Nevada, face down and flailing
by Judith Lewis Mernit
Suddenly, this election season, state politicians in Nevada are refusing to sign the pledge – the one anti-tax crusader Grover Norquist has been foisting upon conservative candidates and lawmakers for years. It requires the faithful to swear that they will never, ever raise taxes.
Many signers surely believe in it; others sign for fear of being branded a RINO -- Republican in Name Only, thereby becoming vulnerable to the nearest challenging Tea Partier. Among state politicians in Nevada this year, however, promising not to raise taxes almost sounds reckless.
“We can't survive without any taxes and regulation,” Republican state Sen. Greg Brower told a roomful of party loyalists in early October, adding that Nevada’s schools have been cut to the bone. “We’ve got to stop the bleeding.”
Rarely does anyone hear such words from Republican politicians hunting for national office, especially not when they’re talking to other conservatives, who cling to the theory that ever-lower taxes stimulate the economy while higher tax rates kill jobs. Yet while the rest of the country merely flirts with the cutting-for-prosperity philosophy, Nevada has been serving as a laboratory for real-world, low-revenue governance.
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. Unlike Wyoming, however, it imposes no severance tax on minerals extracted from the earth.
This experiment has not proved successful. Every year since 2008, when Nevada’s primary revenue source — sales taxes, mostly paid by tourists — crashed along with the economy, the state government has scrambled to find enough money for basic services. And every year it comes up a few billion dollars short. If Norquist dreams of making the government so small you could “drown it in the bathtub,” Nevada is already face down in the water and flailing.
Nevada now leads the nation in unemployment, hunger and personal bankruptcies. Its schools rank worst in the nation by every measure, from high school dropout rate to per-pupil spending. One Nevada state Senate candidate, former Henderson city councilman Steve Kirk, a Republican, has called that situation “embarrassing.”
But the public education problem also has real economic consequences. Nevada’s business-tax friendly environment was supposed to lure corporations to relocate here; as it turns out, low taxes aren’t the only thing that matters. There’s also the wellbeing of a state’s residents. And high on any prospective CEO’s list of quality-of-life indicators are good schools for the company’s children.
State Sen. Brower understands, then, that there’s little to be gained anymore by Nevada lawmakers writing off any source of revenue — even if it involves the “T” word. So does Kirk, who’s up against a former schoolteacher in a competitive southern Nevada district, and has promised to end cuts to education even if it means raising taxes.
Gov. Brian Sandoval, who once vowed to let temporary taxes imposed in 2009 “sunset” on schedule in 2013, now admits the state can’t get by without them. The Republican state senator who designed those temporary tax increases, Bill Raggio, was stripped of his party leadership for his efforts; he retired shortly thereafter and died last February. Now he’s been posthumously vindicated: Even his former arch-nemesis, Republican state Sen. Michael Roberson, says he fears what will happen if those taxes expire.
There is even the possibility that sometime in the next few years Nevada may add a new revenue stream. An “education tax” initiative engineered by the Nevada State Education Association already has the support of Brower’s opponent, state Sen. Sheila Leslie, a popular progressive who resigned her seat in a safe Democratic district to fight Brower in his. The measure calls for a 2 percent tax on gross business income above $1 million; proponents have until Nov. 13 to gather the 72,352 signatures required to put it before Nevada’s lawmakers when they meet again next spring.
No self-respecting Republican supports such a tax, but few want to go after it head-on. “It’s being billed as a way of providing funding for education,” Brower 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 of the tax — which could total as much as $800 million — for Nevada’s public schools. Or perhaps he wasn’t forgetting at all. Perhaps Brower, who this year refused to take the pledge, needed a reason to oppose the initiative to satisfy his base. Yet anti-tax base or no, what’s facing Nevada citizens is real-life austerity economics. The state is broke and needs to raise money.