Guinn seeks tax increases
Saying it would be “a choice of political cowardice” not to fund the needs of seniors, needy children and students, Gov. Kenny Guinn asked lawmakers Monday to support tax increases totaling just less than $1 billion to balance the budget.
Even with that much money, however, Guinn said most of the state’s agencies are getting only enough money to maintain existing programs. The budget totals $4.89 billion in general fund money — $1.1 billion more than the current $3.79 billion budget.
Budget Director Perry Comeaux said the spending plan contains about $300 million for enhancements — most of it going to education and human services programs.
In his third State of the State address, prior to the opening on Feb. 3 of the 2003 Legislature, Guinn warned lawmakers “the state of our state is fragile.”
Refusing to deal with the state’s financial shortfall, he said, would leave thousands of seniors without nursing home care, affordable medicine and their independence, force 27,000 new students into crowded classes without new textbooks, deny thousands access to higher education, eliminate health insurance for 25,000 needy children and cut support for Medicaid recipients and the mentally ill.
“To me this is not a choice worthy of our citizens,” he said. “It is not a choice for leaders, but a choice of political cowardice.”
He said his administration has spent four years cutting the budget, improving efficiency and privatizing where it would save money. He said this budget continues that theme by permanently eliminating 500 of the 1,500 vacant positions in state government.
But he said it would be wrong to balance the budget without more revenue.
“I refuse to balance this budget on the backs of our children, senior citizens and the poor,” he said.
He said he wants lawmakers to increase five existing taxes by April 1. Cigarette taxes would rise 70 cents a pack to $1.05, generating nearly $243 million over the biennium. Liquor taxes will go up 89 percent to raise another $35 million and restricted slot license fees will rise to add nearly $5 million to state coffers.
But the lion’s share of the new money for 2004-05 will come from business. The Business License Tax will triple to $300 per full-time employee each year, generating an estimated $366.8 million over the next two years. Raising the Secretary of State business and corporate fees will bring in another $56.9 million.
The advantage of raising those levies by April 1 is that, in addition to the $707 million they will raise over the next two years, they will add nearly $84 million to this fiscal year’s budget.
In addition, Guinn proposed a business license fee to bring in $19.4 million over the next two years, a new tax on a wide range of amusements and spectator events such as night club shows, concerts and professional sports contests to collect $167 million and a 15 cent state property tax — which would add $99 million a year to the pot beginning in 2005.
Altogether, those adjustments would put just under $990 million more in the state treasury over the next two years.
Half of the money to enhance and expand programs will go to kindergarten-through-12th-grade public education. That includes $24.2 million to provide full-day kindergarten in more than 400 Nevada schools designated as “at risk.”
Another $37.8 million is set aside for new books and other teaching supplies, $33 million in special pay for teachers willing to work in at risk schools and those who teach math and special education. More than $10 million will pay new teachers $2,000 signing bonuses and $35 million will cover 2 percent raises for teachers Guinn promised two years ago.
Higher education will get a total of $80 million to handle growth of more than 6 percent a year in the university system and to offset the drop in estate tax revenues.
Another $47 million will expand programs within the state Human Resources Department. That includes $5 million to expand the Senior Rx program to help up to 12,000 seniors pay for prescription drugs and $5 million to expand Nevada Check Up to provide medical insurance for up to 10,000 more children instead — a total of 35,000.
Medicaid waivers for seniors, the physically disabled, mentally retarded and adult group homes will also get more funding although the maximum welfare grant of $348 a month will remain the same.
Guinn said he will ask lawmakers to approve a quarter-percent gross receipts tax recommended by the Governor’s Task Force on Tax Policy. He said such a tax is a key to stabilizing Nevada’s tax base.
The increased business license tax will cover that gap until the new tax is up and running in two years. After that, the business license tax will drop back to $140 a year per worker.
He also urged lawmakers to consider other revenue methods including changing the constitution to allow different property tax rates for homes, commercial business and land development.
He asked them to also consider professional, business and discretionary taxes on services.