Administration stumbles over cost of collecting proposed taxes
Gov. Kenny Guinn’s tax plan stumbled briefly during legislative hearings Friday when his taxation director was unable to explain how much money it would cost to collect the governor’s proposed new taxes.
Senate Majority Leader Bill Raggio asked whether there would be costs to collecting increased cigarette, liquor and business license taxes and what the total estimated cost of collecting the proposed business gross receipts tax would be.
Taxation Director Chuck Chinnock said he couldn’t answer the question, but would present lawmakers with data when the issue comes up during the 2003 Legislature.
Raggio repeated the question several times, but was unable to get even an estimate out of Chinnock, who said they still were working on the costs.
“I find it hard to believe some discussion hasn’t been had about the potential cost in your department,” said Raggio, R-Reno. “We need to know what potential cost and expense would be if these things occur, and I’d like some estimate today.”
“I don’t have anything today,” said Chinnock.
“What’s so special about today?” Raggio asked. “Was this supposed to be an easy ride?”
“I think that’s the kind of information we expected to get today,” he said.
Deputy Budget Director Andrew Clinger attempted to rescue the situation, saying the governor built $12.5 million into the 2004 budget and $20 million into 2005 to expand Taxation Department staff to handle the business tax and that the budget office and Taxation Department had worked on developing accurate estimates of what those costs would be.
He said after the meeting that amount actually covers all the costs of collecting the new taxes proposed to balance Guinn’s budget.
As for the increases to existing levies, Raggio said he doesn’t think there should be any added cost.
Clinger confirmed that judgment: “It was not anticipated there would be additional costs.”
Chinnock was also questioned about the decrease in collections by taxation auditors over the past two years. Collections in 1999 were nearly double the $11.1 million collected in 2001. Since only about half the money owed is actually collected, that means the department’s 60 auditors are each generating less than $100,000 a year.
He said it’s a combination of strict application of the Taxpayer Bill of Rights and random selection of which businesses to audit.
Assembly Minority Leader Lynn Hettrick, R-Gardnerville, said that makes no sense. Auditors should waste less time on small businesses and instead review large operations with large tax bills.
“The statute doesn’t prohibit us from doing risk-based audits,” he said. “A person who pays more taxes is more likely to have a mistake.”
Chinnock said he would support looking into that.