Tax task force gets details on state's built-in deficit

Consultant projects $307 million annual shortfall by 2010

April 18, 2002 - If nothing is done to change Nevada's tax structure, the state will operate at a $307 million annual deficit by the year 2010, a consultant told the Governor's Task Force on Tax Policy on Wednesday.

And that's if government services are provided at the same level as today.

The task force's technical working group is trying to establish the state's baseline needs so the eight panel members can begin discussing proposals to change the tax system. Their report is due Nov. 15, and the 2003 Legislature will consider their suggestions.

Several of the members appeared eager at their fourth meeting to reach the point of discussing more specific recommendations, but Chairman Guy Hobbs was adamant that sound facts be used to make assumptions about long-term revenue and expenditure projections.

Tax consultant Jeremy Aguero, chairman of the panel's technical working group, presented the members with a stack of documents 4 inches thick, explaining the assumptions used to create the projection models.

The $307 million is a conservative estimate for the deficit; the technical group estimated less conservatively that by 2010, the figure would be $432 million a year.

Two years ago, Gov. Kenny Guinn estimated that the annual deficit in 2010 could be as high as $1 billion.

With a built-in tax deficit and a requirement that Nevada's state government operate within a balanced budget, the only way to balance that budget would be to cut services if taxes are not raised.

Aguero said aside from getting a better grasp on the structural deficit, the other area of the research he wants to investigate further is Nevada's poor return of federal tax dollars. Nevada ranked last among the 50 states in per capita federal funding.

"I want to find out why we are 50 out of 50," he said after the meeting ended at the Sawyer Building. "That one bothered me more than anything else."

Although it could be attributed to the undercount of the census and the state's rapid growth, Nevada deserves more, he said.

Aguero's three-hour presentation prompted only one outburst from the task force, when he said the working group's analysis showed "simply paying teachers more would not improve students' achievement."

He admitted the data was limited and perhaps even incorrect, but the report concluded: "There is no statistical significant relationship between the average salary of a teacher in a state and educational performance of that state's students."

Task force member Ken Lange, executive director of the Nevada State Education Association, couldn't let that go unchallenged, and after a lengthy discussion, the task force rejected that information as inconclusive. Aguero said he couldn't remember who asked the working group to address that question.

Mike Sloan, general counsel for Mandalay Resort Group, asked Aguero to run a program showing how much a 1 percent gross receipts tax for all businesses, including gaming, would raise.

Sloan also asked for information on businesses such as banks and out-of-state homebuilders, which do not pay any business tax in Nevada. Many pay such taxes in other states. He also wanted information on how much revenue would be raised if property tax rolls were split so that commercial ventures paid a higher rate than residential property owners. "What portion of other states' taxes are paid by gaming taxes?" he asked Aguero.

The panel's next meeting was scheduled for May 15 in Carson City.

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Article Copyright ©: J. Morrison, Las Vegas Review Journal