Abby Johnson: Study long ago foresaw Nevada’s current fiscal woes
Once upon a time, a generation ago, the Nevada Legislature asked the Urban Institute and Price Waterhouse to study the “Fiscal Affairs of State and Local Governments in Nevada.”
The Price Waterhouse study looked at Nevada’s tax system and economy, and relationships between state and local government. The study found that “the system reflects the history and character of Nevada’s people.” Rejection of taxation, the tension between gambling culture and community, and the growth and dependence on federal expenditures were consistent themes.
The 1988 study also predicted that the fiscal system would be challenged during times of explosive growth and recession. The study provided both policy direction and specific recommendations. And it warned that Nevada’s economy was not recession-proof. At the time it was considered a wake-up call, but decades of lawmakers have been hitting the snooze button. Most difficult recommendations were never implemented.
Now, 22 years later, Nevada’s economy has nosedived like a toboggan on an icy slope, dragging the state budget along for the ride. At stake is the safety net of essential services for the disabled, mentally ill, elderly and poor, education at all levels, and Nevada’s future.
The PW study was meant to head off the revenue calamity that was foreseen. But essential reforms were not made in the good times, and now a state budget gap of more than $1 billion looms.
Some key findings and direction of the report: Constitutional prohibitions of specific taxes should be repealed to provide more flexibility, says the report, and amending Nevada’s constitution is cumbersome and difficult. “Growth in education, prisons and medical assistance expenses are major factors leading to budgetary imbalance.” Sound familiar?
Some suggestions to equalize and broaden the tax structure: Provide property tax relief based on low income rather than age; assess all property annually at
100 percent of market value; tax services, drugs, and even food (which I oppose.) Continue the mining net proceeds tax “if supplemented with a severance tax based upon gross yield in order to reduce revenue instability and to insure that all mines pay some tax to compensate for environmental impacts.”
The study did not support a lottery but that recommendation needs a second look when the Legislature commissions a revision of the study in 2011. (Forty-three states now have lotteries.)
The happily-ever-after ending will come when the Legislature and governor work together with local governments to overhaul Nevada’s fiscal affairs. A safety net for tough times and the ability to broaden and equalize revenues will ensure essential stability and prosperity for Nevada’s future.
• Abby Johnson is a resident of Carson City, and a part-time resident of Baker, Nev. She consults on community development and nuclear waste issues. Her opinions are her own and do not necessarily reflect those of her clients.