An Eye Witness Account Of A Unique Legislative Drama – The Legend Of 429
By: Doug Busselman, Executive Vice President
(Note: Having completed this post and found it to be lengthy, I apologize in advance for those who might read the account to it’s conclusion. Legends often times take some time to recount. I hope that you’ll find my version of what transpired on the way to our tax increase worth your time to read through…)
The end result is (or actually will be) Nevada taxpayers will pay an estimated $781 million more in taxes when it’s all said and done with SB 429. It’s probably all over, even if there will still be much more said before it gets done, but having had the ability to be there and personally watch the process play itself out on May 22nd might be the stuff of and all-time tax bill legend.
About a week earlier, when the last pieces of the next biennium budget fell into place, the process of SB 429 began. In a hastily rescheduled joint Assembly and Senate Taxation Committee meeting with the Assembly Taxation Committee Chairman Kathy McClain of Las Vegas calling the shots, an unnumbered bill draft was “heard” in its first almost committee hearing. The details were sorta sketchy, as they say.
The concept was for a tax increase on the amount of taxes businesses pay for employee wages, with the kicker that payrolls below the Obama Line ($250,000) would receive a reduced tax rate. In the beginning there wasn’t an actual amount for what the above $250,000 for annual payrolls would be paying. Instead of a filled-in-rate there was a side sheet handed out with the estimated tax yields different rates would bring in, with the top rate listed of 2 percent.
It was good theater that afternoon to watch the line-up of those paying tribute to testify in support of a bill that didn’t have an amount. Those fawning over how much they appreciated the dedicated effort that went into this proposal (without the blanks filled in) included a majority of representatives of those who get paid with tax dollars -- perhaps a cynical point of perspective that I noticed as “interesting”.
Those who went to the table to voice concerns ran the gauntlet with legislative members on the committee primed to pounce on those who would dare question or not salute the work they had done in “cutting and slashing” the state budget (in spite of the cold hard reality that the amount of the budget for the coming two-year cycle is larger than the amount of the current biennium we’re in). Things might be tough for Nevada businesses, but darn it, teachers and others who we spend our tax dollars on should not have to endure any less than what legislators have decided is the amount that should be doled out.
The Assembly passed another element of what would eventually find its way into SB 249, the doubling of the business license amount, without a hearing, by tacking it on as a floor amendment to a bill that was supposed to be an efficiency measure for good government. This stream-lined, one-stop-shopping, “Business Portal” bill suddenly became a tax measure with an additional element of a $200, per-“business site” fee.
Senate Introduction:
Shortly after 10 p.m. on Tuesday, May 19th the Nevada Senate convened its scheduled 6 p.m. “hearing” as the “Committee of the Whole”. I still remember receiving my warm copy of the bill, freshly out of the photo-copy tray. Eventually there would even be enough copies of the tables that went with the bill to show how much each portion of the revenue enhancements would produce. Since I didn’t get a copy of the worksheets to begin with, I jotted into the margins the amounts that were reported, as well as the differences in how things had changed to get to this point.
There was an actual amount now for the employee payroll tax… 0.50 percent for those under $62,500 per quarter (that’s $250,000 annually) and 1.17 percent above (basically, doubling the current 0.63 percent).
The business license fee was still going to be $200, and $200 each year from now on, but didn’t include the per-business-site provision.
For the first time, the increase in sales tax was presented, taking the 2.25 percent amount of the local school support tax – increasing it to 2.6 percent and then skimming the 0.35 off and sending it into the state coffers.
The last element of the plan included changing the rate of depreciation calculated on vehicle registration fees for the government services portion. Vehicles that are “valued” higher, pay higher annual registration taxes and when the schedule was reworked the increase is estimated to bring in just over $94 million more.
Conflicts Of Interests:
The legend of SB 429 wouldn’t be complete without covering in brief the possible inability of key Senators being able to vote. A required two-thirds majority of the 21 Nevada Senators are needed to push the green “yes” button at their desk for a tax measure to gain passage. Because of conflicts of interests, under the Legislative rule 23, it seemed that a couple of key legislators, involved in the behind-closed-door negotiations to write the bill, weren’t going to be able to vote. Not voting, in this case was the same as a “No” vote.
It was interesting to see that while the two-declared “conflicted” drew public attention, a couple of others in the chambers (on the other side of the political isle and also very “key”) had similar circumstances which caused Senator Hardy and Senator Raggio to have their situations.
