Nevada Legislature: Wheeler, Knecht roll out budget plan with no tax hikes

Controller Ron Knecht and a group of Assembly Republicans headed by Jim Wheeler of Gardnerville rolled out a budget plan they say would fund the governor’s education enhancements without raising taxes.

And much like Gov. Jim Gibbons did seven years ago, much of the plan is balanced on the backs of local government and public employees.

He and Knecht said Monday their plan would allow the state to drop Gov. Brian Sandoval’s Business License Fee proposal — designed to generate $438 million — and enable the temporary tax increases Sandoval proposes making permanent to “sunset.”

The plan saves money by rejecting the proposed increase in Public Employees Retirement System premiums called for by the retirement system board. Employer payments would be held flat and, they said, any actuarial increases would be paid by employees. In addition, employees at the local level would be required to pay at least half of their PERS premiums. Many of those governments and school districts currently cover the entire PERS premium for workers.

But local governments wouldn’t get the benefit of that reduction in PERS payments. Instead, Knecht and Wheeler said those employer savings would be diverted to the state Distributive School Account — an estimated $334 million over the biennium to replace the loss of the business license tax.

In addition, employer contributions to public health plans would be held flat, generating nearly $12 million more for the state.

Local governments get hit by the part of the plan that would take local property taxes to the state General Fund. They said their plan would take 9-cents of the property tax rate from every county to the state General Fund.

That move, Knecht and Wheeler said, was estimated to be worth $142 million in 2011 and likely would generate significantly more in the coming budget cycle.

A key feature of the plan is to lift the restrictions on nearly $300 million worth of “categorical” funding in the K-12 education budget. Instead of putting affixed amount in each of those categories — such as Class Size Reduction and All Day Kindergarten — Wheeler said school districts would be given the freedom to use their share of that pot in whatever way works best for their county. He said the logic is that Nevada’s county school districts vary widely in their needs for those programs in the governor’s budget.

Wheeler said the money would be awarded as block grants to the districts.

It also extends the pre-payment of the mining tax — worth about $31 million next year — and would close down several “nonessential” programs, allowing the state to sweep about $38.8 million over the biennium into the General Fund.

Altogether, they said the plan generates $6.9 billion in General Fund cash for the biennium — less than the governor’s $7.3 billion program but higher than the Economic Forum’s $6.6 billion in revenue.

“We feel we can actually balance our budget and improve our schools and do all that without raising taxes,” said Wheeler.

Both he and Knecht said the budget plan is not set in stone.

“We hope this will start the discussion about living within our means,” said Wheeler.

“It’s a work in progress,” said Knecht. “And it’s the only proposal that does not require a super majority (two-thirds in each house to pass) because it doesn’t raise taxes.”

He said he expects that leadership in both houses will be open minded about at least considering the plan.