Sunday, May 31, 2009
All of the energy bills have fallen into place, but Debbie Smith's attempt to change the STAR Bond process may die in the Senate. This has been her main priority this session, and one she has spent countless hours on. There are developers who claim to have made their plans based on the current formula for tax abatements, and they have been working overtime on this bill.
The Speaker certainly wants to override the governor's misguided veto on her bill to create a K-12 education rainy day fund.
The Raggio-Horsford tax study is a done deal.
Ironically, the one thing that may be holding up the session adjournment is the Governor's veto stamp! While he has railed against the wasted time and money of the session, his record-setting veto extravaganza may cause the legislators to hang around until 1 am Tuesday just to ensure that they have time to overturn any bills returnd by the Governor.
Assembly is currently honoring, one by one, their term-limited members.
Saturday, May 30, 2009
The biggest issues remaining are the final four or five vetoed budget bills that need to be overridden by the Senate, the Raggio-Horsford fight on what an interim tax study should look like, the SB 201/RTC-5 veto override, and Barbara Buckley's reserve account for k-12 education.
Apparently, Senators Raggio and Townsend want an override vote on SB 201 to occur before they agree to override the final budget bills.
As for the tax study, Senator Raggio proposed an open-ended study conducted by a private, outside firm. Senator Horsford, on the other hand, wants to put together a commission that will focus on some specific business taxes and a mechanism that will allow these various new taxes to be outlined completely for quick consideration by the 2011 Legislature and quick implementation by the Department of Taxation, etc.
As for the Speaker, the Governor vetoed AB 458, which would set-up a special reserve account for K-12 education. Current practice forces any extra education funding left-over at the end of a biennium to be reverted back to the general fund. This bill would allow that left-over money to stay in a separate account and be utilized specifically for education during budget downturns.
The Chamber testified in strong support of this bill and other bills that set up reserve accounts for such things as higher education.
In a bizarre act that seems to make the perfect the enemy of the good, the Governor vetoed AB 458 because the Legislature ignored his bill that would have set up similar reserve accounts for k-12, higher ed, and health and human services.
While the Chamber supports all of those concepts, it would seem to me that AB 458 is better than current practice, so it should have been signed into law.
Now, back to waiting....
Thursday, May 28, 2009
As I type this, the Senate is taking up SB 427, the long-term spending reform bill, which includes changes to PERS, PEBP, and collective bargaining for local government employees that is outlined in the post below. They just voted 19-2 to send the bill to the Assembly.
As soon as this bill gets through both houses, that should grease the skids for the tax increase override vote.
That bill, which the Governor vetoed at 5 pm today (along with 19 or so other bills), has to make its way over to the Legislative Building by midnight tonight.
That should allow an override vote by tomorrow.
Other than that, there are about a zillion conference committees meeting to has out disagreements and the renewable energy bills should be wrapped up soon.
Tuesday, May 26, 2009
So, this week is kind of surreal, with several conference committees meeting to hash out differences on some remaining policy bills. Usually, budget issues get shoved right up until the last day of session. Given the quirkiness of the calendar this year, there may be hope that we get out by this weekend!
It would seem to be in the Speaker and Majority Leader's best interest to adjourn a few days ahead of time, enabling them to argue that they saved tax dollars. (Apparently, it costs around $120,000 per day to run the Legislative Building).
The renewable energy bills are still being hashed out. While most folks would assume that the major policy differences occur between Democrats and Republicans, the Assembly and Senate Dems have different ways to look at things as well! Everyone, including the Governor, wants to be in front of the renewable energy issue, so everyone seems to have their own bill on the subject! It will all get worked out, and Nevada should be well-positioned to take advantage of our abundant natural resources and (for now) business-friendly climate.
The Governor has until midnight on Thursday night to veto the budget and tax bills, which leaves plenty of time for an override vote in both chambers.
Word has it that the "reform package," which the Senate Republicans demanded before signing off on the tax increases, was in drafting this morning. All of the reforms are supposed to be wrapped into SB 427, which began its short life last week in the Senate Finance Committee as a PERS reform bill.
The Las Vegas Chamber has been instrumental in the negotiations on this bill. Below, you will find the reforms that were agreed to. This language was sent out to the members of the Vegas Chamber:
Public Employees' Retirement System (PERS):
(Effective for employees hired after January 1, 2010)
-Increases the number of years of service required for firefighters and police to retire with full benefits from 25 years to 30 years
-Increases the retirement age required to retire without penalty
-Increases the early retirement penalty from 4 percent to 6 percent per year
-Reduces the benefit factor from 2.67 to 2.50, adding 2 years to the number of years required to fully vest
-Reduces the ability to take advantage of the system by controlling spikes in compensation for the 5 years before retirement by capping the annual increase in pay at 10 percent (excluding promotion and assignment related bumps)
-Lowers the cap on Cost of Living Adjustments (COLA) for post-retirement increases
Public Employees' Benefits Program (PEBP):
-Increases number of years required to begin vesting in program from 5 to 15 years of service for public employees hired after June 30, 2009
-Requires retirees to be continuously enrolled in PEBP immediately upon retirement to receive benefit, eliminating adverse selection issues
Collective Bargaining Reform:
-Brings fairness to collective bargaining process by changing law so fact-finder must consider state employee compensation, as well as local government ability to pay for life of contract
-Brings transparency to collective bargaining process by requiring a full fiscal hearing before elected officials vote on a contract
Friday, May 22, 2009
A few minutes later, the Assembly passed it 29-13, with John Carpenter from Elko as the only Republican voting yes, along with every Democrat.
