Tug o' Tax

It seems only natural, if impulsive and simplistic, to recoil and swing when the government slips its hand into our pockets and takes a hefty chunk of our cash. We dislike it. But we also generally disapprove of neglecting the poor and elderly and infirm and the state's infrastructure, and we reasonably allow for the salaries of thousands of state employees, and somehow let slide certain elected officials' pet projects, and on and on, the tedium of balancing a state budget turning into such a tired and timeless grind that at times, it's refreshing to be presented with someone's rash reaction to the whole affair.

In that spirit, it appears that Nevadans for Sound Government is gaining momentum for its intended repeal of the 2003 Legislature's wallop of a tax increase. Or, as the garrulous organizer George Harris says, or bellows, on the day the Review-Journal reports growing public support for the measure, "It won't fail! It won't fail!"

The road to repeal has not been without some challenges thus far, and faces others ahead.

First, the group of anti-tax 'n 'spenders was criticized for not including the full text of the relevant tax statutes in its referendum question. Indeed, the question says, "Shall the following sections of Chapter 5, Statutes of Nevada 2003, 20th Special Session, be repealed: Sections 1 through 128, Section 130 through 164.38, Sections 166.5 through 188.3, Sections 188.7 through 189, Sections 190 through 192.5?" For those who haven't committed the tax code to memory accurately, this might prove problematic should they care to know precisely what they're supporting.

Next, the R-J reported that the group distributed confusing "fact sheets" that jiggled the numbers of various levies. Handouts reportedly said the new cigarette tax added 80 cents; in fact, it added 45 cents. The state was said to tax liquor at 72 cents per fifth; it taxes liquor at 31 cents per fifth. The group ceased distributing the fact sheets.

Then, members of the group — more specifically, members of the Hansen family of Independent American party activists — gathered PR speed by calling the ACLU and heading into a turf war by circulating petitions at public buildings. They were wrongly booted out of the DMV and Janine Hansen was arrested while circulating petitions in a bus terminal. The setbacks got them an extension on the signature-gathering deadline, and now, lo and behold, the measure has qualified for the ballot. This week the paper of record reported that 47 percent of 625 polled "likely voters" would vote to repeal the taxes.

So what fresh hell would this create? Depends, of course, on whom you ask.

1. "Well, we would suddenly have a huge hole in the budget," says Nevada Legislative Counsel Bureau Director Lorne Malkiewich. "As of the date of the canvass of the votes, the taxes would go away and the department of Taxation and the Legislature would have a real mess, all of the sudden one day." Because the revenue generated by the 2003 tax increases went largely into the general fund, the repeal wouldn't disembowel one particular set of state programs so much as just drain the general fund. That, says the nonpartisan Malkiewich, reopens the financial hole we left a year ago.

Not so, in the world according to Harris. "All of our programs are fully funded without the $833 million (in tax revenue). The taxes went to mid-level managers," he asserts, asking his followers for a hefty suspension of disbelief. "We do not have a revenue problem."

2. The governor may call a special session of the Legislature to panic publicly and try to reconfigure what no human fully understands, the budget. "There are restrictions on what the Legislature can do in a small amount of time, obviously," says Malkiewich. "They could raise sales tax or property taxes at a rate to make up the difference."

Or they could cut programs significantly. "We're going to eliminate programs that are just retarded," Harris says, "like the Perkins school." He's referring to Nevada State College in Henderson, which, he says, is a $70 million boondoggle shepherded by Assemblyman Richard Perkins. Harris says he's confident that under the watchful eye of the public the next time around, lawmakers will find places to trim. He suggests privatizing the DMV or revising state benefits plans. "Here's what's going to happen: They're going to have to manage the people's money."

3. Even if Harris' referendum fails — if voters reject the ballot question — the tax laws in question will be affected. The nature of the referendum is such that a rejection means the Legislature would not be able to change the relevant statutes without a vote of the people; thus, those tax rates are locked in until a new vote changes them. "It's a risky proposition one way or another," Malkiewich says. If it's approved, the taxes instantly dry up. But if it fails, then in order to change, say, the entertainment tax in the future, there would have to be a ballot question. "So either way, the statutes are affected."

"To me, that's good news," says Harris. "The forefathers put a safety measure in there."

4. Still, Malkiewich says his money is on a court challenge that would negate the referendum should it pass. The referendum's wording, or lack of wording, makes it prime for judicial reconsideration. "I think it's got huge legal problems," he says.

Harris says he's "offended" by allegations that people don't know what they're signing, or what they'll be voting for or against. He says people understand that they're being overtaxed, and that Nevada's deep and consistent problems with education and social services have no relation to its reluctant tax base. Instead, he says, "taxpayers in the state of Nevada are getting raped."

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