Nevada lawmakers review alternative to governor's tax plan

CARSON CITY, Nev. (AP) -- Nevada lawmakers on Tuesday reviewed an alternative to Gov. Kenny Guinn's $1 billion tax plan -- a rival proposal that includes a tax on services and some spending cuts.

Dozens of business and casino industry lobbyists gathered at a late evening Senate Taxation Committee session on the measure, the first legislator-produced, comprehensive tax bill to get a hearing.

"We consider this a workable alternative," said Sen. Terry Care, D-Las Vegas. Care wrote the bill along with Sen. Mark Amodei, R-Carson City.

SB382 replaces the Republican governor's proposed 0.25 gross receipts tax on businesses with a 3 percent tax on services.

It would exempt home construction, health care, child care, garbage collection, advertising and any services priced below $50.

The bill also includes a 3 percent increase in the state tax on hotel rooms and a payroll surcharge. It also sets up a new upper tier on casino taxes, raising the gross gambling levy by a half-percent for larger casinos.

It scales back other elements of the governor's plan, like increases in the per-employee business activity tax and alcohol and tobacco taxes. Many of the tax increases would be gradually phased in to avoid "sticker shock," Amodei said.

Amodei promoted the plan as "broad-based" -- a buzzword in the Legislature meaning it reduces the state's dependence on tourism-dependent sales and casino taxes.

"This is a state that is inclusive," Amodei said. "To concentrate on any one area or group is not appropriate."

Amodei had previously said his plan would raise about $1 billion but on Tuesday said only that it would raise at least $700 million -- the state's current budget shortfall.

Earlier in the day, representatives from various Nevada business associations and chambers of commerce unveiled two television ads attacking the gross receipts tax and promoting a tax on services.

One 30-second ad urges viewers to call their legislators and ends with the announcer urging viewers: "Just say no to the gross receipts tax."

Business lobbyist Sam McMullen also promoted a plan to tax services at 5 percent and drop the state's sales tax by 2 percent. He said the proposal would be offered as an amendment to the Care-Amodei tax plan.

The governor and politically powerful casino industry lobbyists have criticized the Care-Amodei plan as too dependent on volatile tourism taxes. They say the service tax also hits the general public while the gross receipts tax targets companies with deeper pockets.

Nevada faces a $704 million-plus budget hole over the next two years without any new programs or taxes.

Legislators have introduced dozens of bills raising taxes on everything from business incorporation fees to cigarettes. Many have yet to get a hearing and will likely be killed after a committee passage deadline on Friday.

Taxation panels have not yet voted on Guinn's short-term tax plan, which the governor says would help the state escape a deep budget slump caused by possible effects of the Iraq war on Nevada tourism.

It would immediately raise taxes on cigarettes, alcohol, and the business-activity fee.