider wanted the revision, and Amodei "was willing to give it to him for his vote."

The special session was convened by Guinn after the regular, 120-day session failed to produce a revenue plan.

Even if the Senate's failed plan had won approval in the Republican-run upper house, it would have faced an uncertain future in the Assembly because it lacked a bank franchise fee and a broad-based franchise fee on businesses that the Assembly Democrats had proposed.

Among the main elements of the new Senate plan were higher cigarette and liquor taxes, a real estate transfer tax, a 1 percent room tax, increased casino levies, live entertainment tax, and a payroll tax set at 1.1 percent of capped wages.

The plan, which also would phase out a business license tax, would generate just over $859 million over the coming two fiscal years.

The Assembly Democrats' plan also includes a payroll tax that would eventually replace a business license tax, a franchise fee based on the size of a business, a 3 percent bank franchise fee and a live entertainment tax. It drops the 1 percent room tax increase.

Advocates of both plans say they'd generate enough revenue to fill a budget hole ranging from $860 million to nearly $870 million.

Some Republican lawmakers have insisted that Guinn reopen the state budget that he's already signed into law, so that cuts can be made and the tax need won't be so high.

But Guinn's deputy chief of staff, Mike Hillerby, said the pro-tax governor won't reopen the budget. Referring to the claims that there's room for more budget reductions, he added, "The spinning of numbers is amazing."

Assembly Minority Leader Lynn Hettrick, R-Gardnerville, has said another possibility would be to limit future spending, beyond normal growth, unless there's support from two-thirds of all legislators.

That would put spending on the same footing as taxes, which can't be raised without a two-thirds vote in the Senate and Assembly.

Hettrick, Assemblyman Bob Beers, R-Las Vegas, and other tax foes have called repeatedly for Guinn to reopen the budget.

In ordering the first special session, Guinn said he was open to a wide range of new or increased taxes as long as they're broad-based. It was the third special session called in two years by the pro-tax governor.

The governor also said that while there's adequate funding for state government operations once the new fiscal year opens on July 1, the state's k-12 schools and school administration offices might have to shut down because education funding has been held up by the tax impasse.

Copyright 2003 by The Associated Press. All Rights Reserved.