MINUTES OF THE meeting
of the
ASSEMBLY Committee on Taxation
Seventy-Second Session
May 28, 2003
The Committee on Taxationwas called to order at 3:15 p.m., on Wednesday, May 28, 2003. Chairman David Parks presided in Room 3142 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Guest List. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.
COMMITTEE MEMBERS PRESENT:
Mr. David Parks, Chairman
Mr. David Goldwater, Vice Chairman
Mr. Bernie Anderson
Mr. Morse Arberry Jr.
Mrs. Dawn Gibbons
Mr. Tom Grady
Mr. Josh Griffin
Mr. Lynn Hettrick
Mr. John Marvel
Ms. Kathy McClain
Mr. Harry Mortenson
Ms. Peggy Pierce
COMMITTEE MEMBERS ABSENT:
None
GUEST LEGISLATORS PRESENT:
None
STAFF MEMBERS PRESENT:
Ted Zuend, Fiscal Analyst
Kim Morgan, Committee Counsel
Mary Garcia, Committee Secretary
OTHERS PRESENT:
None
Good afternoon. I would like to call the Committee on Taxation to order. [Attendance was taken.] For the record, we do have a quorum. We have had many months of discussion on various tax plans and proposed revenue adjustments to get us through the situation we have found ourselves in. What I have today is an Assembly Taxation Revenue Plan that is in front of each of you (Exhibit C). It is a two-page document of revenues for the first and second years of the biennium.
What I would like to do is to simply and quickly go through those. I think that everyone looking through this list is quite aware that these are all revenue sources that we have previously discussed, and that there is certainly nothing new on the list. They are items that we have already had considerable testimony on. What I will do is open it up for questions.
Assemblyman Goldwater:
In order to save time and move forward, Mr. Chairman, I would like to move that we accept the taxes laid out in this Assembly Taxation Revenue Plan for fiscal years 2004 and 2005 with the outlined business fees increased to $100; a business license tax increased $40 per full-time employee; a real property transfer tax as outlined in the document; a liquor tax as outlined in the document; a cigarette tax as outlined; a gaming percentage fee increase; a unified business tax as we outlined in our hearings; and the restricted slot tax outlined in the document, increasing the fee to $100 for each of the first 5 slots and $175 for each slot from 6 to 15, which is a reduction from what we had discussed at our hearing. Additionally, it includes the banking franchise tax under the unified business tax as outlined, the commercial lease tax that will be in effect in the second year, and the live entertainment tax. Reducing the basic government services tax by 25 percent, which I think is a very important part of good tax policy for the people of this state, is still alive in S.B. 370, which, hopefully, will pass. What we can also do in this motion, if you will accept it, is establish an account for rebates, so that if we do collect money in excess of what we hope to, we can offer rebates to people who qualify, such as senior citizens or the disabled. That would be my motion.
ASSEMBLYMAN GOLDWATER MOVED DO PASS ON THE ASSEMBLY TAXATION REVENUE PLAN.
ASSEMBLYWOMAN PIERCE SECONDED THE MOTION.
Assemblyman Marvel:
We just came from Ways and Means, and, looking at the first year, we are going to need $354 million plus, and this shows $298.6 million.
Assemblyman Goldwater:
My motion would be to do pass and re-refer to Ways and Means. The difference would come from the federal money for make-up provisions for the “No Child Left Behind Fund,” if I am not mistaken. [Off-microphone discussion.] Oh, it is just a do-pass motion.
Ted Zuend:
Mr. Chairman, I believe you are referring to the money that was just approved in the tax cut package passed by Congress, which is $105 million over 2 years of additional one-shot money from the federal government.
Assemblyman Goldwater:
That makes up the difference in the first year, John.
