Looking Ahead To The Legislative Session
Lawmakers return to Carson City for the regular legislative session beginning next Monday.
They already met for two special sessions last summer, when they approved deep cuts to state spending as a result of the COVID-19 pandemic.
But according to Governor Steve Sisolak’s budget proposal, state revenues haven’t been as bad as they all feared. In December, the Economic Forum announced the state has collected more taxes than it thought it would.
Meredith Levine is the director of economic policy for the non-partisan Guinn Center. She said the extra cash is good news.
"Of course, we have to recognize that is below where we would like to be as a state, but at the same time, it's a bit more robust than expected and that is only good news," she said.
The state is behind the 2019-2020 budget by about half a billion dollars, and gaming wins were down 24 percent for the fiscal year. Levine said the shortfall is significant, but there is a qualifier to that statement.
"When you look at the amount available for operating appropriations, so that's the money available to spend, it's actually a decrease of only $187.5 million. That's about a 2 percent decrease over the current biennium," she said.
While $187.5 million is not as drastic as $500 million, for a small state like Nevada, it is significant, she said.
With such a large drop in state funds, the question many people are asking if instead of cutting budgets the state looks at bringing in more revenue. Another move is afoot to raise mining taxes, which are currently enshrined in the state constitution. Clark County Education Association is pushing for the state to raise sales and gaming taxes.
Levine said she had seen one estimate that put the revenue the state would receive from an increase in mining tax at $300 million, which could mean a lot during this time. However, she pointed out that tax increases to pass during a recession are tough.
"We have to balance those needs of raising revenues during constraint and also what it might mean for the industries and the people affected and that's where I think a better way to maybe think about that is how to increase federal funding streams."
While talking about taxes during a recession might be a tough sell, Annette Magnus with Battle Born Progress believes it is a perfect time to start talking not just about taxes but about the state's entire funding structure.
"I think what was missing from [Gov. Sisolak's] State of the State, and really, what we need to have a real discussion about in this state, and we've needed to have the discussion for a long time - the pandemic just really just exacerbated it - was the real need to restructure our revenue system in this state, and how we actually go about raising money."
She said the system needs to be more fair and equitable for all Nevadas. Magnus said, currently, Nevada is too dependent on regressive taxes like sales taxes, which disproportionately burden low-income people.
Randi Thompson is the director for the Nevada chapter of the National Federation of Independent Business. She said she doesn't always agree with Magnus on policy issues, but on this issue, she does agree.
"As we like to say in the business community, lower the rate - broaden the base," she said, "60 percent of our economy is a service sector, and we don't tax that."
She also said that Nevada's communities are suffering because of a property tax cap that was put into place when the state saw skyrocketing property values, but they had unintended consequences when there was a downturn in the economy.
"We really do need to have a very open conversation and I want to be at the table with Annette because I think we can find common ground," she said.
Fred Lokken is the chair of the Political Science Department at Truckee Meadows Community College. He said legislature after legislature has kicked the can down the road when it comes to funding structure.
"The current budget structure was put into place in 1961 when there were 300,000 people in the state, and Las Vegas had just become the largest city in the state. That is reprehensible," he said.
Lokken believes there is an emerging appetite to finally address the problem but most lawmakers don't want to stir up the kind of drama that would come with tackling the topic and instead want to push it off - again.
"What this session should be is at least laying the foundation," he said, "I would love to see a real deep dive on our current economy with data that would be able to be brought back to the 2023 session with the intent that we would be in a better financial situation."
During the time between 2021 and 2023 and with that new information, he said Republicans and Democrats would have a better idea of how to improve the tax structure for the state.
Magnus noted that her mother was born in 1961 and that nothing has changed since then is a real problem. She believes there is an appetite to have this big debate among both progressives and conservatives in the state.
She also doesn't believe it is a matter of choosing one industry to tax, like mining or gaming. Instead, she wants the entire system examined and addressed.
"I think all things should be on the table," she said "One size fits all is not going to solve this problem. It's just like the marijuana tax. That is a great tax but that one thing alone is not going to solve all of our budget problems. We have to have a robust conversation.
Meredith Levine, Director of Economic Policy, Guinn Center; Fred Lokken, Chair of Political Science Department, Truckee Meadows Community College; Annette Magnus, Executive Director, Battle Born Progress; Randi Thompson, Nevada State Director, National Federation of Independent Business