Playing good defense in the Legislature
Nevada Appeal News Service
The 2009 session of the Nevada Legislature wasn’t great for business, but lobbyists say it very easily could have been a lot worse.
After 90 days of playing defense, lobbyists for business think they managed to stave off some potentially troublesome measures – and even managed to score a few victories.
“It was better than we expected,” says Tray Abney, director of government relations for the Reno-Sparks Chamber of Commerce.
With Democrats in control of both the House and the Senate, Abney says business groups came into the session worried about whether their voices would be heard and concerned whether they had the horsepower to derail legislation unfriendly to business.
The Legislature approved the biggest tax increase in the state’s history – overriding the veto of Gov. Jim Gibbons to do so – and businesses will pay a good chunk of the $780 million in new revenue generated during the next two years.
For some industries, the tax package represented a victory of sorts. The Nevada Mining Association, for instance, worried that the industry would be singled out for a big tax increase to help balance the state’s budget.
In the end, says association President Tim Crowley, “We were treated fairly, and we supported the tax package.”
The budget shortfall that produced the tax increase also produced sharp cuts in the size of the state government. That’s good news for business groups which long have contended that state government is too big, says James Endres, a lobbyist with the law firm McDonald Carano Wilson in Reno.
But the recession also brought the tax increase.
“Nevadans had to pay dearly for that reduction in the size of government,” Endres says. As the economy stays weak, more hard choices about taxes and reduction in state services may lie ahead, he says. Abney and other business lobbyists, meanwhile, say they managed to stop a number of proposals that would have burdened businesses.
A package of workers compensation measures that might have increased workers comp costs by as much as 10 percent, for instance, was diluted. The package included a proposal that would allow employees to sue for workers comp benefits and a proposal that would have shifted the burden of proof about workplace injuries to the employer from the employee.
Also repelled was a measure that would have required that businesses with multiple locations pay a state business license tax of $200 for each location. Current law requires only that they pay $100 for one location. Although the fee for the license was increased to $200, Abney says business groups marked a victory when the fee wasn’t extended to branch locations.
Tom Clark, director of legislative and regulatory affairs in Reno for the law firm of Holland & Hart, isn’t so sure.
The fee, Clark notes, now applies to companies that merely incorporate in Nevada and actually conduct their business elsewhere.
While an increase in the fee to $200 from $100 may not look like much, Clark says some will look at it as a doubling of the state’s fee – and that may discourage business owners from incorporating in Nevada.
The Nevada Motor Transport Association and business allies, meanwhile, beat back a couple of tax plans that targeted the trucking industry. One would have levied a tax based on the weight of a truck and the miles it traveled in the state; the other would have boosted the fuel tax on diesel used by trucks by 7 cents a gallon.
Business groups contended the tax proposals would discourage the growth of the logistics industry in Nevada and would boost the costs paid by businesses and consumers alike.
On a brighter note, Abney says the Legislature agreed to undertake an interim study of the logistics industry and its needs before lawmakers gather again in 2011.
While business groups spent much of the session playing defense, business interests from northern Nevada scored a big win with legislative approval of a measure to enable the Regional Transportation Commission to invest $250 million in roadwork during the next five years. Some 3,000 jobs will be created, proponents say.
In the renewable energy arena, Clark gives the Legislature high marks for its decision to create a new Renewable Energy and Energy Efficiency Authority and establish a Nevada Energy Commissioner.
“This shows that Nevada is serious about developing renewable energy,” he says.
Judy Stokey, director of governmental affairs for NV Energy, says lawmakers also completed other major pieces of energy-related legislation including:
• A requirement that NV Energy’s long-term plans now include provision for transmission lines to carry energy from regions where renewable energy facilities are likely to be located.
• Creation of a fund for renewable energy, energy efficiency and energy conservation loans, using federal stimulus money. It also creates partial abatements of sales and property taxes for wholesale power producers who use renewable sources.
What the increase in state taxes means for business Here’s an analysis by the Reno-Sparks Chamber of Commerce of the effects on business from the $1 billon tax increase approved by the Nevada Legislature:
• The payroll tax rate declines to 0.5 percent of payroll from the current 0.63 percent for the first $250,000 of annual payroll. It increases to 1.17 percent from the current 0.63 percent for annual payroll of more than $250,000. (This doesn’t apply to banks, which already pay a higher rate.)
• The sales tax increases by 0.35 percent, bringing the rate to 7.725 percent in Washoe County.
• The state’s annual business license fee, which now is paid by companies that are incorporated in Nevada even if they don’t business here, increases to $200 from the previous $100.
• The depreciation allowance on motor vehicles is delayed for one year, and the schedule is altered for future years.
A business with a $10 million annual payroll will pay 83 percent more in payroll and business license taxes under the new package, the chamber estimates. That business would pay $115,525 in taxes now compared with $63,100 before approval of the measure.