Assembly Republicans on Wednesday proposed a 2 percent reduction in sales taxes, while starting to tax some services and cutting several programs, as part of their plan to balance Nevada's budget.
The plan would omit a controversial gross-receipts tax on businesses, and the sales-tax reduction would slash state revenues by about $627 million, the equivalent of $300 each for the state's 2 million residents.
It calls for a half-percent increase on large casinos' gross revenues as part of a proposal to generate $300 million a year, and would balance the budget by eliminating nearly $270 million in costs over two years.
Minority Leader Lynn Hettrick, R-Gardnerville, flanked by most of his 18-member delegation and a few members of the Senate, emphasized the proposal is conceptual.
"This is not in the form of a bill," he said.
The proposal would generate the lion's share of its new money from a new half-percent tax on all real property transfers and an increase in the existing gaming tax.
The gross receipts tax on large businesses in the state, proposed by the Governor's Task Force on Tax Policy and included in Gov. Kenny Guinn's budget, is not in the GOP proposal -- nor is a tax on amusements and admissions.
Hettrick said the real property transfer tax would generate an estimated $137.9 million in 2004 and $151.1 million in 2005. He said it's an ideal revenue source because people pay it only when they buy or sell real property. He also said the transfer tax has been growing more than 10 percent annually.
Nevada's largest casinos, Hettrick said, would be hit with a half-percent increase in gross-revenue tax to 6.75 percent. Smaller casinos would also get proportionate increases. Altogether, the two would generate $46 million in 2004 and $47.7 million in 2005.
The Republican plan also proposed cutting out some of the governor's proposed increases in corporate and business fees paid to the Secretary of State's Office -- boosting only the securities licensing fees to raise $2.5 million a year.
The only business tax proposed in the plan is a $100 a year annual business license fee, instead of the $25 one-time fee businesses now pay.
Other than that, the plan would mimic task force proposals to double cigarette tax to raise $60 million more a year and nearly double liquor taxes to generate about $18 million a year.
A 2 percent cut in sales tax, much of which is paid by tourists, would cost the state budget about $627 million. A 25 percent reduction in the governmental services tax on vehicles would cost about $56 million a year. Hettrick said the sales tax cut would be made up by a 4.5 percent transaction tax on services. Non-business services worth less than $50 would be exempt, as would such things as insurance premiums, garbage disposal, health care and day care.
Hettrick said legal fees, architect fees and other such services would be taxed under the plan.
"This change adds stability to our present system while saving meaningful money for the majority of Nevada families," he said.
The rest of the budget would be balanced by cuts in a long list of agencies and services. That includes cutting off any increase in the Nevada Check Up program which provides health care benefits to the children of the working poor and Senior Rx.
Gov. Kenny Guinn proposed substantial increases in both those programs. Under the GOP proposal, both those programs would be capped at their current number of clients.
Guinn said eliminating those enhancements was shortsighted since those children, for example, will just end up in the emergency room when they need care and the state will pay more in the long run.
The GOP plan cuts budgets including welfare by lowering the estimates of how much those caseloads will rise over the coming two years. Their proposal takes $28.8 million out of the welfare budget alone.
"This does exactly the opposite of what the governor said," said Bob Fulkerson of Progressive Leadership Alliance of Nevada. "It balances the budget on the backs of the poor, the children, the elderly. It's harmful. It's shocking."
It also reduces funding for the state's universities by about $68.2 million over two years.
Nevada's university system chancellor, Jane Nichols, called Hettrick's plan "a disaster" for higher education. She said it would force state colleges to cap enrollment and make other major cutbacks.
The Republican plan eliminates the governor's proposed full-day kindergarten and makes other cutbacks in education funding totaling about $40 million -- as well as eliminating Henderson State College, which was founded just last year -- a $3 million savings.
The Family to Family program would be eliminated, saving about $2.9 million, and $4 million in disaster relief would be cut from the proposed budget. The workers compensation fraud unit would be eliminated, saving another $4.5 million over the biennium.
With all the cuts, which are not all listed here, Hettrick said, Guinn's $704 million shortfall over the next two years could be reduced to $511.5 million.
Guinn said he needs to study the plan but that he doesn't think the budget can take more cuts without serious damage to programs.
"I'm drawing my line in the sand at $704 million," he said.
Guinn said cuts much beyond that "are not going to roll very well."
Hettrick said the GOP's final contribution to the tax debate will be proposals for "substantial procedural and structural reforms so that we do not end up in this position again."
Those, according to Assemblyman Ron Knecht, R-Carson City, include a form of budgetary cap to keep the state's spending from growing beyond a certain rate.
Hettrick said the plan will be included in existing measures as the tax debate continues, but not every member of the Assembly GOP caucus agrees with every element of the proposal.
The Associated Press contributed to this report.