Consumers face slightly higher sales taxes, businesses' annual fees will double and larger employers will shoulder higher payroll taxes when key elements of the 2009 Legislature's patchwork plan to raise $781 million in taxes takes effect next week.
Some consumers may find it tough to spot the tax increases, unless they're buying big-ticket items, and thousands of small companies will see tax decreases.
But the state's largest companies will see tax bills increase by millions of dollars.
More than half of the new revenue expected over the next two fiscal years will come from businesses paying $200 annual fees plus an increased rate on payroll taxes paid for by companies with more than $62,500 in payroll costs in any single quarter.
There's a cut for businesses with lower payrolls, and that's welcome news for up to three-quarters of all Nevada companies. But the remaining one-quarter, including mid-size businesses, big mines, major hotel-casinos, utilities and other large firms, will pay more.
"It's going to be difficult for these properties to fund these tax increases. Times are very, very tough," said Bill Bible, head of the Nevada Resort Association which represents the major resorts. "But the resort association was supportive of the increases as a method of funding the state's budget deficit."
Hotel-casinos expect to pay more than 20 percent of the $346 million expected to be generated from the payroll levy, known as the modified business tax over the next two fiscal years.
Smaller businesses will feel the pinch, too.
"We're going to probably have an increase in taxes. I don't think it's going to really bad, but it could affect us," said Paula Wright, owner of the J.M. Capriola Co. western wear store in Elko, which is down to seven employees from 12.
"It probably won't make much difference to me, but it might make a difference to other people in this community and that would bother me. If people drive into town and see a lot of empty buildings, that hurts," she said.
"We have been here for 80 years and I hope we can stay for a few more," Wright said.
Besides the modified business tax increase, the annual business license fee increase, from $100 to $200, should produce an additional $61 million. Also, a 0.35 percent increase in sales taxes is expected to raise about $280 million.
In September vehicle registration fees will change, resulting in $94 million in new revenues. The percentage of depreciation on vehicles will be reduced when they're reregistered, meaning fees still will drop, but not as much as they would have under the old system.
"It's a tax increase, but it's somewhat subtle," said Wayne Frediani of the Nevada Franchised Auto Dealers Association, adding that some Nevadans will notice they're getting less depreciation but others won't.
"A lot of people won't pay any attention," said Frediani. "They'll get the DMV bill in the mail and just pay it."
Republican Gov. Jim Gibbons vetoed the increases, but was overridden by legislators who put together a coalition of Democrats and Republicans to get the necessary two-thirds majority.
Also, under a separate increase that wasn't part of the $781 million package, lawmakers approved higher hotel room taxes, paid mainly by tourists, in the Las Vegas and Reno areas. Most of the $200 million or more from that plan will be generated in Las Vegas. Gibbons let that increase take effect without his signature, after he included it in his proposed budget.
Even with the expected $1 billion in increased taxes, legislators had to make cuts in many government services and programs and mandate furloughs for state workers that will cut their salaries by 4.6 percent.
The lawmakers had support from some business leaders and tried to spread the impact of the taxes so consumers wouldn't be too hard hit.
But some experts say the state's low-tax reputation suffered.
"I don't think you're going to take $1 billion out of the economy and say people aren't going to be aware," said fiscal analyst Jeremy Aguero, adding, "Many of those dollars are money that would have been spent elsewhere."
Consumers also will find their spending doesn't stretch quite as far. The sales tax increase will push rates 0.35 percent higher, resulting in rates of 6.85 percent in several outlying counties, including Elko County, just under 7.5 percent in Carson City, just over 7.7 percent in Washoe County, and 8.1 percent in Clark County.
For a Las Vegas family that averages about $15,000 in yearly spending, the tax liability would be $1,215 at the new 8.1 percent rate, up from $1,164, or $41 more a year.
The change in vehicle fees means that someone with a 3-year-old car worth about $12,000 would have annual DMV fees of $158, instead of the $137 that would have been collected if the old depreciation rates had remained in place.
For someone with a six-year-old car worth about $7,500, the fees would be $59 instead of $46, under the changed depreciation rate from 15 percent to 5 percent.
