Sen. Ben Kieckhefer, R-Reno, and Assemblyman P.K. O’Neill, R-Carson City, laid out a laundry list of reforms to attendees at the Northern Nevada Development Authority breakfast Wednesday.
Kieckhefer said one he and O’Neill worked on together was the bill changing Nevada’s prevailing wage law that sets pay requirements for public works projects. He said the changes should save school districts up to $250 million over the next decade.
O’Neill said there also were significant changes to construction defects laws and collective bargaining. And there were modifications to the Public Employee Retirement System, reducing the annual credit for new employees from 2.5 percent a year to 2.25 percent sponsor Sen. Michael Roberson, R-Las Vegas, said should eventually save $1 billion.
Both O’Neill and Kieckhefer pointed to the Educational Savings Accounts legislation they say has Nevada at the forefront of school choice reform.
They did so after Mendy Elliott of Capital Partners started the meeting by decrying the lack of change sought by businesses.
She pointed to “the fact that we have this Republican Legislature and we couldn’t get some reforms passed.”
Specifically, she pointed to the failure of lawmakers to adopt Assemblyman Randy Kirner’s plan to convert PERS into a modified 401K system instead of a defined benefit retirement plan.
Kieckhefer said the new estimated revenues contained in the funding package go primarily to fix the state’s public education system. He said to accomplish that goal, the majority of that new money is targeted, not part of the general education funding pot.
“We decided to spend money in areas of higher need,” he said pointing to English Language Learners, special education and areas with high poverty levels.
“It’s going into specifically funding the needs we’ve been talking about for years,” said O’Neill joining him.
He said all those education reforms also come with outside studies to measure whether they are accomplishing their goals and if they don’t perform he’ll be voting to cut that funding next session.
The specific objections to the tax package focus on the “commerce tax” on business revenues.
NNDA members were also given a primer on how the commerce tax works by economist Eugenia Larmore of EKAY Economic Consultants. She said the most heavily impacted category was utility businesses followed by retailers. But overall, she said just more than 8 percent of industry in Nevada will feel the commerce tax. The biggest reason is companies grossing less than $4 million — the majority of Nevada businesses — are exempt. In addition, she said companies can deduct half of what they pay in the commerce tax from what they pay in the Modified Business Tax.
Kieckhefer said the purpose of the commerce tax is to broaden the tax base and draw in more businesses than the estimated 5 percent of companies that pay the MBT.
MBT hits hardest on labor-intensive industries like Nevada’s hotel/casinos.
A key advantage of the commerce tax, he said, is about 30 percent of it is going to be paid by out-of-state companies that currently pay little or nothing in Nevada taxes because they have few if any employees to pay the MBT. The commerce tax, he said, is aimed at the revenue they generate in Nevada.
As for concerns the commerce tax rates would just be raised in future legislatures to raise more money, both men said there’s going to be changes to fix problems as they are discovered but they doubt there’s going to be wholesale rate increases.
Elliott again expressed concern there’s going to be pressure to change those rates and lawmakers “are going to pit industry against industry.”
“That’s a real concern,” she said.
Kieckhefer took issue with that saying it’s not going to be lawmakers pitting businesses against each other.
“It’s going to be businesses going in and trying to cut a break for their own industry, not the legislators,” he said.
It was the second time in two days the two lawmakers representing Carson City faced members of the public and business community to describe their part in the 2015 Legislature.
Both said they were elected to make tough decisions and had no regrets about supporting the tax package designed to fund major education reform.