Ron Knecht: No new or increased taxes needed in state budget

Recently, I joined a group of Assembly members led by Jim Wheeler, some excellent professionals and public-spirited citizens to present a state budget proposal that would secure the important goals Nevadans share with no new or increased taxes.

Our “Balanced Plan for Growth” starts with the $6.3 billion base revenue forecast of the Economic Forum for fiscal years 2016 and 2017 and adds additional non-tax revenues. On the other end, it starts with the $7.3 billion of spending proposed by Gov. Brian Sandoval and carefully reduces that amount by cutting non-essential spending. It yields a $6.9 billion proposed budget that’s a work-in-progress vehicle with which to forge a consensus.

Our budget would increase current spending of $6.6 billion by 2.45 percent year (in current-dollar terms), which is less than the rate of growth of Nevada’s economy. So, it’s a small step toward fixing Nevada’s spending problems and the excess size of state and local government. By working both the revenue and expenditures sides equally, it’s truly a balanced plan.

The Balanced Plan eschews the $438 million Business License Tax (BLT) and the extension of the $545 million in sunset taxes, both proposed by the Governor. The BLT is a complex variant of the business margins tax defeated by voters last November by a margin of nearly 4-1. That proposal was itself a variation of the gross receipts tax defeated in the Legislature in 2003. The sunset taxes are a set of temporary taxes passed in the wake of the Great Recession in 2009 that were extended in the 2011 and 2013 Legislatures when hoped-for increases in revenues failed to materialize due to the tepid economic recovery.

By eschewing tax increases and new taxes, our plan gains a major advantage over all other tax and budget proposals presented this session: It alone requires only simple majorities to pass. If 15 Assembly members or eight Senators are unwilling to vote for new or increased taxes, then no plan requiring new and increased taxes can pass, but the Balanced Plan would still be viable in the face of such opposition.

Our goal is to leave Nevada’s children a much better world of prosperity, freedom and opportunity, as previous generations did for us. This requires two main things:

Economic and effective management of public services, especially Nevada’s poorly performing schools;

Reining in the excesses of public spending, taxes and regulation to restore the traditional vibrant economic growth that has been lost due to the continued growth of those excesses for about 60 years.

The Balanced Plan funds existing and new categorical K-12 programs highlighted by Gov. Sandoval. By providing local flexibility in the allocation of funds to those programs and ceasing to merely throw more money at under-performing providers and those lacking necessary incentives to improve, it reaps savings in expenditures.

By eschewing new and increased taxes and growing state spending slower than the economy, it takes a direct first step to reining in the excesses of government spending and taxing. It shows avoiding tax increases is not only possible, but also essential to the future wellbeing of our children.

The Balanced Plan is fully respectful of the roles and contributions of both the governor and Legislature. It was presented constructively as a work in progress, not a take-it-or-leave-it finished product for an up-or-down vote. Via the plan, we seek to promote a process of deliberation, collegiality and compromise to avoid the stalemates of past difficult budget legislation, especially the 2003 session that required two special sessions to resolve.

It’s detailed in Controller’s Monthly Report No. 3 at Check it out.

Ron Knecht is Nevada State Controller.


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