Removing sunsets from existing taxes will generate $879 million

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Lawmakers were told Thursday Gov. Brian Sandoval’s bill making the temporary but sunsetted tax hikes permanent would generate $879 million to balance the recommended budget.

Chief of Staff Mike Willden and budget director Jim Wells told the Senate Revenue and Economic Development Committee the biggest single piece of that puzzle doesn’t go to the General Fund but, instead, directly to K-12 education. That’s making permanent the increased Local School Support Tax rate of 2.6 percent of sales tax revenues. That generates a total of $376 million over the biennium.

In addition, SB483 makes permanent the increase in the Modified Business Tax to all Nevada businesses, generating another $277 million that does go to the General Fund.

The plan also included an estimated $39 million a year from increasing the tax on a pack of cigarettes from 80 cents to $1.20 although Willden conceded the actual revenue form that may fall to $30 million a year or less.

It would generate nearly $10 million over the biennium by raising the Modified Business Tax on mines to the same 2 percent level now paid by financial institutions, significantly higher than other businesses pay.

Those and other numbers presented to the committee Thursday would pump some $502 million into the General Fund and $376 million into the K-12 school budget.

Carole Vilardo of the Nevada Taxpayers Association said she objects specifically to several portions of the plan but, most specifically, to the part that continues to divert the two pieces of the General Services Tax worth about $127 million and $66.9 million to the General Fund for at least another two years.

She was joined by representatives of the Associated General Contractors in arguing the Highway Fund badly needed that money to catch up on long-postponed maintenance and road construction projects in Nevada.

Bryan Wachter of the Nevada Retail Association said that group is willing to support making the temporary tax increases permanent because of the problems in just extending them every two years.

“Businesses require stability and if we have to have this conversation every two years, that doesn’t provide stability,” he said.

The committee took no action on the bill.

The taxes were created in 2009, and lawmakers have temporarily extended them every two years. Sandoval, a Republican, called on lawmakers during his State of the State address in January to make the group of so-called “sunset taxes” permanent in order to help pay for his education initiatives.

“The sunset revenue, or at least that dollar figure, has become part of our base budget,” said Republican Sen. Ben Kieckhefer of Reno, chairman of the Senate Finance Committee. “If we were to extend the sunsets, we would be able to continue what we’re doing right now and nothing else.”

“If we want to make any advancements in our education policy or health care,” he said, “we’d have to go above and beyond what the sunsets brought.”


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