Senate Minority Leader Dina Titus, D-Las Vegas, Monday accused Gov. Jim Gibbons of holding education hostage to give businessmen a tax break.
"He said he's not going to accept any DSA (education budget) proposal until he gets several things including the modified business tax," she said.
Titus said it was Gibbons who stood on the Supreme Court steps and called for the amendment to require lawmakers pass public education budgets before funding any other state agencies.
"He is the person who said you can't hold education hostage," she said. "But it's being held hostage for his personal agenda."
The key issue is the temporary decrease in the Modified Business Tax approved by the 2005 Legislature. The tax was cut from 0.65 percent of gross payroll to 0.63 percent but that decrease will sunset effective July 1, bumping the tax rate back up to 0.65 percent.
Gibbons called on lawmakers to cut the tax even further to 0.62 percent. Each point is worth about $4.5 million a year to the state treasury - $9 million over the biennium.
After Democrats refused, he greed to leave the tax at 0.63 percent if lawmakers would put the $9 million into his school empowerment program. But Democrats argue that money could add more all day kindergarten classes.
Titus said Gibbons has been willing to compromise on everything except the tax.
"He said he's will not fund anything unless he gets that business tax rollback," said Titus.
She said the irony is businessmen have not been demanding that tax break, that they are supportive of better funding for education.
But because the constitution now requires lawmakers pass the education budget before any other, "we can't move on, can't finish up the session."
Sen. Maggie Carlton, D-Las Vegas, agreed: "He stood over there on the Supreme Court steps with Dawn and said he will not allow education to be held hostage."
Tray Abney, of the governor's office, said the governor promised voters he wouldn't increase taxes.
"They're trying to force a tax increase on him," he said.
"They could pass the DSA today if they take care of the business tax."
Senate Majority Leader Bill Raggio, R-Reno, said he thought earlier Monday they would get an agreement.
"I have nothing to tell you," he said leaving the office at 8:30 p.m. "I thought we were close to having an agreement, but we don't."
He said the reactions of people involved in the negotiations aren't helping.
"The more people decided to get irritated about it, the less chance there is for success."
In addition to the negotiations, the Progressive Leadership Alliance of Nevada, a nonpartisan coalition, protested in front of the legislative building, saying Gibbons' budget priorities were out of line.
The lawmakers' proposal also includes numerous fee hikes, mainly affecting interest groups willing to accept them. The lawmakers had made major progress on the budget during closed-door meetings Saturday, in what one participant described as a "logjam" breaking.
The plan was presented early Monday to Republican and Democratic caucuses in the Senate and Assembly, as bill-drafters worked to turn the deal into a printed Assembly bill to be introduced and voted upon later this week.
The K-12 public education funding amounts to about $2.3 billion. As part of the lawmakers' offer, there's an increase in full-day kindergarten and some more innovative school program funding - although not to the level that Assembly Democrats had initially hoped for.
Highway funding isn't part of the plan, and will be handled in a separate bill - one that Gibbons has threatened to veto if it contains new taxes. That's despite a tentative offer from the trucking industry to sign off on a 3-cent-per-gallon increase in diesel fuel taxes to help overcome a huge shortfall in highway construction funds.
In the final budget negotiations between Senate and Assembly leaders, those involved had said they were very close for several days but had differences that were more philosophical than fiscal.
All sides said they were headed home for the night. Raggio said efforts to find a compromise will resume in the morning.
The Associated Press contributed to this story.
• Contact reporter Geoff Dornan at gdornan@nevadaappeal.com or 687-8750.