With few solutions in hand for dealing with a worsening budget crisis, Nevada lawmakers heard business leaders, policy experts and citizens talk Thursday about ways to change the state's tourist-dependent tax structure.
At a joint meeting of Senate and Assembly Taxation committees, lawmakers heard the same refrain " it's unwise to single out specific industries for tax increases, the state must diversify its economy, and more tax revenue is needed to maintain a struggling education and social services network.
Bill Bible, head of the Nevada Resort Association which represents major hotel-casinos, underscored the severity of the fiscal crisis by noting half of the state's revenue comes from taxes related to the gambling industry.
Major casinos are seeking bankruptcy protection, and the industry overall is suffering financial distress that was previously thought "unimaginable," Bible said.
"Any thoughts that the gaming community is recession-proof have been completely disabused," Bible said. "This harsh economy has laid bare Nevada's overreliance on visitors and tourism, and has placed Nevada's government at the mercy of a volatile economic storm that is endangering the total economy of the state."
Bob Fulkerson of the Progressive Leadership Alliance of Nevada, an activist group, said the state should double a modified business tax to raise $279 million, using a tiered system that would protect smaller businesses. He also proposed a tiered system for collecting business profit taxes, which he estimates could capture $200 million annually.
"Nevada's tax system is not just broken, it is also fundamentally unfair," Fulkerson said. "It balances the state's meager budget on the backs of those who can least afford it, and protects some of the state's biggest and most profitable businesses from meaningful taxation."
Fulkerson said that he also would like to see Nevada's mining industry pay more taxes. The group advocates doing away with most of the deductions the industry enjoys. If lawmakers eliminate deductions " except those for transportation and energy costs " that could raise an additional $141 million, he said.
"Singling out mining for industry-specific taxation is not only fair, it's responsible," Fulkerson said. "There are a lot of people in Nevada, especially low- and middle-income workers, who can legitimately complain that the state's unfair tax system is taking them for a ride. Mining can't."
Tim Crowley, president of the Nevada Mining Association, countered that the recession has also hit the mining industry and the values of virtually all minerals except gold and silver have plummeted. He cautioned against relying on the mining industry since the price of gold is so volatile, and changes value after events such as the collapse of Bear Stearns, changes in oil prices, and corporate bailouts.
Crowley said the mining industry would support broad-based business taxes, but added, "As Nevada looks to stabilize its revenue stream, it is clear that it would be unwise to place a disproportionate reliance on the value of gold."
Crowley also said the industry pays the pays over $14,000 in taxes per employee, higher than the most other business sectors. He said that mining is the 16th largest industry in the state, and "despite its relatively small size, the industry is a strong and generous supporter in communities throughout the state."
As the lawmakers listened to witness after witness, Gov. Jim Gibbons issued a statement saying they should "provide Nevada citizens with a clear indication of whether they intend to raise taxes to resolve the budget crisis."
Gibbons, a foe of higher taxes in most cases, said the lawmakers should bring their tax proposals "out of the shadows and let the public see what they are up to." He added that's better than "springing a massive tax hike on Nevadans in the waning days of the legislative session."