Open meeting held on tax plan

CARSON CITY " After facing criticism from Gov. Jim Gibbons and editorial writers about discussing their "secret tax plan" behind closed doors, Nevada lawmakers held a public hearing Thursday on their first major element of the tax plan.

The proposal is to raise a modified business tax for businesses with a total payroll of $250,000 or more, and to decrease it for smaller businesses.

"The time has arrived, it's time to talk about revenue," said Assembly Taxation Chairwoman Kathy McClain, D-Las Vegas. "There's been a lot of input from a lot of people on the revenue structure. We've spent many hours trying to fix the budget without killing every program in the state."

The proposal, which could raise $350 million or more, is part of a larger plan being crafted this week which will aim to raise up to $780 million in revenue " a figure that Assembly Speaker Barbara Buckley confirmed is the agreed-upon number for both Democratic and Republican leaders.

The increase for large businesses could raise the business tax rate, now 0.63 percent, to anywhere between 1 percent and 2 percent. Small business owners would see their rates fall to 0.5 percent.

The proposal, though vague, was met with support from many business lobbyists. But some said they could not support any tax increase without reforms to collective bargaining, prevailing wage agreements and public employee retirement and benefits.

"The majority of people in the building already participated in the largest tax increase ever," said David Kallas, representing the Las Vegas Police Protective Association, which supports an increase to the MBT. "So what's the difference if it was in 2003 or 2009? Let's get the problem solved."

"I've often said, what's the difference if it's the highest tax increase in history or the second-highest? They're going to kill us anyway," McClain replied.

Most lobbyists said they would support an increase and would like to participate in discussions on just how high the tax hike would be.

"Our members understand that times in Nevada are difficult," said Steve Hill representing the Las Vegas Chamber of Commerce. "We understand that additional revenue will be needed to solve short-term problems. We are asking the Legislature for a solution not only for the short term, but for long term as well."

Hill was not the only one raise the question of whether long-term solutions, meaning new taxes, are going to be part of the equation. Lawmakers involved in the negotiations have said that the tax discussions are focused on raising existing taxes, and there is little discussion or support for imposing new taxes.

"It's so late in the session, it would be impossible to fix the tax structure, to try to get a new revenue structure in place," McClain said. "I worry that we're not just digging a hole, but running toward a cliff that we're going to fall off next session."

Senate Taxation Chairman Bob Coffin, D-Las Vegas, disagreed with McClain, and said he wished there had been more support for a net profits tax. Proceeds from new taxes could not be collected immediately, but would set the stage for those collections in the future.

"I'm disappointed that we didn't start a long time ago on things that would work better for the long term," Coffin said. "I'm still pushing behind the scenes to get something enacted now."

Some in the business community withheld support for the proposal because their request for reforms have not yet been met.

"I have not seen any public employee benefit reform, any reform of prevailing wage," said Trey Abney, lobbyist for the Reno-Sparks Chamber of Commerce. "So sitting here today, the Reno-Sparks Chamber could not support this."

Lawmakers say they will likely hold a public hearing on a sales tax increase in the next few days.