Supreme Court Schedules Session on Tax Impasse

Nevada Budget Crisis
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The Nevada Supreme Court told lawyers involved in a legal battle over state taxes to show up in court Thursday to hear an announcement from justices about the dispute.

The lawyers for Gov. Kenny Guinn, the state Legislature and others involved in the litigation already have filed briefs advancing their arguments, and were told they didn't have to be prepared for formal oral arguments.

A brief court statement Wednesday said justices will make an announcement relating to Guinn's petition for a historic Supreme Court order directing the Legislature to pass enough taxes to balance the state's nearly $5 billion, two-year budget. No other details were provided.

As the court moved ahead with Guinn's petition, key lawmakers said they hope to resume negotiations Friday in efforts to end the impasse over taxes that wasn't resolved in the regular legislative session that ended June 2 or in two special sessions that followed.

"We should be doing this. We shouldn't be directed by the courts or some other external entity," Senate Majority Leader Bill Raggio, R-Reno, said.

Raggio said the negotiators must agree on the components of a tax plan that could range anywhere from about $700 million to more than $860 million. He added that discussion of budget adjustments can come afterward.

Assembly Speaker Richard Perkins, D-Henderson, said Raggio warned him against continuing to seek a gross or net receipts tax on business, but his response was, "We've got to have a broad-based business tax."

Perkins also said a levy that businesses would pay on their payrolls, especially one that lacked a cap on salaries, "is just a bad tax" and shouldn't be the cornerstone of the emerging tax plan.

Senate Minority Leader Dina Titus, D-Las Vegas, agreed, saying the tax plan has to include a broad-based revenue source because there are too many problems with a payroll tax of the sort pushed by Assembly Minority Leader Lynn Hettrick, R-Gardnerville.

"You should pay taxes according to your ability to pay, "said Titus, adding, "You've got to have something else besides payroll."

Assembly Majority Leader Barbara Buckley, D-Las Vegas, said a payroll tax is "a risky approach not tried in any other state, and it's a real disincentive to hiring people. It's not fair and it's not equitable."

Whatever elements go into the tax plan, Guinn said he'd go along with some budget reductions if senators and Assembly members agree on the taxes and tell him exactly what they want cut.

Hettrick said Tuesday a limited service tax was floated by Perkins, but the speaker then returned to the idea of a business receipts tax, which Hettrick has adamantly opposed.

Hettrick also talked about possibly lowering the budget increases in health-related programs for the elderly and children from low-income families, but Perkins said Assembly Democrats won't support "balancing the budget on the backs of seniors and children."

Guinn, a Republican who favors major tax increases and a broadened tax base, said he could sign a proposal that would boost taxes by no more than about $760 million _ compared with the nearly $1 billion that he initially proposed.

The $760 million is lower than the $803 million discussed during failed Fourth of July weekend negotiations. And it's about $100 million lower than what's needed now to balance the already approved state budget.

Guinn said he'd sign a tax bill and then authorize legislators to make the necessary budget cuts _ as long as there's agreement from a majority of all lawmakers on what those cuts should be.

While some Assembly Republicans wanted a tax package of no more than about $700 million, Hettrick said one or two of the 15 holdouts might go for about $760 million. If Democrats who came down to $803 million on Saturday would go still lower, the result could be a successful two-thirds' majority vote for a tax plan. So far, the voting has been one short of the necessary two-thirds, or 28, Assembly votes.

Businesses would bear the brunt of any of the various tax plans that have been debated. The proposal from Saturday's negotiating session included a 2.5 percent net profits tax on business, and an employer-paid payroll tax of 0.7 percent on the first $21,500 of wages per employee.

The main tax on casinos, now at 6.25 percent, would increase to 6.75 percent. There's also a 3 percent tax on the profits of banks, and big increases in taxes on cigarettes and liquor.

Also, the plan would set a 0.26 percent tax on real estate sales and a 10 percent tax on live entertainment.