The Governor has the bill and has until Thursday to veto it.
There was some back and forth between Senate Majority Leader Steven Horsford and Minority Leader Bill Raggio most of the afternoon, as Raggio insisted on a hard sunset for the new tax rates and some haggling over the language of an interim tax study.
While all the rates remained the same, Raggio's sunset demands were agreed to. The new tax rates will sunset on June 30th, 2011 unless the 2011 Legislature renews them. (Shall we place our bets now?)
I must point out that there has been no reform package introduced yet. There was a PERS hearing on Thursday, but the bill has not gone to a vote yet. So far, I have seen nothing on PEBP, prevailing wage, or public employee collective bargaining.
Therefore, we remain opposed to the inevitable tax increases.
The autism bill is still out there, as is the binding arbitration bill.
The SB 201 (RTC-5) veto has not been taken up for an override vote, and the new RTC-5 bill, with a diesel tax addition, is still hanging out there.
Both chambers are meeting on Saturday morning, but then have the rest of the weekend off!
Since the budget and tax bills have been sent to the Governor, next week is wrap-up and veto overrides! If she is going to run for Governor, it would seem to be in Speaker Buckley's best interest to wrap up session early, before the June 1 deadline. She can then claim that she saved the taxpayers money, given that it apparently costs $120,000 every day to run the show down here.
Ready for the circus to end.
And then, a long nap...
Thursday, May 21, 2009
Given the Governor’s promised veto of any budget package that includes a tax increase, there is a legislative self-imposed deadline of Friday to get the bills to the Governor so that there is enough time for a veto override.
Things were slowed down a bit tonight as an ethics bomb went off in the Senate Chamber. Senator Raggio has been threatened with an ethics complaint if he votes on the tax package because a member of his law firm testified on a tax proposal a week or two ago. Therefore, Raggio asked for a legal opinion from the legislative council and received a letter that stated he should abstain from voting on the issue.
This prompted a rushed bill that would allow and require every legislator to vote on bills of “immense statewide importance.”
There always seems to be wrinkles in the rush to close…
The tax bill finally has a name: SB 429. It would raise $781.2 million total. The revenue breakdown is as follows:
-Sales tax increase of 0.35 percent: $280 million
-Tiered Modified Business Tax rate: $346 million
-Doubling of the business license fee: $61 million
-Changes to governmental services tax on vehicles: $94 million
The payroll tax rate would be further complicated by reducing the tax rate from 0.63% to 0.5% on all annual payroll over $250,000, while increasing the rate to 1.17% on payroll above that amount.
While the Chamber understands the need for small business tax relief, we are concerned about instituting a hiring disincentive for any company that is near the $250,000 cap.
Up later this morning in Senate Finance is SB 427, the PERS reform bill. While it is a good start, it does not include a minimum retirement age and some other details.
Stay tuned, as things are moving fast….
Monday, May 18, 2009
The tax show began on Thursday afternoon, when the Assembly and Senate Taxation Committees met in a joint meeting to discuss Speaker Buckley’s proposal to “protect” small businesses by cutting the Modified Business (payroll) Tax from 0.63% to 0.5% of payroll under $250,000/year.
That equals out to about a $325 tax cut. Of course, a business with $250,000 in payroll could have as few as three people or as many as 13 or so. Everybody has a different description of a small business, but this proposal seems to define it as exceptionally small.
Now, the MBT rate described above applies to the first $250,000 of payroll of EVERY business. But, on any payroll above that $250,000 magic number, the rate is set to increase to an undetermined amount. That new rate could double to 1.25%, or even triple to 2%, which is the rate that our bank members currently pay.
You want to know what the most disheartening thing about this is? I was one of the only lobbyists that stepped up to the table to say that we could not support any tax increases because long-term spending reforms had not yet been implemented! The Retail Association stepped up to the plate to offer an alternative solution, and the NFIB representative opposed the plan as well.
I reiterated the Chamber’s support of the list of long-term spending reform that you are familiar with. I stated that, at this point in time, the Chamber could not support ANY tax increases because very little progress had been made on these reforms.
While I can respect a position of “our tax rates should be higher,” I have a hard time fathoming how anyone can claim that there is “no where left to cut.”
A system that allows public employees to retire at age 50 with 75% pay for the rest of their life is not “bare bones.”
A system that forces local governments to beg public employee unions to take only a 1% COLA instead of the 4% they were promised is not “bare bones.”
A prevailing wage survey system that calculates the prevailing wage by including prevailing wages in the formula is not “bare bones.”
I have been told by a few legislators that “we do not have enough time to deal with all of these reforms in 120 days.” I respectfully disagree. We seem to always have time to spend tax dollars, but then run out of time to save tax dollars.
For those of you who are not familiar with the legislative process, it usually works as follows: bill is heard in committee on one day, it is decided upon in a work session on another day, it goes to the floor, then goes through the same process in the other chamber. In other words, one bill could get through the entire process in about two weeks if there was strong legislative will to do so. 120 days is plenty of time!
While I have not seen the results of whatever reform package is going to come out of the “core group,” I have a feeling that it won’t be comprehensive enough and that the Chamber will not be able to support the final budget package.
While some may call this unreasonable or unrealistic, it is the position of this Chamber that every last dime must be spent as efficiently as possible before taking almost $1 billion out of the economy.
More on the rest of the tax package soon…