Not to worry though – when rules get in the way of reducing the potential for enough “green lights” – you change the rules and the conflict of interests are resolved. That was the solution applied in this application, although it will be interesting to see if that is now the way things will be going forward, or if additional rule changes will be needed for different conditions in the future.
Friday Deadline:
In order to deal with a likely veto by Governor Jim Gibbons, the determined deadline for passage of SB 429 was the afternoon of May 22, requiring enough time to physically deliver the bill to the Governor’s office before 5 p.m. closing.
The Senate “Committee of the Whole” started their 9 a.m. scheduled meeting promptly about 11:45. The clock ticking in the background yielded some significant results that hadn’t been in the bill, not the least of which is a “sunset” on the tax increases unless the 2011 Legislature reverses the scheduled shut-off for the end of the 2011 fiscal year.
Additional “clarifications and corrections” were able to be extracted for the sake of getting things moving forward, as well as a side deal, publicly agreed to (and reinforced by the need for a 2/3 majority to override the impending veto) for the type of tax study that will take place over the next two-years.
On To The Assembly:
Let there never be said the statement that the Nevada Legislature lacks for creative solutions. While the Nevada Senate inched along the path of SB 429 passage, the Assembly Speaker – who will work to become Governor in the next election – wasn’t going to be caught having trouble getting the bill through her end of the building on time.
Instead of waiting for the bill to pass the Senate, the Assembly came together in their own “Committee of the Whole” and heard a Senate bill that hadn’t passed the Senate to come to them. Although not all the details were known or finalized the Assembly members were briefed by legislative staff and had the chance to ask questions “for the record” on what they hoped to soon vote on.
An extremely brave businessman also had the chance to testify before the group, sharing his thoughts on how this set of tax increases were going to negatively harm those struggling in the private sector to make things meet and keep people employed.
Because of the technology of the internet, I was able to sit in the balcony of the Assembly and watch/listening with earplugs the final arrangements playing out on the Senate floor. The dynamics of getting such a close-up view of a possible “crash” was quite invigorating…watching the clock moving closer to 5 p.m. … listening to the Senate extractions of concessions … sitting in the gallery of the Assembly as they “processed” a bill that they didn’t even have.
On my laptop computer screen I watched the vote of 17 to 4 displayed on the Senate board, while the Assembly wrapped up their “hearing” on the matter. For a little while one had to wonder if the Assembly was going to vote on the Senate bill before the Senate did.
Assembly Passage:
As the staff hastily handed out the copies of the legislation that had just passed the Nevada Senate mere moments before, I wondered if the Assembly members were going to 12-plus page document before voting. Actually, I also wondered (and will never know) if the papers being distributed were even copies of the SB 429, passed by the Nevada Senate mere moments before.
While the distribution was being made the Speaker requested and promptly got a motion to declare an “emergency” and cut through the rules and get to the vote (the legislative way of saying that sounds better, but that’s the end result).
Every Assembly member probably got a stack of some papers when the vote board was activated for their button pushing and for a moment time slowed to slow-motion (just like on TV) as the voting buttons were pressed. 13 red “no” displays (representing Republican members thoughts) 27 green “yes” votes (representing the majority party’s perspective) – and two not voting yet names. The Speaker implored, “All members, please vote” and I watched from above Assemblyman John Carpenter’s thumb extended to press his voting button, finally lighting up his name on the vote board in green. That last instant reach and the weight of the decision which went into which color to press will always be part of the legend of SB 429, in my mind. The final count for Assembly passage 29 "yes" to 13 "no". Assemblyman Carpenter was the lone Republican member of the Assembly to vote in favor of passage.
To The Governor:
Although I wasn’t actually there to personally watch the trip, I did see on the television news an hour or so later, the delivery of SB 429 to Governor Gibbons. The video showed the Legislative police and the news reporters escorting the young lady charged with hand carrying the bill to the other side of the Capitol mall.
Epilogue:
Going forward the Governor will in all likelihood use most of the time he has (five days) to prepare his veto message and send SB 429 back to the Legislative Building for an override vote. There will probably be some further discussions, speculations and additional hurt feelings along the final steps.
Having witnessed what has played out so far, it’s hard to imagine that anything from here isn’t going to be anti-climatic, but if there’s any drama that can exceed what’s happened so far – the legend of SB 429 can only grow.
