High drama as Legislature grinds toward an end

After a day of high drama as the Legislature fought its way toward a tax-budget compromise, Assemblyman John Marvel, R-Battle Mountain, decided to break with the Assembly hardliners, giving the compromise tax plan the 28 votes needed to reach a two-thirds constitutional majority.

"We are in a constitutional crisis," said Marvel. "It's too much taxes and the appropriations are too high. But to do the business of the state of Nevada, I will reluctantly support this bill."

He had been part of the group of 15 Assembly Republicans who prevented passage of the tax-budget plan for more than a month since the end of the regular 2003 session.

They eventually won most of the battle, getting rid of what they argued were income taxes on banks and businesses, a property tax increase proposed by the governor's office and other tax ideas they said would hurt Nevada's economy. They also forced reductions in the total amount of the tax plan from $860 million to $811 million authorized in SB8.

And that is much less than the $996 million originally called for in Gov. Kenny Guinn's budget.

Passage of SB8 cleared the way for final adjournment of the 20th special session of the Legislature sometime after midnight this morning.

The plan is based on a modified business tax that levies a 0.7 percent tax on gross wages paid by a business the first year and 0.65 percent the second year. The banks tax is structured much the same, but it hits banks for 2 percent of gross wages and charges $7,000 per branch office per year. Bank representatives agreed to the deal.

Assembly Minority Leader Lynn Hettrick, R-Gardnerville; Bob Beers, R-Las Vegas; and Ron Knecht, R-Carson City, made a last-ditch attempt to convince Marvel he should oppose the bill, saying he was lied to because spreadsheets show the tax package could generate as much as $836 million. After a meeting with Hettrick, Speaker Richard Perkins, D-Henderson, and other leadership members, Marvel decided to stick with his decision to support the plan in SB8.

A half hour earlier, the same measure won 17 of the 20 Senators present. Sen. Ray Shafer, R-Las Vegas, was missing and reported to be on vacation. But all the Assembly members who were missing Sunday reported back for the final vote Monday. Ann O'Connell, R-Las Vegas, abstained and fellow Republicans Sandra Tiffany and Barbara Cegavske voted no.

The bill contains the $1.65 billion to fund Nevada's schools, including class-size reduction money.

Passage of the bill was delayed from the Senate Democrats, who had been pretty much out of the loop during the negotiations. They halted the process for more than three hours before agreeing to back the plan after liquor taxes were changed from a 50 percent jump to a 75 percent increase. That amounts to about a penny per six-pack of beer.

In addition, the plan contains an increase in cigarette taxes of 45 cents per pack, an entertainment tax, a real estate transfer tax, gaming tax increases and a business license fee.

Already approved by the Legislature is a bill increasing fees charged by the Secretary of State's Office that will raise about $44 million, and a variety of changes in collection allowances for sales, cigarette and liquor taxes that will raise about $30 million over the biennium. Those taxes are included in the total $836 million the bill is projected to raise.