Lawmakers hope vote Monday on tax, budget deal

Nevada legislators hoped to vote today on an $803 million tax package that would balance a record $5 billion, two-year state budget and head off historic intervention by the state Supreme Court to force the lawmakers to act.

The tax package, worked out Saturday in a daylong, closed-door meeting of legislative leaders, contains elements of various plans that had been pushed by Republican and Democratic Assembly members and senators, and by GOP Gov. Kenny Guinn.

Key elements of the package include a 2.5 percent net profits tax on business, a payroll tax that also would be paid by businesses and a 3 percent bank franchise levy.

Other major elements include higher "sin" taxes on liquor and cigarettes, increased taxes on casino revenues, a real estate transfer tax and a new levy on live entertainment. Sales and property taxes aren't going up.

Earlier proposals for a gross receipts tax on business had been adamantly opposed by 15 Assembly Republicans, who united to prevent approval by two-thirds of the 42 Assembly members. The proponents needed 28 votes and could only get 27.

The net profits provision that's in the latest plan had been advanced earlier, but was scrapped in favor of the gross profits levy as the legislators struggled to achieve the goal of broad-based revenue sources to help end the state's dependency on gambling and sales taxes.

After Saturday's leadership meeting, other lawmakers were contacted by phone on Sunday to ensure two-thirds' support in both houses. Leaders said they wouldn't call for votes today unless they were confident the plan would pass.

At the end of Saturday's meeting, Senate Majority Leader Bill Raggio, R-Reno, said the leaders had made "very significant progress toward a compromise in which all the interests have been addressed."

"A great deal of work has been done today," said Assembly Speaker Richard Perkins, D-Henderson. "It has been fairly fruitful -- but I think we've had fruitful discussions in the past, too.

The regular, 120-day session adjourned June 2 without approval of a complete tax plan and budget, and the legislators are now in their second special session since then -- at a cost of about $50,000 a day.

In addition, Guinn has gone to the state Supreme Court asking for an order directing the Legislature to properly fund the budget and Nevada's K-12 school system. A court ruling could come as early as Tuesday -- but the court proceedings would stop if there's a successful vote today.

"At this point, we are hopeful we can avoid this matter proceeding any further in the court system," Raggio said.

Assembly Minority Leader Lynn Hettrick, R-Gardnerville, shared the views of Raggio and Perkins that progress had been made Saturday -- but stopped short of endorsing the emerging tax plan.

Hettrick had favored $703 million in new tax revenues, while Assembly Democrats had favored an $864 million plan. The $803 million was achieved by reducing some state university spending, shrinking a "rainy day" fund and cutting the immediate need for more welfare funding by letting legislators approve higher funding later if there's a proven demand.

Guinn said he'd support a lower dollar total on taxes -- even below $803 million. And while he had supported a franchise fee taxing the gross receipts of business, the governor also said he'd agree to a payroll tax as the centerpiece of a package that would adequately fund the state budget.

Guinn also said he was saddened to be the first governor in state history to turn to the state Supreme Court because of the legislative deadlock, but added, "I have an obligation to uphold Nevada's Constitution."

The constitution requires adequate funding for public schools, and also requires enough taxes to balance the budget for each fiscal year.

While the fiscal year already has opened, states agencies don't have immediate budget problems. However, the K-12 school system faces the prospect of dried-up funding next month.