Tax Hike “Truth” is in Eyes of the Beholder

(Chuck Muth) – Las Vegas Sun columnist Jon Ralston accurately noted on Wednesday that I was “truly stricken” yesterday by the fact that Mary Lau, head of the Retail Association of Nevada, said on his show Monday that the state budget can’t be closed without tax hikes, adding, “It’s awful when folks tell the truth, isn’t it Mr. Muth?”

Well, it is true that I was “stricken” by Mary’s statement, especially because she’s one of my favorite people in politics here in Nevada. She’s a ball-buster in a business filled with wishy-washy pansies (mostly Republican). But Mary’s position is an opinion, not necessarily a truth. And Mary and I simply have a difference of opinion on this one.

The truth is there is no $3 billion hole in Nevada’s budget. Worst case scenario, the hole might be around $1.5 billion. And Democrat Senate Majority Leader Steven Horsford has already said there are still $1.5 billion worth of budget cuts that can be made to close the gap. Therefore, it is NOT true that taxes need to be raised next year to balance the budget.

It will, however, require some serious and politically painful cuts to government along the lines of what the private sector has already gone through – including some permanent salary and benefit reductions, layoffs, and yes, outright closures of some non-essential and low-priority government programs, departments, agencies and services just like how some businesses have been forced out of business during this recession.

That said, Mary’s suggestion that extending the sales tax to certain services is something the Legislature should absolutely take a look at next year, but ONLY if strong spending control measures for future budgets are put into place at the same time, and ONLY if done in a revenue-neutral fashion.

For example, if you increase revenue by extending the sales tax to certain services, you must decrease the taxes, say, on vehicle registrations at the same time.

Ditto abatements and exemptions in the existing tax structure that perhaps, legitimately, shouldn’t be continued. Fine. Put ‘em on the table. But again, any increase in revenue from abatement and exemption reform needs to be offset by an equivalent tax cut somewhere else, like vehicle registration fees.

And that’s the God’s honest Muth’s Truth.