Sandoval won't raise payroll taxes

CARSON CITY (AP) - Nevada Gov. Brian Sandoval won't allow payroll taxes to increase with the sunset of a tax package approved by lawmakers two years ago, the administration said Wednesday.

Chief of Staff Heidi Gansert said the first-term Republican governor will adhere to his pledge not to raise taxes in the recession, even though it will widen the budget shortfall by $18 million.

The Las Vegas Sun reported that Sandoval's promise to allow the 2009 tax measure to expire included reduced payroll taxes for small businesses that also would have ended on June 30.

To make the tax increase more palatable to conservatives, the 2009 bill reduced from 0.63 percent to 0.5 percent the payroll tax rate on the first $62,500 of payroll a quarter, or $250,000 a year. Any payroll over that amount has been taxed at 1.17 percent since July 1, 2009.

Gansert later Wednesday said the payroll tax rate would remain at 0.5 percent for the first $62,500 a year of an employee's wage. Higher wages will be taxed at .63 percent, down from the level passed by lawmakers in 2009, the Sun reported.

Sandoval has not released details of his budget plan, which he will present in his State of the State address Jan. 24.

The state Economic Forum has projected Nevada will have $5.3 billion in general fund revenues to spend over the next two years. That leaves a budget shortfall estimated between $1.1 billion and $3 billion to maintain existing levels of state service, economists have said.