Assemblyman Griffin:
I just want to make a comment about this, Mr. Chairman. I appreciate the effort here. There are some specific concerns that I have with some of the pieces. I am concerned about the graduation of the real property transfer tax. I think that tax is a good one, and something that we need to fix. I would like to ask this Committee for an opportunity to change this, which will be seen shortly. I do plan on supporting this motion, but I think that, with all the taxes we are starting to add up here, we are starting to compound at some top levels of, specifically, the real estate industry and some of the land development industry. That concerns me, so I would like an opportunity to address that in the next few days, if possible. I guess we could go down the list and say that about a lot of these things.
We had a meeting last night in which I was the only freshman present. It was an honor to be there. This is a scary time for all of us, a scary time for me as a freshman in this Legislature. Not to point fingers at anybody, and I do not mean it to sound like that, but as freshmen, we did not create this problem. I am not saying anybody created it. A lot of this is structurally driven. With all the concerns that my friends and constituents have, some support this and some do not, it is tough. I hate being in this situation.
I did not create this, but I was elected to try to fix it. That is what I intend to do here today. I do not know what happens to people in their elections, but at some point, when you make these votes, that does not matter. I, personally, am not worried about reelection. I heard a great comment from Mr. Vergiels a few weeks ago when someone was threatening my election in a primary. He said, “Josh, if my career had ended every time somebody had threatened to end it, I would have lasted 3 days in this place.” I think there is some validity to that. That does not mean that this is right or wrong based on political reasons, but who cares? If somebody else wants to come and take this seat in 2 years if we vote for this, they will not have this problem. There will be other problems, but they will not have this problem.
One thing that happened, in my opinion, was that the number was reduced. As many people here know, some will say that the number is arbitrary; some will say it is very significant. To me, the number was not arbitrary. I was concerned at $1 billion; I was concerned at $900 million, and this is $850 million. I know that some people on the other side of the aisle think that is too little. I appreciate that, but I respect the fact that the number came to this level and feel it is a number I can support. I will take the next few days and try to encourage, in the final package, some of the problems I do have with it. Thank you for letting me make this speech, and I do support the motion.
Assemblyman Goldwater:
In response, I would simply say the problem we are having is something that was identified 20 years ago in our tax structure. The choices that are before us are simply about what kind of state we want to live in. I know, as you do, your constituents are not saying, “We want worse public schools. We want poorer health care. We want to make sure our seniors do not have prescription drugs and let a few people out of prison.” They do not want those things. They want a state that does the things we promised.
No tax package is perfect, but we cannot, as we debate these issues, allow the perfect to become an enemy of the good. This is a good package. It is a do‑pass motion. I hope it is something we can live with, and something with which we can fund what we just passed in Ways and Means.
Assemblywoman Gibbons:
I think my constituents would definitely be for supporting and funding education for their students. It is our future. The problem I have with this tax proposal is that it is geared too much toward punishing business. It is very punitive with the commercial lease tax of 2 percent, the real property transfer tax, the business license tax, a business license fee, unified business tax, gaming percentage fee, and live entertainment tax. That is all directed at business. I think business is prepared to pay their fair share, but we have got to be fair about this.
[Assemblywoman Gibbons, continued.] I am not saying that I am not willing to work with you. I am willing to work with you. I think I have shown clearly how we could come up with numbers that are workable. I think there are some other people that are here in the audience that will be ready to step up to the plate and work together to help us solve this problem. In the real world, in business, we are hurting. It is very difficult to make a living. Even at that, most of my business people say, “I am willing to step up to the plate, but I want to be a part of the solution.”
I have seen so many tax plans now, and I have not even seen correct numbers for this unified business tax. I can tell you it raises a lot more money than it says here. If done correctly, you could get rid of the real property transfer tax, the commercial lease tax, the restricted slot license fee, the business license tax, and the business license fee. We would have plenty of money. I urge you to come forward with the numbers and tell me what the unified business tax really does raise. I can argue differently with you. Thank you.
Assemblywoman Pierce:
I would just like to say I think this is a very fair plan. There are some industries in our state that have, for a long time, contributed almost nothing to this state and the communities in which they make a profit. This plan makes them step up and be part of the community.
