NV lawmakers OK bill extending higher business tax to fund teacher raises

CARSON CITY, Nev. — After contentious debate in both houses, the Nevada Legislature on Monday passed the bill that raises $100 million in business taxes to augment K-12 education funding for the coming biennium.

The bill eliminates the business tax sunset that was set to reduce the 1.475 percent levy per employee back to the base rate of 1.17 percent effective July 1.

It was contentious because Republicans argue that is the same as a tax increase and requires a two-thirds vote. But a Legal Division opinion issued earlier in the session stated only a majority vote was needed because removing a sunset isn't the same as raising a tax, effectively because it maintains the status quo.

Senate Democrats first tried to get the two-thirds majority but, with 13 members, they were a vote short. Unable to get even one Republican vote, they went back to the opinion allowing a simple majority vote and passed SB551 13-8.

Extending the higher Modified Business Tax rate is projected to generate a bit more than $100 million to fund education. Minority Leader James Settelmeyer, R-Gardnerville, and Sen. Ben Kieckhefer, R-Reno, argued it isn't necessary to use the MBT because lawmakers have more than $100 million in savings from budget decisions and updated projections.

Majority Leader Nicole Cannizzaro, D-Las Vegas, agreed there is some unallocated money available.

“But it is not a surplus that is going to fund education long term,” she said.

Cannizzaro said that money is “one shot” cash that won't be available in future years.

“There is no budget surplus that is going to continue to fund education over the long term,” she said.

She said SB551, “provides for an ongoing revenue source for education.”

There was no need to use the simple majority opinion in the Assembly since, even with Assemblyman Tyrone Thompson's seat vacant, Democrats a two-thirds majority. The vote there was 28-13.

SB551 provides some$16.5 million to the school safety budget and $72 million for teacher pay raises across the state. Finally, it provides $9.5 million for Opportunity Scholarships to continue that program.

In addition, the legislation repeals statutes that created the Educational Savings Accounts created in 2015. Democrats objected to the ESA's saying they take public money away from the schools and give it to parents who could then use the money to pay private school tuition — effectively vouchers.

The Nevada Supreme Court ruled the ESAs constitutional but said the funding plan for them was unconstitutional because it didn't come through a separate budget account.