(Note: Having completed this post and found it to be lengthy, I apologize in advance for those who might read the account to it’s conclusion. Legends often times take some time to recount. I hope that you’ll find my version of what transpired on the way to our tax increase worth your time to read through…)
The end result is (or actually will be) Nevada taxpayers will pay an estimated $781 million more in taxes when it’s all said and done with SB 429. It’s probably all over, even if there will still be much more said before it gets done, but having had the ability to be there and personally watch the process play itself out on May 22nd might be the stuff of and all-time tax bill legend.
About a week earlier, when the last pieces of the next biennium budget fell into place, the process of SB 429 began. In a hastily rescheduled joint Assembly and Senate Taxation Committee meeting with the Assembly Taxation Committee Chairman Kathy McClain of Las Vegas calling the shots, an unnumbered bill draft was “heard” in its first almost committee hearing. The details were sorta sketchy, as they say.
The concept was for a tax increase on the amount of taxes businesses pay for employee wages, with the kicker that payrolls below the Obama Line ($250,000) would receive a reduced tax rate. In the beginning there wasn’t an actual amount for what the above $250,000 for annual payrolls would be paying. Instead of a filled-in-rate there was a side sheet handed out with the estimated tax yields different rates would bring in, with the top rate listed of 2 percent.
It was good theater that afternoon to watch the line-up of those paying tribute to testify in support of a bill that didn’t have an amount. Those fawning over how much they appreciated the dedicated effort that went into this proposal (without the blanks filled in) included a majority of representatives of those who get paid with tax dollars -- perhaps a cynical point of perspective that I noticed as “interesting”.
Those who went to the table to voice concerns ran the gauntlet with legislative members on the committee primed to pounce on those who would dare question or not salute the work they had done in “cutting and slashing” the state budget (in spite of the cold hard reality that the amount of the budget for the coming two-year cycle is larger than the amount of the current biennium we’re in). Things might be tough for Nevada businesses, but darn it, teachers and others who we spend our tax dollars on should not have to endure any less than what legislators have decided is the amount that should be doled out.
The Assembly passed another element of what would eventually find its way into SB 249, the doubling of the business license amount, without a hearing, by tacking it on as a floor amendment to a bill that was supposed to be an efficiency measure for good government. This stream-lined, one-stop-shopping, “Business Portal” bill suddenly became a tax measure with an additional element of a $200, per-“business site” fee.
Senate Introduction:
Shortly after 10 p.m. on Tuesday, May 19th the Nevada Senate convened its scheduled 6 p.m. “hearing” as the “Committee of the Whole”. I still remember receiving my warm copy of the bill, freshly out of the photo-copy tray. Eventually there would even be enough copies of the tables that went with the bill to show how much each portion of the revenue enhancements would produce. Since I didn’t get a copy of the worksheets to begin with, I jotted into the margins the amounts that were reported, as well as the differences in how things had changed to get to this point.
There was an actual amount now for the employee payroll tax… 0.50 percent for those under $62,500 per quarter (that’s $250,000 annually) and 1.17 percent above (basically, doubling the current 0.63 percent).
The business license fee was still going to be $200, and $200 each year from now on, but didn’t include the per-business-site provision.
For the first time, the increase in sales tax was presented, taking the 2.25 percent amount of the local school support tax – increasing it to 2.6 percent and then skimming the 0.35 off and sending it into the state coffers.
The last element of the plan included changing the rate of depreciation calculated on vehicle registration fees for the government services portion. Vehicles that are “valued” higher, pay higher annual registration taxes and when the schedule was reworked the increase is estimated to bring in just over $94 million more.
Conflicts Of Interests:
The legend of SB 429 wouldn’t be complete without covering in brief the possible inability of key Senators being able to vote. A required two-thirds majority of the 21 Nevada Senators are needed to push the green “yes” button at their desk for a tax measure to gain passage. Because of conflicts of interests, under the Legislative rule 23, it seemed that a couple of key legislators, involved in the behind-closed-door negotiations to write the bill, weren’t going to be able to vote. Not voting, in this case was the same as a “No” vote.
It was interesting to see that while the two-declared “conflicted” drew public attention, a couple of others in the chambers (on the other side of the political isle and also very “key”) had similar circumstances which caused Senator Hardy and Senator Raggio to have their situations.
Not to worry though – when rules get in the way of reducing the potential for enough “green lights” – you change the rules and the conflict of interests are resolved. That was the solution applied in this application, although it will be interesting to see if that is now the way things will be going forward, or if additional rule changes will be needed for different conditions in the future.
