Tax plan adjusted as deal on budget nears completion

A deal on the budget is all but finalized -- including a better pay raise for teachers and more flexibility for school districts in using class-size reduction money.

The deal reportedly includes 2.75 percent raises for teachers in fiscal 2004. The extra three-quarter percent over what Gov. Kenny Guinn proposed is designed to cover the increased cost of retirement system premiums for teachers. They would get a 3 percent raise in fiscal 2005 -- which is not in Guinn's budget and will cost the state just about $56 million.

The Senate reportedly agreed to fully fund the $220 million for class-size reduction, and the Assembly agreed to allow school districts flexibility in using that money across grades 1-5, instead of grades 1-3 only.

That puts the total new revenue needed at just over $860 million for the biennium. That doesn't include several other revenue items including $68 million in one-time federal money, which will be needed to balance the state budget.

With about $860 million as a goal, the Senate Taxation Committee met Friday night to beef up its $558 million tax package. They bumped up cigarette taxes by about $16 million, jumped the proposed entertainment tax from 8 percent to 10 percent -- staff will have to determine what that generates -- and added a 1 percent room tax worth about $30 million.

The committee also approved an additional one-quarter percent increase on each tier of the gaming tax; again staff must determine what that brings in.

Chairman Mike McGinness, R-Fallon, said the big item is a payroll tax, which should more than make up for the reductions by itself. Once in full operation, it should bring in nearly $220 million a year.

He said the vote was designed to send a tax plan to the Senate floor that generates enough money to cover the proposed budget.

He said details will be hammered out on the floor and, again, told his committee everyone can propose whatever amendments he or she believes are appropriate and vote his or her conscience.

Negotiations to finalize both tax and spending plans continued into the evening Friday.