Las Vegas Review-Journal (Sunday)
Mining tax gambit all about politics
Democrats in Carson City just gave a master class on how not to make a deal. On Thursday night, legislative Democrats introduced a proposal to increase mining taxes by capping deductions. That idea isn’t new. Legislators have discussed hiking mining taxes for years. The way Democrats went about presenting the proposal, however, revealed their goal was more political theater than problem solving.
Start with the timing. Ever since Gov. Steve Sisolak shut down Nevada’s economy, it’s been obvious that tax revenues wouldn’t keep up with projections. Gov. Sisolak originally wanted to hold a special session in June. He delayed it at the request of Assembly Speaker Jason Frierson and Senate Majority Leader Nicole Cannizzaro.
Despite months of lead time, there was little talk about raising taxes prior to this proposal. Even Gov. Sisolak was content to patch Nevada’s budget hole with a combination of fund sweeps, budget gimmicks and cuts.
“It’ll be up to them on the Republican side to see if somebody is willing to step up” and raise taxes, he said the day the special session started.
While Democrats have large majorities in the Assembly and Senate, tax hikes require a two-thirds vote in both houses. Democrats would need one Republican vote in the Senate to pass a tax hike.
If Democratic legislative leaders wanted a tax hike, they had months to make that case to the public and Republican lawmakers. Instead, they introduced a mining tax hike increase at 7 p.m. on the ninth day of the special session. They rushed the bill through the Assembly that night.
It went immediately to the Senate. Ms. Cannizzaro sent the bill to the floor and had the Senate vote on the bill after 2 a.m. By a 13 to 8 margin, the bill failed to receive a two-thirds majority. If that sounds like the theater of the absurd, that’s because it was. It got worse. After the late night, Democrats decided the Legislature should take the rest of Friday off and reconvene on Saturday. The coronavirus has devastated the private sector, and Democrats needed an off day.
Making the whole situation more surreal was that this proposal would have done little to fix the state’s budget hole. Nevada is around $1.2 billion short of the $6.9 billion it planned to spend. That includes the general fund and money spent on education without passing through the general fund. In total, Gov. Sisolak proposed around $650 million in general fund spending reductions. The mining tax would have generated $54.7 million.
This tax hike proposal also didn’t meet the standard Gov. Sisolak laid out before the session. He didn’t propose any tax hikes, but he signaled he’d be open to temporary increases.
The governor understands “that any options during an unplanned special session would be short term, stopgap measures to help sustain critical public services until the legislature reconvenes in a regular session in 2021,” the Nevada COVID-19 Fiscal Report from his office read.
In contrast, this mining tax would have been a permanent increase. Gov. Sisolak reversed himself on Thursday, saying he would have signed the tax hike if it reached his desk.
Republicans were right to reject this political stunt. The private sector is struggling with 15 percent unemployment. It’s not the time to raise taxes without accompanying reforms.
If Democrats are serious about wanting more revenue, they shouldn’t waste their time on political stunts. They should start negotiating.
Republicans have long pushed for an expansion of school choice programs — and for good reason. A well-designed school choice program can improve student achievement for both students in the program and those who stay in public schools. It can also save taxpayer money. This could either come from increased tax credits for Opportunity Scholarships or a revival of the Education Savings Account program. The need to escape Nevada’s failing public school system has never been more urgent, especially after the Clark County School District failed so many kids this spring.
The outline of a grand bargain is clear: more tax revenue in exchange for more school choice. Until or unless something like that happens, Republicans are right to stand firm.