Friday Deadline:
In order to deal with a likely veto by Governor Jim Gibbons, the determined deadline for passage of SB 429 was the afternoon of May 22, requiring enough time to physically deliver the bill to the Governor’s office before 5 p.m. closing.
The Senate “Committee of the Whole” started their 9 a.m. scheduled meeting promptly about 11:45. The clock ticking in the background yielded some significant results that hadn’t been in the bill, not the least of which is a “sunset” on the tax increases unless the 2011 Legislature reverses the scheduled shut-off for the end of the 2011 fiscal year.
Additional “clarifications and corrections” were able to be extracted for the sake of getting things moving forward, as well as a side deal, publicly agreed to (and reinforced by the need for a 2/3 majority to override the impending veto) for the type of tax study that will take place over the next two-years.
On To The Assembly:
Let there never be said the statement that the Nevada Legislature lacks for creative solutions. While the Nevada Senate inched along the path of SB 429 passage, the Assembly Speaker – who will work to become Governor in the next election – wasn’t going to be caught having trouble getting the bill through her end of the building on time.
Instead of waiting for the bill to pass the Senate, the Assembly came together in their own “Committee of the Whole” and heard a Senate bill that hadn’t passed the Senate to come to them. Although not all the details were known or finalized the Assembly members were briefed by legislative staff and had the chance to ask questions “for the record” on what they hoped to soon vote on.
An extremely brave businessman also had the chance to testify before the group, sharing his thoughts on how this set of tax increases were going to negatively harm those struggling in the private sector to make things meet and keep people employed.
Because of the technology of the internet, I was able to sit in the balcony of the Assembly and watch/listening with earplugs the final arrangements playing out on the Senate floor. The dynamics of getting such a close-up view of a possible “crash” was quite invigorating…watching the clock moving closer to 5 p.m. … listening to the Senate extractions of concessions … sitting in the gallery of the Assembly as they “processed” a bill that they didn’t even have.
On my laptop computer screen I watched the vote of 17 to 4 displayed on the Senate board, while the Assembly wrapped up their “hearing” on the matter. For a little while one had to wonder if the Assembly was going to vote on the Senate bill before the Senate did.
Assembly Passage:
As the staff hastily handed out the copies of the legislation that had just passed the Nevada Senate mere moments before, I wondered if the Assembly members were going to 12-plus page document before voting. Actually, I also wondered (and will never know) if the papers being distributed were even copies of the SB 429, passed by the Nevada Senate mere moments before.
While the distribution was being made the Speaker requested and promptly got a motion to declare an “emergency” and cut through the rules and get to the vote (the legislative way of saying that sounds better, but that’s the end result).
Every Assembly member probably got a stack of some papers when the vote board was activated for their button pushing and for a moment time slowed to slow-motion (just like on TV) as the voting buttons were pressed. 13 red “no” displays (representing Republican members thoughts) 27 green “yes” votes (representing the majority party’s perspective) – and two not voting yet names. The Speaker implored, “All members, please vote” and I watched from above Assemblyman John Carpenter’s thumb extended to press his voting button, finally lighting up his name on the vote board in green. That last instant reach and the weight of the decision which went into which color to press will always be part of the legend of SB 429, in my mind. The final count for Assembly passage 29 "yes" to 13 "no". Assemblyman Carpenter was the lone Republican member of the Assembly to vote in favor of passage.
To The Governor:
Although I wasn’t actually there to personally watch the trip, I did see on the television news an hour or so later, the delivery of SB 429 to Governor Gibbons. The video showed the Legislative police and the news reporters escorting the young lady charged with hand carrying the bill to the other side of the Capitol mall.
Epilogue:
Going forward the Governor will in all likelihood use most of the time he has (five days) to prepare his veto message and send SB 429 back to the Legislative Building for an override vote. There will probably be some further discussions, speculations and additional hurt feelings along the final steps.
Having witnessed what has played out so far, it’s hard to imagine that anything from here isn’t going to be anti-climatic, but if there’s any drama that can exceed what’s happened so far – the legend of SB 429 can only grow.
Posted by Doug Busselman at 5/23/2009 5:24 AM 
Categories: Nevada Legislature
Tags: Nevada Tax Increase Nevada Legislature
Categories: Nevada Legislature
Tags: Nevada Tax Increase Nevada Legislature
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