Lawmakers Back To Tax Talks Following Court Ruling

Nevada Budget Crisis
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A historic Nevada Supreme Court ruling cleared the way for resolving a legislative impasse over taxes, but Assembly Democrats and Senate Republicans were no closer to a deal following renewed negotiations Friday.

"The major differences again are insistence (by Democrats) on some gross receipts or net profits tax ... and Republicans oppose that," Senate Majority Leader Bill Raggio, R-Reno, said.

"But I'm willing to keep talking and I hope others are," Raggio said following talks with various lawmakers that lasted for several hours.

Assembly Speaker Richard Perkins, D-Henderson, said the Democrats won't give up on a business franchise tax that would be based on gross receipts or net profits, and noted that a majority of senators earlier had backed the idea of a net profits levy.

"We keep coming back to putting out a broad-based business tax and keeping the burden off the average citizen and small business," Perkins added. "No sales tax, no property tax, none of those types of things."

Assembly Majority Leader Barbara Buckley, D-Las Vegas, and Senate Minority Leader Dina Titus, D-Las Vegas, said an increased sales tax was brought up by Republican negotiators at one point, but Democrats won't go along with that.

The Assembly was scheduled to meet Sunday to vote on its version of a tax plan that could raise about $860 million and balance the state's record $5 billion state budget for this and the next fiscal year.

The Senate plans to meet Monday and vote on its proposal - unless negotiators manage to compromise before then. Without a deal by Monday's expected Senate vote, conferees from each house would have to work out an agreement.

The Friday talks followed Thursday's surprise state Supreme Court ruling that a simple majority rather than a two-thirds vote is enough to impose new taxes.

The high court said Nevada's constitutional requirement that tax increases be approved by a two-thirds vote of the Legislature must give way to another constitutional mandate - to adequately fund public education.

The 6-1 decision came after Republican Gov. Kenny Guinn asked the court to order lawmakers to end their impasse over new taxes. The impasse has delayed the state's funding for public schools, and school officials have said they will run out money next month.

The court's ruling weakens the two-thirds requirement by defining it as procedural and saying that constitutional provisions involving basic rights take precedence.

Because legislators seem to have irreconcilable differences over the amount and type of new or increased taxes needed to pay for education, considered a basic right, justices said it would be "a waste of public resources to simply tell the Legislature to forge on."

The dissenting justice, Bill Maupin, said that legislators should be given more time and that Guinn's petition seemed to ask the court to order legislators to vote for taxes.

Guinn petitioned the court to intercede minutes after the Legislature adjourned June 2 without meeting constitutional requirements to pass a balanced budget and fund public schools. While the Legislature approved a budget that has been signed into law, it has been unable to muster a two-thirds majority required to pass a tax plan to pay for it.

The tax plans legislators have considered have ranged from about $700 million to nearly $1 billion and have largely targeted businesses.

They include a proposed 2.5 percent net profits tax on businesses, an increase in the casino tax from 6.25 percent to 6.75 percent, a 0.26 percent tax on real estate sales, a 10 percent tax on live entertainment and big increases in taxes on cigarettes and liquor.

Rep. Jim Gibbons, R-Nev., who led the drive to amend the state constitution in 1994 and 1996 to require the two-thirds vote on tax increases, said he was outraged by the court's decision to set the two-thirds requirement aside. Gibbons scheduled a news conference Saturday at the state Supreme Court to outline possible steps to counter the high court ruling.