Where to invest Nevada’s profits?
December 2, 2004
If Nevada state government were a publicly owned corporation, its stock would be soaring. Profits are way ahead of schedule. Growth is rampant. The forecasts are strong for the next two years.
So the questions for its board of directors, otherwise known as the Legislature, set to convene in February, are these: Where do we invest? Education? Infrastructure? Services? Or do we start sending money back to the stockholders – the taxpayers.
The rosy picture of the state’s future comes from the Economic Forum, experts who get together periodically to figure out how much money the government is going to have to spend in its next budget.
They saw sales-tax revenues perking along at 13.9 percent so far this year, and said the trend will continue at 10.5 percent next year. That’s a healthy economy.
In all, the forum set $5.75 billion as the figure the government will have – $840 million more than the current budget.
Of course, it’s not all due to a glistening economy. Remember that the chief executive officer, Gov. Kenny Guinn, and Legislature dramatically raised taxes in 2003 and started charging a variety of taxes never before on the books.
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The tax increases didn’t have the effect some had feared: driving away industry, slowing growth, and crippling businesses. The package as it emerged from rough-and-tumble legislative sessions did have a desired effect: spreading the tax burden wider, thereby shoring up the state’s finances at a time when the future strength of the economy remained murky.
With that accomplished, the 2005 Legislature can answer those questions posed above. It should clarify several of the tax questions – such as whether trusts and landlords are considered businesses – with an eye toward trimming back wherever possible.
The first investment should be into the state’s rainy-day fund, which saved it when things got tight two years ago. The second should be in education, where the Millennium Scholarship fund needs bolstering. Then infrastructure, so water supplies and highways keep pace with population growth.
For state taxpayers, the top priority should be a cap on the amount property taxes can rise each year if a house doesn’t change hands. As values soar, people are being penalized for staying in their homes.
We’ll see a budget from Guinn in a couple of months which we expect to be conservative and forward-looking. Just because Nevada has the money doesn’t mean we have to spend it.