Senate Majority Leader Michael Roberson on Tuesday proposed an amendment that would cover most of the shortfall in Gov. Brian Sandoval’s budget with a $1 per pack increase in the state’s cigarette tax.
The proposed amendment was presented during the work session on SB483, the bill that would extend and make permanent the “sunseted” tax increases used to balance the current budget.
That bill already includes a 40-cent per pack cigarette tax hike proposed by Sandoval, generating $81.2 million in revenue.
Raising that increase to $1 would raise the tax from 80 cents to $1.80 per pack and add another $111.1 million to the total cigarette tax revenue.
That added money would erase more than three-quarters of the $144.1 million shortfall caused by the tax credits the state has granted to companies including Tesla.
The shortfall appeared during the Economic Forum meeting May 1 when analysts estimated the impact of those tax credits over the current and coming two fiscal years at $166.9 million — a factor that was not included in the proposed budget.
Guindon said revised projections for the Minerals tax and Local School Support Tax cut that shortfall to $144.1 million.
With the added revenue from raising the cigarette tax hike from 40 cents to $1, Roberson told the Revenue and Economic Development Committee the shortfall is cut to just $33 million.
Sen. Ben Kieckhefer, R-Reno, said that, however, assumes the governor’s proposed business license tax also passes this session. He and Roberson said both the sunsets bill, the amendment and the business tax are necessary to generate the $7.44 billion in General Fund revenue needed to pay for the governor’s proposed budget.
Extending the sunsets will generate an estimated $897 million over the biennium. With the $1 tax hike, total revenue from the cigarette tax is estimated at $348 million. The latest estimate for the business license tax plan is $490 million in the coming two years.
Roberson said he intends to take a committee vote on the amended sunsets bill Thursday.