As goes Nevada, so goes the nation?

by Judith Lewis Mernit

Updated 10/30/12

Twenty-seven days before the general election, northern Nevada state Sen. Greg Brower pleaded a case before a roomful of ardent conservatives that sounded suspiciously moderate. "We can't survive without any taxes and regulation," the Washoe County Republican told a women's club at the Nugget Hotel in Sparks. He acknowledged that he considers power-sharing in state government between Democrats and Republicans healthy, and reminded his audience that poverty, not Obamacare, has driven up Nevada's Medicaid costs. When Brower got to education, he sounded like the most liberal man in the room. "We've cut a lot and we need to stop," he said. "We've got to stop the bleeding." The murmurs of agreement that followed some of his statements dwindled to silence.

Such is the fate of a political candidate in a swing county in a swing state, a place so evenly split between Republicans and Democrats that no constituent can demand ideological purity and expect their candidate to win. As of mid-October, Republicans had registered just 1,600 more voters than Democrats had this election season, a less than 1 percent advantage. Nevada political reporter Jon Ralston wrote in August that Washoe's most populous city, Reno, might determine the presidency: "The Biggest Little City could have the biggest impact of any locale in America." Odds-maker Nate Silver of The New York Times' FiveThirtyEight blog gives Nevada an almost 10 percent chance of being the "tipping point" state, whose six electoral votes put the next president over the 270 required to win.

But Nevada matters in less obvious ways as well, and Brower's moderation and Washoe County's newly centrist leanings have some resonance for the nation at large. While politicians in the U.S. House and on the campaign trail flirt with the idea that ever-lower taxes stimulate the economy while higher rates kill jobs, Nevada has been living that grand experiment, serving as a laboratory for the kind of low-revenue governance fashionable among certain conservatives and even some Democrats in this lackadaisical economy. The state has no personal income tax, no franchise tax and low taxes on its dominant industry, gambling. It's one of only three Western states, along with Wyoming and Washington, that doesn't tax corporate income -- and unlike Wyoming, it imposes no severance tax on minerals extracted from the earth.

While that's all worked out pretty well for the ranchers and miners of rural Nevada -- who do create a small number of decently paying jobs -- most Nevadans live in cities. Which means that Nevada now leads the nation in just about every dismal metric that measures comfort and well-being, from unemployment to bankruptcies to high-school dropouts. Jodi Tyson of the nonprofit Three Square, which works to address hunger in the state, reports that just in the past year the number of people who report "food insecurity" in Clark County, which includes the cities of Las Vegas and Henderson, has climbed to 17 percent, well above the national average. Every year, the state scrambles to find enough money to run the government. And every year, it comes up a couple of billion dollars short.

Brower, a good-looking, personable family man -- Greg Kinnear would play him in the movie -- knows all of this. So does his opponent, state Sen. Sheila Leslie, a popular, progressive Democrat who moved out of her safe Democratic district to fight Brower in his. The outcome of their race could determine the balance of power in the Nevada Legislature, where Democrats have a secure majority in the 42-member Assembly, but only outnumber Republicans in the Senate by one. Ten of the 21 Senate seats will change personnel this year, and four of the contests to fill them are in play. Brower, whom the county commissioner appointed when Republican state Sen. Bill Raggio retired in 2011, is the only incumbent at risk. He cannot afford to lose.

Nor can former Henderson city councilman Steve Kirk, another Republican state Senate candidate, who is vying for a Democratic-leaning district in the southeast Las Vegas Valley. Tellingly, Kirk has followed the same trajectory as Brower. During a debate on Ralston's television show in early October, Ralston pressed Kirk on how he'd fix a public education system he'd derided as "broken." When Kirk answered that he'd fight for more funding to reduce class size and hire more teachers, Ralston pulled up short.

"Wait a second -- my contact lenses are bothering me," he said, blinking into Kirk's face. "Are you the Republican or the Democrat in this race?"

Kirk didn't flinch: "I'm the pragmatist."

Part of the reason for the shift, says Eric Herzik, a University of Nevada-Reno political science professor, owes to a steep decline in the state's traditional revenue base -- sales taxes paid by tourists -- as Nevada has lost its monopoly on gaming. "For the last 40 years, we have lived on the kindness of strangers," he says. "But those strangers aren't showing up so much anymore." And while education used to not matter so much in a service economy where bartenders made middle-class salaries, now Nevada's education problem has begun to sting. In August, a young and telegenic Las Vegas elementary school teacher, Claritssa Sanchez, briefed President Obama on conditions in her classes, where inflated class sizes and a dearth of desks force some kids to sit on the floor. Obama later used the anecdote at a rally where Sanchez introduced him. Kirk called it "embarrassing."

The public education problem also has real economic consequences. Nevada's business-tax friendly environment should lure corporations to relocate here, but it doesn't: Quality of life matters more, and good schools fall into that category. The state's increasingly tarnished reputation has even cut into its convention base. "It used to be that your company will bring its convention here because we could underbid any other city," Herzik says. "That completely flipped in the last decade. No corporation wants to be associated with Vegas these days."

Or, for that matter, Reno. Apple Inc. set up shop in the city, wooed by an 80 percent reduction in state and local taxes. The company will hire some 200 employees to run a data center and business hub. "But do you think their executives are going to come here?" Herzik asks. "Not a chance."

And so Steve Kirk's new political identity -- pragmatism -- may very well become Nevada's next political movement. U.S. Sen. Dean Heller has embraced the term, transforming himself into a man for the people and against the banks to fend off Democratic challenger Rep. Shelley Berkley. So has Gov. Brian Sandoval, who once vowed to let temporary increases to payroll and business taxes imposed in 2009 "sunset" on schedule in 2013, but now admits the state can't get by without them. Raggio was stripped of his party leadership after authoring the sunset tax bill; he died last February. Now he's been posthumously vindicated: Even his former archnemesis, conservative Las Vegas Sen. Michael Roberson, fears what will happen if those taxes expire.

Not every Nevada Republican has tacked quite so far toward the center, nor has every Democrat held to the left. Republican Danny Tarkanian, who seems to be edging out state Sen. Steven Horsford in northern Nevada's new Congressional District 4, has not backed off plans to privatize Social Security, and Horsford has been cautious about pushing any millionaire's tax to reduce the federal deficit. "I don't think a tax increase is always the answer," he declared on local public radio.

It would also be wrong to conclude that there's so little difference between the state Senate candidates that it doesn't matter which one ends up in Carson City. Leslie and Brower diverge sharply on how to diversify the state's revenue base. Leslie is pushing for an initiative engineered by the Nevada State Education Association that would tax gross business income above $1 million at a rate of 2 percent. The group has until November 13 to gather the 72,352 signatures required to put it before Nevada's Legislature next spring.

No self-respecting Republican supports such a tax, even though a 2 percent rate would still keep Nevada's taxes below its neighbors', including Utah and especially California. Still, Brower carefully tailored his objections to appease both Sparks Republicans and the electorate at large. "It's being billed as a way of providing funding for education," he complained. "But there's nothing in the law that says it would go to education." Brower was perhaps forgetting that the first line of the initiative earmarks the proceeds -- which could total $800 million -- for Nevada's public schools. Then again, perhaps he didn't forget: A direct attack on the proposed law might cost him voters he could strip from Leslie; an endorsement would sacrifice his Republican base. In the fine art of battleground politics, the smartest way to win might be to just stand still.

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