(Michael Chamberlain/Nevada Business Coalition) – Democrats in the Nevada Legislature have apparently given up on passing their $1.2 billion tax increase during this session of the Legislature. As the Nevada News Bureau reported [on May 24], joint meetings of the Assembly Ways & Means and Senate Finance committees had been scheduled for this morning to discuss reducing spending levels the committees had passed on party-line votes but that the governor had promised to veto.
The Democrats’ had proposed spending well beyond Governor Sandoval’s budget. They were hoping to pass a massive tax increase proposal to fund the extra spending.
Their tax plan consists mainly of a Modified Gross Receipts Tax, a sales tax on services (called a “transition tax”) and the extensions of tax increases passed in 2009 that are scheduled to end on June 30, 2011. It seems as though Democrats have given up on all their hoped-for tax increases, except the possibility of extending the sunsets of tax increases enacted in 2009.
Even the extension of the sunsets is in doubt. Any tax increase would require a 2/3 vote of each house. Democrats would not only need to hold their caucuses together but convince 2 Republicans in the Assembly and 3 in the Senate to go along with them.
Some Assembly Republicans are willing to negotiate but Governor Sandoval is holding firm to his promise not to raise taxes this session and Senate Republicans seem to be steadfast in their support of the governor. GOP Senators released a letter this afternoon reiterating their unified support for the governor’s budget.
However, the committee meetings keep getting pushed back, indicating there may be some behind-the-scenes maneuvering going on.
Liberal activist groups are beside themselves, which is a good thing. And, according to the Sun’s Anjeanette Damon, the budget negotiations have created a rift among Democrats as frustrated lawmakers have reportedly attempted to go around their leadership in order to try to make a deal.
This is a triumph for Nevada’s taxpayers but far from a complete win just yet. There is plenty of time for Republicans to snatch defeat from the jaws of victory.
A faction within the Republican Assembly caucus may still be trying to make a deal with the Democrats that doesn’t need to be made.
At this point the Republicans do not have to agree to anything the Democrats put forward. If no budget deal is reached before the end of the session on June 6 the session will end with no budget and a special session will need to be convened to pass a budget.
The governor has said he will allow the Legislature to adjourn with no budget and will call a special session to convene toward the end of June. According to state law, the governor has absolute authority to set the agenda for the special session. So he can allow them only to discuss the budget, meaning the Legislature could not discuss tax increases. Since they must pass a balanced budget they would be forced to pass a budget that spent only the money committed in the governor’s budget.
Will Democrats melt down? Will Assembly Republicans snatch defeat from the jaws of victory? Will Nevada’s taxpayers be saved from the havoc arising from a $1 billion plus tax increase? Stay tuned.
(Michael Chamberlain is Executive Director of Nevada Business Coalition.)