Democrats rolled out the first of several proposed tax increases Thursday " a Modified Business Tax plan that gives small businesses a lower rate while bumping up the rate for big businesses.
Assemblywoman Kathy McClain, D-Las Vegas, said like other proposals in the works, it would entail amendments to existing taxes because a new tax would take months or longer to begin generating revenue.
"In the interim, I think there's going to be a lot of work done to balance the structure so we have to stick to existing sources," she said during a joint Senate/Assembly taxation committee meeting.
She said lawmakers plan to have a deal between Democrats and Republicans on the tax plan that they can introduce as legislation on Monday.
The core of the plan authored by Assembly Speaker Barbara Buckley, D-Las Vegas, would roll back the existing 0.63 percent tax on business payroll for businesses with less than $250,000 in total payroll each year to a half-percent. Legislative Economist Russell Guindon said that describes 74 percent of Nevada's businesses.
Businesses with larger total payrolls would see a substantial increase in their rate. But, while lawmakers were presented a sheet showing how much revenue different levels of taxation would generate, there was no discussion of which rate they intend to plug into the proposed legislation.
Other changes in the proposal are designed to "capture" tax revenue from business operators who currently escape the tax " primarily independent contractors.
The Modified Business Tax is projected to generate $500 million over the biennium. Increasing the 0.63 percent to 1 percent " the lowest option on the sheet " generates an additional $202.7 million. Raising it to 2 percent " the highest option " would generate an estimated $788.8 million. But McClain, who chaired the session, said lawmakers don't intend to do that.
Some members of leadership indicated privately the rate being looked at is 1.25 percent, which would pump $349 million into the state's General Fund " just over one-third of the $1.1 billion needed to balance the state budget.
Business representatives in the audience almost unanimously said they support the concept of raising the business tax and the tier system giving small business a break.
However, lobbyists for the resort industry, liquor industry, contractors and others said they can't endorse it until they know the tax rate lawmakers intend to impose.
"Obviously I think this is something, as a state, we must do," said Alfredo Alonso representing Southern Wine and Spirits.
Gary Milliken for the Southern Nevada Associated General Contractors said that group realizes lawmakers have made all the cuts they can and that, "It's time to raise revenues."
Former Assemblyman David Goldwater, principal of Goldwater Capital, an investment firm, urged lawmakers to raise the modified business tax.
"I paid more in toner in my business than I paid in the modified business tax," he said.
Steve Hill of the Las Vegas Chamber of Commerce said his members recognize that lawmakers need more revenue. He urged a long-term solution, not just a short-term fix. He also praised the plan as recognizing that small businesses suffer more in economic hard times than larger operations.
But the Reno-Sparks Chamber of Commerce opposed the plan. Spokesman Trey Abney told lawmakers that group can't support any increase until they see reforms in six key areas, including reductions to public employee benefits and retirement, implementation of the SAGE Commission recommendations, changes in collective bargaining for local government and school employees, relaxing prevailing wage requirements and improved collection practices for money owed the state.
Until some of those changes move forward, he said, "the chamber cannot support any tax increase."
Republicans said after the meeting they could make only general comments until they study the proposal. Sen. Randolph Townsend, R-Reno, said he hadn't seen it until he arrived at the meeting.
As for the idea of increasing the business tax, he said: "Without question, that has to be part of the solution."
Assemblywoman Sheila Leslie, D-Reno, said more pieces of the puzzle will be revealed today and Saturday.
Contact reporter Geoff Dornan at gdornan@nevadaappeal.com or 687-8750.