TAX PAYERS OR TAX CONSUMERS
by Jim Clark

 Nevadans tend to fall into one of two economic categories . . . taxpayers or tax consumers.  Taxpayers are generally employees of private companies, self-employed and retirees/investors.  Tax consumers consist largely of public sector employees.  This basic divide dictates the economic platforms of our major political parties.  Republicans seek electoral and financial support from taxpayers and the enterprises that employ them.  Democrats seek electoral and financial support from government employees and their unions.  In order to retain that support legislators and officials of both parties try to satisfy the economic wishes of these “special interests” all of which send lobbyists with agendas to Carson City.

The problem with this system is that the annual state budgeting process consists of: (1) estimating revenues and spending them all (example: the 2005 legislative session) or (2) if estimated revenues appear inadequate to support spending levels, raising taxes (example: the 2003 legislative session).  Granted Gov. Guinn threatened to veto the profligate 2005 legislative spending spree unless it included a $300 million rebate to taxpayers but that was a one time spending restraint.  Nevada has no constitutional system in place to prevent politicians beholden to tax consumer constituencies from sticking it to the taxpayer constituencies.

Until now, that is.  This month Assemblywoman Sharron Angle (R – Reno) and Senator Bob Beers (R – Las Vegas) filed citizens’ initiative petitions which if passed twice by voters will respectively: (1) impose a cap on property taxes similar to those of California’s Proposition 13 and Oregon’s Proposition 50, and (2) restrain annual increases in government spending to measurable indices (inflation plus population growth) as in Colorado and over 20 other states.  Of Nevada’ sister states with tax and/or spending restraint laws all were imposed as a result of citizens constitutional initiatives;   not one  was enacted by legislative action.

If both initiatives are adopted Nevada will be the first state to simultaneously cap property tax increases and annual spending increases.  Probably a good idea.  The granddaddy of tax restraint measures was California’s Proposition 13 which rolled annual property taxes back from approximately 2 ½% of value to 1%.  California’s tax consumer beholden legislature responded by arbitrarily reducing government services and shifting taxes to sources other than property.  Only now, after a third of a century, is California’s Governor Schwarzenegger proposing spending restraints, solid evidence that tax caps alone will not prevent tax-and-spend legislators from bankrupting a state.   

Colorado’s spending restraint initiative has worked well, at least until that state’s teacher union won approval of a rival constitutional amendment which guaranteed that a minimum percentage of the state’s budget must be spend on K-12 education.  That set up a squeeze which has resulted in a follow-on proposal for temporary relief from some of the spending limitations.   

It is to Nevada’s advantage to be able to learn from mistakes and oversights which occurred in other states.  That information is useful also to debunk the prophets of doom who are already predicting that children will die of starvation and the elderly will be thrown out in the cold if these Scrooge laws are imposed.  It’s important to remember the experience of other states that once tax caps and spending restraints are imposed voters can, and have, overruled them to allow increases on a case-by-case basis.   

Do we want the legislature to continue to have absolute authority to raise taxes and increase spending or do we want them to have to ask us nicely?  Think about it. 

(Jim Clark is president of the Incline Village/Crystal Bay Republican Advocates.  He also serves as chair of Independent Incline).