As lawmakers convene on Feb. 7 for their biennial squabble fest, they can take heart that at least things can’t get much worse. They can’t, right? Wait, don’t answer that. The state is an insolvent institution. If Nevada were a corporation, former CEO Jim Gibbons would have been given a huge bonus and sent packing. But we aren’t a corporation, and we are going to have to deal with what the former governor described in a Jan. 15, 2009, letter to lawmakers as a “tax base [that] has been left to wither.”
Under Gov. Brian Sandoval’s $5.8 billion 2011-13 budget proposal outlined in his State of the State address Jan. 24, hundreds of state workers could be laid off, and those that aren’t would take a 5 percent pay cut. Money now relied upon by local governments for helping take care of the mentally ill, the infirm, autistic children and others would be moved from state coffers, forcing municipalities to pay for some or all of the services out of their own budgets.
Somehow, somewhere, somebody is going to end up paying for this. It’s unavoidable.
How state officials tackle the budget deficit will not only set the tone, but dictate the entire agenda of the upcoming legislative session. And despite what you’ve heard since Sandoval gave a glimpse of the fight to come, the Legislature has other things to tackle during its 120-day confab (which will, no doubt, last much longer).
So here’s a peek at what you have to look forward to until June 6, when the regular session ends and the special session begins (we’ll put money on it) starting with the 800-pound gorilla in the room, the budget.
As much as everything is always about money, this year is even more so. The long and short of it is that Nevada has got to broaden its tax base. For decades, Nevada relied on liberal six-week residency and divorce laws, gambling, mining and construction to prop up the treasury. But the numbers for migratory divorce are down since their heyday in the 1940s. Way down. The cashy, high-class divorcée market ain’t exactly the cash cow it used to be. Sojourning single-minded divorcées haven’t flocked to Reno since Glenn Miller was big.
Gambling isn’t going to save us, at least in the short term. The state’s largest casinos lost $3.4 billion in the fiscal year that ended June 30, which only sounds bad until you realize that it is half as much as they lost during the same reporting period a year earlier. There are now more than 1,500 casinos throughout the country, and the number is growing. California and Washington state have almost as many casinos combined as Nevada. Revenues from mining have been steadily growing over the years, but that’s still a relatively small percentage of the budget, far behind sales and gaming taxes. And we all know what’s happened to construction.
The state’s problem, according to former Assembly Speaker Barbara Buckley, is that we’ve been trying for scattered industry development with little forethought. “We end up trying to cater to everybody and end up not accomplishing anything,” Buckley says.
This didn’t happen overnight; we’ve had a good three decades to watch it develop. Our once-booming economy is in ruins. Predictable ruins, but ruins nonetheless. Nevada leads the nation with a 14.5 percent unemployment rate, which is a Depression-worthy situation when factoring in real-world estimates, which range as high as 25 percent).
Nevada is one of only a handful of states with a Legislature that meets once every two years; except, of course, when there’s a crisis. And in the past few sessions there has been a crisis every time. Supporters of the way we do business now say meeting yearly would give too much power to the executive branch; critics say it’s just not enough time to keep the state’s affairs in order. With Sandoval pledging in his State of the State speech not to raise taxes and the Democrat-led Assembly and Senate saying they cannot go along with the draconian cuts in state programs such as education and social welfare necessary to tighten up the balance sheet without raising taxes, something’s gotta give.
How do we fix the state’s balance sheet and gaping $1.2 billion budget shortfall? That’s the big question, and it’s one that has Democrats such as Assemblyman John Oceguera of Las Vegas already howling. They are talking about tax hikes—although the prefered term in political circles these days is “revenue enhancements”—but it would take every Democrat in the Legislature, and even some Republicans, to override Sandoval’s promised veto of any new taxes. They don’t have the numbers. Which leads us to the present stalemate.
Fasten your seatbelts, we’re in for a bumpy ride.
Hell of a Party
When they’re not dealing with the sinking ship that is our financial situation, our loyal lawmakers have 944 bill draft requests for the Legislature to consider as of press time. That’s 120 days to not only come to some kind of agreement about funding the government, but then also wading through an average of eight bills a day. These are the kinds of things that lawmakers would much rather be dealing with, because who doesn’t want to be the hero who outlaws a potentially lethal practice such as soccer moms searching their smartphones for that perfect emoticon while barreling down the highway at 75 mph?
One issue that could come up, and go away quickly, is a state lottery to help fund education. Although they’re common in other states, you wouldn’t like the odds a sports book would give you for it passing in Nevada. One glimpse at Gov. Sandoval’s inauguration will tell you why.
Perhaps eager to wring a few drops of talent from higher education before her husband slashes and burns the Silver State’s university system like a retreating Russian brigade, the belle of the ball, first lady Kathleen Sandoval, shimmered across the Wynn casino dance floor Jan. 28 in her Victorian-inspired emerald green satin and silk dress, designed and manufactured by University of Nevada, Reno history and style professor Virginia Vogel and her students. In attendance were 2,000 of the first couple’s closest friends, each paying between $100 and $1,000 for the privilege of cutting a rug to the indomitable acid-rockers Starship, and their 1987 mega-hit “Nothing’s Gonna Stop Us Now.” (Apparently, “We Built This City” was deemed insensitive to the state’s unemployed construction workers and Guitar Center employees.) The floor-length number had two different bodices, one chiffon and one lace with beading. It was a hit.
Not a dime of taxpayer money was spent during the celebration, according to the governor’s office. In a very public display of political alliance, casinos picked up most of the tab, and as you would guess, they’re not behind a lottery to compete with the disposable income on which they depend. So we’re still looking for a way to shore up school funding.
Where it Comes From
The four biggest revenue sources as a percentage of the state’s general fund
Sales and use taxes: 30.3%
“Other” taxes: 14.4%
Gaming taxes: 27%
9.1% Insurance Premium Tax
Source: Nevada Department of Administration
Also on the Agenda
- A bill that would make it illegal to text while driving. This one is very likely to pass.
- A bill that would make recycling fluorescent lightbulbs mandatory. It’s a good idea, but the reality is that we live in a state where recycling a TV means taking it to the desert and using it for target practice.
- A bill that would take $121 million in room tax revenue from Clark and Washoe counties and use it to support education.
- A bill to correct the fact that 44 states offer incentives for Hollywood companies to make movies and Nevada doesn’t.
- A bill that would exempt certain restored, classic cars from having to abide by the same smog policies as everybody else on the road. Seriously.
- A bill that would make sure pimpin’ ain’t going to get any easier by stiffening the penalties for pandering.
- A bill that would help take the guesswork out of using deadly force against criminals. Should one come into your house or break into your car, you no longer have to retreat first. Fire away!
- A bill to change the ballot order from alphabetic to a random order when determining who comes first on a ballot.
- A bill to pay for all this bill making. SB1 ponies up $15 million to fund the 76th legislative meeting, or roughly $125,000 per day.
- A bill that would require contractors to offer energy efficiency and renewable energy upgrades on homes to people buying in a development with 25 or more homes.
- Bills to repeal the minimum-wage requirement, make it easier to home-school your child, set money aside to study substance abuse, restore a felon’s rights to bear arms and toughen identity theft laws. The Carson City crowd is also going to revisit the hot-button issue of taxation on moist snuff. These folks have their work cut out for them.
Gov. Sandoval’s “father knows best” speech warned us that there are going to be tough decisions ahead. But like any good father, he only shares the pain with us because he cares.