by Johnny Gunn

The 2003 Legislative Session may not be over for another couple of years, and by then, most of the questions that exist today may just be moot. When legislators waited until the very last minute to attempt to craft a tax increase and budget for this current biennium, they have opened doors many in government are not aware even exist. In particular, how to define an entertainment tax, or worse, how to define legislative intent.

Currently, almost a year has gone by since the 2003 session got underway, there are two or more committees attempting to write some kind of law based on what the legislators finally passed, and questions concerning legislative intent are the single biggest hurdle to jump.

As part of the 2003 tax package, that whopping $833 million tax package, recently reduced from $836 million, there are efforts to raise live entertainment taxes, liquor and tobacco taxes, banking, real estate, and payroll taxes, many of which were supposed to go into effect October 1, 2003. At a meeting of the Nevada Tax Commission on November 25, many of the taxes were finalized, but that doesn’t mean they are actually in effect.

There is an interim legislative taxation committee, there’s the state Tax Commission, even the Gaming Control Board and Gaming Commission are in on the action, and questions as strange as whether hula dancing should be taxed has come to the table.

At the November 25 meeting, final approval was given to the business tax, to the per branch bank tax, to the gaming tax, and to the live entertainment tax. Gaming regulators must still sign off on the live entertainment tax, and some 50,000 businesses in the state must be informed of what is taking place. What to tax. (www.tax.state.nv.us)

State Senator Randolph Townsend, R-Washoe County, says “Nevadans can be proud of all who put this massive plan together. There was lots of thought that went into this despite how poorly crafted the tax plan was. Poorly crafted by the legislature.” Townsend has been a critic all along on a lack of what is called legislative intent concerning the tax package.

There has been much said since the end of the regular session and the two special sessions, about fall out from the tax proposals, in particular among republican lawmakers, many of whom were vehement in their comments about such a large tax increase. Townsend feels there will be more fall out from a lack of understanding of the state’s needs by some lawmakers from the south. “Southern Nevada lawmakers will have a harder time at reelection,” he said. Continuing, Townsend said, “Lawmakers must have a better understanding about Nevada’s needs, about money that must be spent for education and for mental health. Despite our initial problems, though, this tax package has come together and will serve the state’s needs.”

In the middle of all this, Henderson republican assemblyman Josh Griffin has resigned from the the eight person Legislative Committee on Taxation, Public Revenue and Tax Policy, and this has stirred political rambling from both parties. That panel was brought into existence because of the massive tax bill, and is charged with studying implementation of the plan.

Some Background

The 2003 legislative session didn’t end until after two special sessions, a Supreme Court ruling, and threats by the lame duck republican governor not to back certain members of his own party because of their actions during the extended sessions. There was a concerted effort by some republican lawmakers to drastically reduce the amount of the governor’s requested tax increase.

The party was split on the issue, and Griffin was one who voted in favor of the tax increase. He is not planning to run for reelection this time around, and says he plans to work as a lobbyist. Assembly minority leader Lynn Hettrick, a republican from Douglas County, and the head of the republican coalition that tried to limit the tax increase, immediately called for the appointment of a republican who voted against those taxes to replace Griffin.

Assembly speaker Richard Perkins, a democrat from Henderson is suggesting he might put himself on the committee. By rule, this is possible. Also, by rule, Perkins could name another legislator to represent him.

As reported in the Observer last issue, the governor had contemplated the possibility of a tax increase for 2005. And in another side of his mouth, he has declared he won’t propose any new taxes.

How much of this bickering, jockeying, and delaying is about tax policy? According to Nevada Taxpayer Association President, Carole Vilardo, none. 

Questions Abound

Banking taxes have been established at $1,75 quarterly on bank branches, and this becomes effective January 1, 2004. The first payment will be due in January for the October-December, 2003 quarter.

Non-financial institution taxes will be seven tenths of one percent, and that rate will fall to 0.65 percent in July, 2004, again the first payment will be due in January, 2004 for the final quarter of 2003.

Almost every problem that the tax increase regulations have faced can be answered with one simple phrase: Don’t put off until tomorrow what you can do today. The budget was passed in a flurry of last minute chaos, amid court rulings, legislators faced with mounting costs, and because of this, very little thought went into the process. Item for item, the big thing missing from the tax increase package is “legislative intent.”

During half a dozen meetings over the last six months, state Senator Randolph Townsend, a republican from Washoe County has lamented the lack of legislative intent, and that has been echoed by Taxpayers President Vilardo. It is possible that sometime after the first of the year, the various commissions will have finished their rewrite of the laws and rules, and by then, we might have a better understanding of what the $833 million tax increase really means.

Hassling over what constitutes live entertainment was finally answered during the Tax Commission meeting of November 25. A ten percent monthly tax on live entertainment will cover music or vocals by professional or amateurs, dancing and drama acts and programs, animal acts, comedy acts, acrobatics, but not such things as karaoke, or strolling hula dancers. Dancing by patrons, most often from recorded music will not constitute live entertainment, nor will boxing matches.

The live entertainment tax goes into effect January 1, 2004.

In the meantime, statewide tax revenues appear to be up, unemployment is at a low figure despite the fact we’re now in the winter doldrums, and those who pay the taxes may not be clobbered by another round to new taxes in the 2005 legislative session. Senator Townsend is planning to ask for a legislative review of the 2003 tax package, and he says there may be some adjustments to be made.

Figures released at the end of November show a 12 percent jump in taxable sales statewide for the month of September, a significant increase. Nevada’s unemployment figures are below national numbers.

 The entire state assembly is up for election in 2004, and the 2004 campaign season has already begun.

 Will there be considerable fallout from the 2003 sessions? Or will we go through more slacking from those responsible for making our state financially sound? Those who determine committee appointments must make sure that the people who chair those committees are leaders, are able to assume the responsibility of leadership, and set courses that lead us to financial stability.

 According to Senator Townsend, “These seats belong to the public. We must understand where our positions come from. We are only hired to fill these seats temporarily. As members of this body, we are and should be held to a higher level.”