Sun rises, quickly sets on tax policy during Senate hearing

The sun never sets in Carson City, and yet there is so little illumination.

Nearly 13 months to the day that Gov. Brian Sandoval signaled he wanted to spend more than the state’s economic forecasters believed would be available – i.e. making sure so-called tax sunsets would not occur -- his administration presented the actual legislation to lawmakers on Monday.

Call it a tax increase or call it a tax extension – Sandoval has been on both sides of that argument. But during a brief Senate Finance Committee hearing in which essentially no one testified against the proposal and a few legislators indicated how silly sunsets are, all the indications are the levies will continue, no substantive tax policy will be enacted and Gov. Sunny will sign a bill that allows him to keep shining.

The committee took no action, a metaphor for tax policy in this state. I'm sure it will be held for the endgame, a precious bargaining chip.

And thus will the biennial ritual continue: Lawmakers talk a good game – and boy, did they talk BIG this time – about getting serious about real tax reform and serious policy, only to fall into a morass of partisanship and myopia, culminating with a budget number and an obnoxious, disconnected mélange of gimmicks to fund it.

When Sandoval made the announcement that he would not allow certain taxes to expire, he hoped to satisfy concerns about cutting education while short-circuiting any serious tax debate in the 2013 Legislature. With only 49 days left in the session, he seems to have accomplished both missions, as Monday morning’s all-too brief debate indicated that too many lawmakers have bought in to this goofy, repetitive sunset repeal strategy while floundering about for a plan of their own to increase taxes even more.

Whether you believe Sandoval’s extension is a tax increase or not – he believed it was in 2010, then changed with a shove from the Supreme Court in 2011 and reaffirmed his second position a year ago – it remains a policy abomination.

The semantic argument is a waste of time and gray matter; Sandoval wanted to spend more, so he either increased taxes or extended taxes to do it. As Senate Finance Chairman Debbie Smith pointed out Monday morning, this is not the way to run a government, careening biennially to near-crisis and having to renege on commitments (yes, that’s what extending a sunset is) to allow taxes to go down. But Smith and Majority Leader Mo Denis, who did his impression of Oliver Twist (“Please, sir, may I have some more”) when Sandoval made his announcement last year, have yet to produce any tax plan to fund what they say are educational and other necessities.

Let’s also not forget that Sandoval’s announcement last year was to extend $600 million in taxes on payroll and sales taxes.  “In addition to avoiding further cuts to education, this decision means there will be no need for tax increases in the next session,” he said on March 13, 2012, a prelude to his enduring spin about the sunsets: “Nevadans will pay no more than they are in the current biennium.”

Sandoval would, for the second time, allow taxes that were expiring -- or as we so quaintly call it, “sunsetting” – to not go away. It seemed somehow fitting that the governor who always radiated optimism would not let the sun go down. Gov. Sunny wanted the sun to shine

Make no mistake, though: Sandoval is spending a lot more than he could have in the current biennium. The bill that Sandoval's office presented Monday was for two-thirds more than the amount he announced last year -- $1 billion. Besides the sunsets, that number comes from reconfiguring payment dates for mining taxes and subverting the intent of a teachers union initiative petition by pilfering money from the schools fund. (This brought the only real objection, from the Nevada State Education Association, whose lobbyist, Craig Stevens, nevertheless supported the money from the sunsets.)

To be fair, many governors have employed budget gimmickry so they don’t have to raise taxes – or can at least claim they did not. But with the session almost two-thirds over, Sandoval has been able to sit back in his office, a world within and a state apart if you will, and let lawmakers do what they do best: dither.

Only in the Carson City Cloister can a governor spend about a billion extra dollars and look as if he is worshiping at the conservative altar next to a Legislature that always is passing the donation cup but rarely will come up with a thoughtful way to fill it up. Thus we have the biennial scramble at the end to cobble together some tax package to reach an arbitrary number that everyone can accept.

What a system.

Many of these lawmakers are well-intentioned. But you know where that road terminates.

Yes, I know the speaker is coming with an admissions tax that will bring more payees into a narrow tax system that is not reflective of the state’s economic activity. Fine.

But that is not the answer. Nor is a mining tax. Nor is a margins tax via the ballot.

But my guess is the admissions tax can raise enough money to fund some things the Democrats (and some Republicans) want – all-day kindergarten, for example. And so we can put off – again – a discussion of how to really broaden the tax base so all of the free riders can be brought into the mix as gaming goes Asian and sales taxes remain narrow.

The Economic Forum meets again in two weeks. My guess is the forecasters won’t change much, but will sound notes of optimism about the economy.

And during the last month of Session ’13, lawmakers will throw something together, Sandoval will still be optimistic and the sun will not set in Carson City.