Nevada Confidential

   A few years back, a political candidate did a brilliant job in a televised debate by using the slogan from a popular Wendy’s TV ad.  His opponent had spoken of having “new ideas” - he leaned forward and said, "When I hear your new ideas, I'm reminded of that ad: 'Where's the beef?'"

   Being a policy nerd, I actually had looked forward to reading Rory Reid’s 30-page vision for Nevada:  “Virtual Crossroads.”

   I regret to report that, after reviewing it in detail, I not only don’t see the beef – I don’t see the bun – all I hear is the sizzle.

   While it presents a sensible, generally-accepted diagnosis of the problems Nevada faces – it offers no substantive prescription for a cure.

   Sure, it points in a general direction, but that is about as useful as a doctor telling you to “eat well; get plenty of rest; and drink lots of fluids.” 

   The “specifics” he quotes from it are usually:

 ·    “we need a long-term plan for infrastructure rebuilding”  Sure. Yet, the fundamental problem isn’t that we need more plans drawn up - the Nevada Department of Transportation, as well as each county and city transportation department, have file cabinets full of plans.  We need the resources and the commitment to move forward now.  Enough of this planning, already.  Let’s salvage our infrastructure before it deteriorates any further – and let’s put people to work.  Now – not after another round of planning.

 ·    “perform performance review of state government to reduce wasteful spending”  That’s a rather obvious observation.  Every agency of state government has been repeatedly doing that.  It is not that more couldn’t be done.  But, the impression that we can fund adequate services in Nevada by just cutting out the “fat” in the state government is totally naive and unrealistic.  This is unproductive, cynical pandering for votes.  A real leader tells it like it is.

 ·    “provide tax credits to businesses who hire new workers”   Here the vision statement points to a recent Colorado initiative to give businesses that create at least 20 new jobs a 50% credit for the taxes paid on each new employee.  With their system, that equals a credit of about 3.8% - which is a reasonable savings.  However, in Nevada, our payroll tax is only 0.5% - cutting that 50% would give a typical per-job savings of $50 per year.  Show me any company that will hire a new person because of a fifty-dollar savings!  This is not how you transform our economy - this is fluff.

   I could go on-and-on critiquing each section.  Many simply draw the practical question:  “But where is the money for this going to come from?” to which you won’t find any answers.  At best, you hear the old refrain “Growth will pay for Growth.”  If we haven’t learned anything in this painful economic slowdown, haven’t we learned that is not true?  It’s a Ponzi scheme – a few did well - and the rest of us taxpayers are left on the hook.

   Ok, we are at a Virtual Crossroads (who doubts that?) -- but the question is: “how should we move forward?”  Sizzle is not an acceptable answer.

   If marijuana were treated the way alcohol is (with strong restrictions on driving under the influence and the possession and use by minors) Nevada could reap a tax windfall, while bringing some sense to our state’s drug policy by allowing adults to make their own choices. 

Law enforcement; state and local jails; and the courts would be freed-up to focus on authentic matters of public safety.

The ability to legally enjoy cannabis in a controlled environment would add immeasurably to the attractiveness of Las Vegas as a tourist destination, particularly with those of the “Baby Boomer” generation.

   Brothels provide a legal service in many parts of our state – yet they are not taxed.  In addition, an estimated one million dollars changes hands every day in Nevada in unregulated transactions for sexual services – none of this is taxed.

Obviously, consumers are willing to pay for these services which are provided by other consenting adults.  Furthermore, the businesses themselves are willing to collect and pay taxes to the state and to their local communities.  The question is:  why aren’t our “leaders” in Carson City at least discussing this taxing option?

A further step forward would be for the state to allow the regulation and taxation of prostitution to be an option for every county and city in Nevada.  It is far easier to ensure public safety of an activity that is legal.

Taxing, regulating and providing equal access to prostitution would reduce crime, improve public health, increase tax revenue, and allow for individuals to make their own choices.

 While every penny of funds that provide “enrichment” to the educational system is being squeezed out of the budget, there is one-half billion dollars in untaxed “church” property in Clark County, alone ($509,040,418 of Assessed Value exempted in FY 2009-2010)

 For every dollar which the government does not collect on these properties, it must make up for by collecting it from taxpayers.  This exemption has grown from a well-intentioned generosity by early lawmakers into a vast tax expenditure.  If this property were on the tax role, the schools and local units of government in Clark County would split an additional $18 million per year.  Any law that lowers a particular property owner’s tax liability has no different effect than a law that requires a direct payment to that property owner.

The basic facts on which properties receive this exemption – and why – should be compiled, made public and evaluated.  Then, explicit policy decisions must be made as to how much exemption should be given; to whom; and for how long. 

Nevada currently falls far short of even compiling this type of statistics, doing less than virtually any other state to make objective data available about where tax breaks are actually going and how much they costs.  This information can help us all - policymakers and taxpayers – to achieve reasonable oversight of these large tax expenditures.

    One step in seizing control of Nevada’s budget problem is to shine light on the murky, shadowy and under-the-radar parts of the state budget known as “tax expenditures.”  These are losses to the state treasury resulting from politicians having granted certain deductions, exemptions, or credits to specific categories of taxpayers.  These exemptions work like welfare programs for special interests and make up a substantial part of the budget. 

    Nevada is one of only 8 states in the US that does not compile a “tax expenditure report” – something with details on where state tax breaks are going and how much they cost.  Such a report is a necessity as we seek to restore fairness, sustainability and transparency to the state tax system.

    This relevant information would help us all - policymakers and taxpayers – to evaluate the hundreds of credits, exemptions, deductions and exclusions that permeate the Nevada tax base, turning it into Swiss cheese rather than a sensible tax code.  The worst part is that, once exemptions are written into the tax code, they continue indefinitely — regardless of how costly, dated and unfair they may become over time.

    Every dollar the state forgoes in tax revenue is one less dollar it can spend on schools, law enforcement, or other priorities — and one more dollar it must raise through other taxes.

    It is time we have an annual, comprehensive, easy-to-understand “Tax Expenditure Report” and make it widely assessable on the state’s website.