Nevada's taxation committees were told Monday that if the Iraq war has the same drag on the state's economy that Sept. 11 did and they pass no new taxes to cover this year's shortfall, the treasury will be $43.5 million short by June 31 and $105.2 million short over the next two years.
The two committees heard Budget Director Perry Comeaux's report, then adjourned without taking action on the so-called "bridge tax" package proposed by Gov. Kenny Guinn.
"There weren't any votes to pass a bill," said Senate Taxation Chairman Mike McGinness, R-Fallon. "There's support for pieces, but not enough to get the bill out."
Guinn's bill asks them to triple the business-activity tax from $25 to $75 each quarter, triple the cigarette tax, and nearly double the liquor tax to cover a $74 million shortfall between now and the end of this fiscal year.
Assembly Taxation Chairman David Parks, D-Las Vegas, said he could have pushed for a vote to pass Guinn's plan, but "I have strong doubts that would happen."
That means no new taxes can be in place today, April 1, which at minimum means the state will miss a month's revenue from the cigarette and liquor taxes. Those taxes are collected monthly and can't be applied retroactively.
The stiffest resistance has come from the business community, which strongly opposes Guinn's plan to triple the per-employee business tax. Ironically, if a terrorist incident or something else causes a severe slump in tourist revenues and quick taxes become necessary, the business-activity tax will end up being the only part of the governor's "bridge" plan that can generate money.
That's because that tax is collected quarterly, not monthly. It will still generate more than $40 million this fiscal year, as long as it is enacted before the end of June.
Both taxation committees will meet again this afternoon, but Parks said he doesn't see anything that would change enough minds to pass the tax plan.
Comeaux presented lawmakers with four scenarios, ranging from a rosy assumption that they approve Guinn's plan and Nevada doesn't suffer from the Iraq war to "the scary one": no tax increases and a 3.2 percent dip in state revenues matching what the state suffered after Sept. 11.
That would leave revenues from $30.6 million to $43.5 million below the minimum needed by June 30. And the problems would cascade into next year's budget -- to the tune of $76.6 million -- as well 2005, another $28.5 million below minimums.
The minimum treasury balance is set by statute at 5 percent. Comeaux said that is what the state needs to pay its bills on time and make appropriations to public schools, the university system, human resources programs and the rest of state government.
The taxation briefing came on the same day legislative money committees began the process of voting on state budgets for the coming two years. The Ways and Means and Senate Finance committees closed a dozen small, noncontroversial budgets.
Ways and Means Chairman Morse Arberry, D-Las Vegas, said the taxation committees have to make some decisions fast, or the budget process will grind to a halt. But he pointed out they can't close budgets without knowing how much money there is.
Senate Finance Chairman Bill Raggio agreed, saying "We have to settle immediately on this fiscal year taxes."
Then, he said, comes the plan that will provide funding for the state for the next two years.
No action is possible today because neither the Assembly nor Senate has a floor session scheduled until Wednesday.
