Tax chaos hurts business

The Nevada Legislature's inability to pass a tax bill, followed by Gov.

Kenny Guinn's petition last week asking the Supreme Court to force it to do so, is having a chilling effect on the state's business community.

"Nobody's making any decisions whatsoever," said Ray Bacon, executive director, Nevada Manufacturers Association in Carson City, meaning out-of-state manufacturers looking at a possible move to Nevada are holding off making any commitments to relocate.

"And if the gross receipts tax passes then a bunch of companies won't move in and a bunch of companies will move out," said Bacon.

The gross receipts tax, in the form of a franchise tax on business, was still being considered in the final hours of the Legislature's second special session that stalled out last Monday on the final day of the fiscal year.

At one minute past midnight, at the start of the new fiscal year, Attorney General Brian Sandoval delivered to the Supreme Court a petition for a writ of mandamus asking the court to step in and order lawmakers to fund the state's budget for the next two fiscal years.

The court responded later in the day, issuing an order giving the Legislature until end of day Monday to respond.

It also said the governor could make a supplemental filing.

The order invited the two parties to "suggest a resolution to the tension" caused by the requirement to pass any new taxes by a twothirds majority in each house while other bills, including the budget, need only a simple majority.

The budget bill was passed in the regular session, while several tax bills have died because they couldn't garner a twothirds majority in either the Senate or the Assembly.

The situation is unprecedented in Nevada, where the Legislature has always passed a balanced budget, which it is required to do by the state's constitution.

The ensuing uncertainty has already hurt business in the state.

"Every resident agent I've talked to has indicated that new filings are down considerably," said Derek Rowley, president of the Resident Agents Association and president of Corporate Service Center Inc., a resident agent in Reno.

"We've seen this impact for several months now and it has gotten stronger as time has passed," said Rowley.

"But I feel reasonably confident that we'll come out of this OK."

Rowley may have been the only one feeling optimistic last week.

Most lawmakers expressed despair at the stalemate and concern about the long-term effect of the governor's suit.

"Do not think of this as a footnote in history, because the damage that has been done to the Legislature as an institution, as the people's body in a three-branch government is inestimable," said Sen.

Dina Titus (D-Clark County), Senate minority leader, during the July 1 floor session of the Senate.

"I look at what has happened and I cannot help but be discouraged, disappointed and dismayed that the entire state could be held hostage by a handful of people who say, 'my way or no way,' who are not willing to compromise and who want to protect special interests as opposed to the interests of this whole state."

Others were placing blame elsewhere.

"Could any of the lobbyists who have influenced the outcome of our efforts here be held responsible in any way?" asked Sen.

Raymond Shaffer (RClark County) during the session.

"I heard the same rumors and I will follow up on those and if any of you suspect a violation of the law by a lobbyist, I would encourage you to forward that information to Mr.

Malkiewich," said Sen.

Terry Care (D-Clark County), referring to Lorne Malkiewich, the director of the Legislative Counsel Bureau.

The rumors concerned lobbyists for the gaming industry, whom some have accused of intimidating both legislators and others testifying in opposition to the gaming industry's stance on tax issues.

"They told one person he'd lose business and never sell another can of beer," if he testified, said NMA's Bacon.

"It is extortion, or on the edge of extortion."

Others said stalemate was inevitable given the need for a supermajority to pass a tax bill.

That means the budget can pass while the tax bill can be defeated by the exact same votes.

Lt.

Gov.

Lorraine Hunt, quoted on local TV news, compared it to trying to mix apples and oranges.