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CARSON CITY, Nev. (AP) — Gov. Brian Sandoval's team offered tweaks to his tax plan Saturday in hopes of getting it through the Assembly in the last three days of the legislative session.
The Republican-controlled Nevada Senate voted in April to approve key parts of the governor's plan to raise or extend $1.1 billion in taxes over the next two years. He's trying to meet a $7.4 billion budget that includes major new investments in education.
But he still must garner a two-thirds majority in the Assembly, which includes a sizeable bloc of anti-tax conservative Republicans.
The latest version of the plan includes exemptions and lower rates for smaller businesses, addressing concerns that the measure would hurt fledgling companies, and eliminates a proposed reduction of the vehicle registration fee, sending that money back to the state general fund and highway fund.
Here's a look at the key components of the A B464, which aims to raise $510 million over the biennium:
ALL BUSINESSES: The latest version of the plan would raise the business license fee for corporations to $500, up from the existing $200 amount. But unlike previous versions that raised the fee for other business entities, the new revision keeps the rate for non-corporations at $200. It would also increase filing fees by $25, which would raise around $40 million a year from Nevada's 330,000 business entities.
SMALL BUSINESSES: Sandoval's plan raises the state's existing modified business tax, which is a levy on payroll and disproportionately hits labor-intensive businesses such as casinos. Business groups that favor the tax say it's tried and true, predictable and easy to calculate. The new rate for most businesses would be 1.475 percent of wages beyond the first $200,000 a company pays out each year, and 2 percent of those wages for the mining industry and financial institutions. Companies would still get to deduct health care premiums for employees from the calculation.
BIG BUSINESSES: The new commerce tax is the one most like the graduated business license fee that Sandoval originally proposed in SB252. It would apply an industry-specific tax rate to businesses with more than $4 million a year, although the new plan will have fewer than the 30 or so categories in the governor's original bill. Businesses can count 50 percent of their commerce tax bill as a credit against their modified business tax bill — a provision that's intended as a perk to those who employ people. The commerce tax aims to capture more money from capital-intensive businesses such as mines and those that do business in Nevada but aren't based here.
The revised plan includes a new wrinkle that would allow the state to lower the modified business tax rate if revenues from the new commerce tax and MBT rate bring in more revenue than expected from the state's biannual Economic Forum.
WILL IT COME TO PASS?
Any tax increase faces a rough road through the Republican-dominated Assembly, where nearly a dozen lawmakers have pledged to vote down any tax increase and 15 "no" votes could kill it. That leaves a fine line for the governor and his Assembly allies, as approval of a tax package will come down to a handful of swing Republican votes to overcome the required two-thirds majority.
Two Republicans who were considered "on the fence" announced their support for the plan shortly before Saturday's hearing. They included Assemblymen Derek Armstrong and Erv Nelson.
"I've changed my mind," Nelson said. "Initially I was against it, especially the commerce tax, but now I think it's a good compromise to create fiscal stability, help economic development and improve the education system."
SUNSETS AND CIGARETTES
The revised "Nevada Revenue Plan" only makes up about half of Sandoval's plan to massively expand K-12 funding. Lawmakers also need to approve SB 483, which raises around $600 million by making a set of expiring payroll and sales taxes permanent. The so-called "sunset" bill also raises a tax on cigarette packs by $1 each.
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