Lawmakers review tax history, future options

Nevada lawmakers are reviewing major tax studies going back several decades as they try to find solutions to the nearly $2.4 billion hole in the proposed state budget for the coming two fiscal years.

Senate and Assembly Taxation committees on Thursday heard a detailed history of the state's reliance on gambling and tourism industries for revenue, highlighting the fact that almost a month into the 2009 session the panel has yet to work on anything specific.

But Senate Taxation Chairman Bob Coffin, D-Las Vegas, said he's "not letting the grass grow under my feet." He asked staffers to prepare a general estimate of revenues produced from various increases to existing taxes.

The Democratic leadership in the Assembly is building its own list of ways to generate revenue and a detailed list of what can be cut, according to Assemblywoman Sheila Leslie, D-Reno.

Instead of debating specific tax increases, Thursday's hearing focused on a review of tax studies that generally have come to the same conclusion: Nevada relies too heavily on gambling and sales taxes, exporting the burden of funding state services to those who live outside of the state.

They also make recommendations to generate more revenue: raise gambling, cigarette and liquor taxes.

Nevada lawmakers over time built a tax structure that produces a shrinking tax base even as the population grows, consultant Jeremy Aguero testified.

"Call it patchwork, call it piecemeal, call it what you will, it's a reflection of our history," he said. "It's worked well for us at times and not so well at times, but it is not an accident."

Assemblyman Harry Mortenson, D-Las Vegas, suggested at the hearing that the Legislature float a bond to cover the budget shortfall. He said lawmakers could impose an unspecified new tax and use its proceeds to pay off the bond over time.

Lobbyist Marvin Leavitt, a former Las Vegas finance director who represents Henderson and Las Vegas, called Mortenson's suggestion "bad fiscal policy." He said bond purchasers would request an unusually high interest rate if payments were based on a new tax source.

"People will support tax increases they don't have to pay," said Nevada Taxpayers Association president Carole Vilardo, noting the public approval in November of an advisory question to increase the room tax rate by 3 percentage points in Clark County.

Vilardo suggested legislators consider a use tax, similar to a sales tax, on complimentary meals offered by casinos, companies and other businesses. She also said that depending on what Congress does, Nevada and other states likely someday will levy sales taxes on most Internet sales.