Governor's tax task force makes tentative recommendations

The Governor's Task Force on Tax Policy has voted tentatively to recommend increasing existing taxes by $285.3 million next year.

Chairman Guy Hobbs reminded members of the panel -- charged with fixing Nevada's tax structure -- that amount only gets the state closer to the amount of revenue needed to provide governmental services.

The governor's staff estimates the shortfall for this biennium could pass $300 million and figures presented to the task force show the state's shortfall will be about $359 million in fiscal 2004 and grow larger each year after unless the state finds more revenue.

Hobbs also made it clear the list is tentative and could change dramatically before the task force adopts its final report and recommendations to Gov. Kenny Guinn Nov. 15.

However, it includes most of the items members and Guinn have indicated they support for months now, including doubling both the tobacco and liquor taxes.

Raising cigarette taxes from 35 to 70 cents a pack and doubling other tobacco levies will add an estimated $53.5 million to the treasury next year and more in each year over the next decade. Liquor tax increases will add $14.6 million in fiscal 2004, increasing annually.

One of the more controversial items on the list, however, is the proposed 6.5 percent tax on "amusements" such as sports contests, theater tickets, cabaret and night club cover charges. Several members said they wanted to make sure those charges weren't also put on high school sporting events and other such activities.

The amusements tax is expected to generate as much as $121.9 million its first full year, depending on what is exempted. Potential exemptions will be discussed by the task force at its October meeting.

Hobbs noted that it's important for the state to begin moving toward "transaction" taxes because of the growth of services against the weakness of sales taxes.

Brian Greenspun of Las Vegas offered assurances he doubted any of the panel intended to impose the tax on school sports and similar events.

Another issue on the October agenda is the proposed 10-cent property tax increase included in the tentative list. The tax would generate $61.8 million for the state in its first year and Hobbs pointed out it is one of the most stable taxes and among the best tied to growth.

But panel member Luther Mack of Reno said he would prefer the tax to be phased in while Greenspun argued it should start at 10 cents and increase to 20 cents over the next 10 years.

Altogether, those proposed increases would generate at least $285.3 million more revenue for the state a year. But that is still at least $75 million short of the amount of money needed just to maintain existing governmental services.

The state has a projected general fund shortfall totaling as much as $4.5 billion by the end of fiscal 2011.

But Hobbs said that is by no means the end of the list the task force will consider proposing to the governor and the 2003 Legislature.

"We're just getting started," he said.

Ken Lange, representing public education, said the state's needs in a wide variety of programs are critical and that the task force wouldn't be doing its job if it didn't recommend much more in revenue increases than Wednesday's tentative list.

The biggest piece of the puzzle they have been working on is the proposed quarter-percent tax on gross receipts of Nevada businesses which should generate well over $200 million a year.

The task force expects to spend most of its October meeting refining that proposal and working out the impact of requested exemptions to it.