Just making money is not sufficient to make you part of the community. You have to support schools, services, and the entire picture that makes up a community. I think this brings some equalization to the taxes that are placed on business. I think this is a very fair plan in that it makes some businesses that have never contributed enough pay their fair share. It does not impact ordinary people nearly as much as most of the tax plans that are floating around. Thank you.
Assemblyman Hettrick:
I will just comment very briefly on these. First, I think increasing the cigarette tax by 50 percent, according to the testimony we had, would be apt to drive the actual revenue down somewhat because of the impact it would have on sales. I have a concern about that. Regarding the slot license fee, I believe the operators agreed they could handle $2.3 million, but anything over that was going to put several small operators out of business. I have problems with that.
I say the unified business tax is gross receipts with a different name. I have vowed from the day this session started or before that I would not vote for any form of it, so I do not support that. The banking franchise fee is a separate item. All this time we talked about broad‑based business tax, yet we cannot come up with one that covers all of the businesses, because there “ain’t no such animal,” so we create separate ones for the ones we are trying to get to. To me, it is incredible. The $450,000 exemption eliminates 65 percent of all businesses, so to call this broad-based in any way is not true. It is an attempt to get to the people we want to get to.
[Assemblyman Hettrick, continued.] According to everything I have heard about the commercial lease tax thus far, it will be very detrimental in many places. I do not believe we have enough detail to know the real impact. I feel the same way about the live entertainment tax. We do not have any detail. We do not know what is included in the amusement tax or essentially what is not. It is just hard to tell what we are doing here.
Finally, I would tend to agree with Mrs. Gibbons. I do not think the revenue from the unified business tax is correctly stated. I think that there are differences there that ought to be clarified. I will not be supporting this motion.
Assemblyman Grady:
I guess what bothers me more about this than the figures is that we come in here and are dropped a plan, and a motion is made to vote on it without us even having the time to really study it. I am still very concerned that we do a budget and then raise the taxes to meet the budget. I think that is backwards to the way the system should work.
I agree with my colleague that, as freshmen, we did not create this when we ran for this office, but we knew we were going to have to correct it. I hope we can correct it, but I do not feel that dropping this on us and asking us to look at it for 30 seconds and vote on it is a good way to make legislation. I will not be supporting it on those grounds. Thank you.
Assemblyman Arberry:
When I was listening to some of the comments and thinking about all of this coming together, it reminded me of an evolution. At this time, Nevada has gone in a complete cycle, and now we are making changes. Nevada is growing up, and this just one of the steps showing that we are growing up.
I know everyone keeps talking about a figure. I do not think it is about the figure. It is about what services we can provide for the people in need and the people that are trying to get educated and trying to provide good quality people to work at those businesses that are trying to locate here so they can prosper. I think this is the beginning of that evolution. I think everyone needs to realize that, at some point Nevada was horse and buggy, but at some point we had the years of the ’45 Fords, then the ‘60s came and we had the high-performance cars. Then we came to the point where we had jets and we left the regular propeller-driven planes. I think that is what is happening right here.
[Assemblyman Arberry, continued.] I commend this Committee. I know it has been a lot of hard work. I commend the committee the Governor had appointed to try to put some of this together. It is a shame that we have to come to this point, but I think everyone needs to realize that this is the evolution, and this is the beginning of something we have to do.
Hopefully, when we do this, the tax we do pass will be enough to carry the state to where we will not have to put this back on any other newly elected officials’ backs. I understand what Josh is saying when he says he is new. Hopefully, when the next evolution comes around, it will not be like this. I just want to say I commend all of you. I know it is not going to make everybody happy, but hopefully it will do something that will make some other people happy.
THE MOTION CARRIED. MR. HETTRICK, MRS. GIBBONS, MR. GRADY, AND MR. MARVEL VOTED NO.
Chairman Parks:
Thank you very much. We are adjourned [at 4:33 p.m.].
RESPECTFULLY SUBMITTED:
Mary Garcia
Committee Secretary
APPROVED BY:
Assemblyman David Parks, Chairman
DATE: