Gov. Steve Sisolak, then a Clark County Commissioner, at a ceremonial groundbreaking in November 2017. (Las Vegas News Bureau photo)
Nevada’s official economic forecasters met Tuesday and found the same thing they always find: A state that leans so heavily on sales taxes for revenue can’t afford to fund education adequately.
Now state legislators, and a bunch of other people too, are going to spend the next few weeks obsessed with the state’s inadequate education budget, occasionally pretending that big improvement is at stake.
Big improvement is not remotely at stake.
Any chance for big improvement was brushed aside before the legislative session began, when Gov. Steve Sisolak, gushing “if it ain’t broke don’t fix it,” said no new taxes. Now lawmakers and Sisolak will be struggling to provide teachers a little bit of a raise without forcing districts to jam even more students into overcrowded trailers in school parking lots.
Everyone is “for” education. Sisolak ran for office telling anyone who would listen how passionate he was about supporting public schools and public school teachers. In terms of importance to Sisolak’s campaign, education was second only to the most decisive issue of the election, the fact that Steve Sisolak is not Adam Laxalt.
And yet, well, here we are.
How Nevada baked failure into the cake
While it is surprisingly easy to document the cowardice of Nevada elected officials and mock their crocodile tears about education funding, the current, which is to say usual, education funding predicament is far from entirely their fault.
Past lawmakers bear an awful lot of the blame.
So do Nevada voters.
Nevada has no state income tax. That has been in the state constitution since voters, hammered by an economic collapse in the 1860s, determined that the only thing that would save them was to hand the state over to California mining companies and California banks.
Having no state income tax is bad policy, and one that forces reliance on the sales tax, which means low-income people pay a larger portion of their total income in state taxes than households with higher incomes. Only two other states and the District of Columbia collect more money per person from sales taxes than Nevada does.
And Nevada loves it. The state’s official motto may be “Battle Born” but it could just as easily be “We don’t have an income tax.”
It’s not that Nevada’s economy can’t support a modern, adequately funded education system. It can. Nevada spent the equivalent of 2.8 percent of gross state product on education in 2016. Only four states spend less on schools in proportion to the size of their economies.
Absence of an income tax explains a lot of that. But so does the Jim Gibbons Let’s Doom Education, And By Extension, Nevada, Forever state constitutional amendment of 1996.
Gibbons, you may remember (whether you want to or not), was a horrible albeit tremendously entertaining governor. But before he was a gubernatorial floor show, he was a rather good political opportunist, and one of the ways he built his political brand on his way up was spearheading an amendment to the state constitution prohibiting the Legislature from raising taxes without a two-thirds majority.
The amendment passed easily in 1996, winning the support of 64 percent of Nevada voters (which is a tad shy of two-thirds but that didn’t matter and no one cares).
To this day, in an affront to popular will and democracy itself, a mere one-third of legislators in only one chamber of the Legislature can override everyone else in Nevada, and kill any and all tax increases.
Currently there are more than enough Democrats in the Assembly to pass taxes. But one Republican would need to be picked off to make up a two-thirds majority in the Senate. Only then could Nevada take some obvious first steps to direct more of Nevada’s wealth, now sitting on the education sidelines, to schools.
Those obvious first steps, by the way, are:
Raise the gambling, er, gaming tax. Nevada’s 6.75 percent rate is the lowest in the nation, because of course it is. It’s also a large source of state revenue, second only to sales taxes (sales account for about 30 percent of state general fund revenue, gaming a little less than 20 percent). A handful of other states have gambling tax rates in the neighborhood of 10 percent. But some 20 states levy rates of more (sometimes substantially more) than 20 percent. As I’ve written before, I suspect everyone has stopped talking about higher gaming taxes because everyone has given up. But since Nevada’s unofficial motto is “we don’t have an income tax,” casinos are still where the money is. You want to make a big difference in education funding, not at some vague time in the future, but now? Make the Strip do it.
Raise the mining tax. The quick way to do this is removing mining tax deductions currently in statutes and regulations. The industry’s tax rate is in the state constitution; the deductions aren’t. Mining has milked the deductions magnificently. The world’s premier gold mining operations are those operated by Barrick and Newmont here in Nevada. Yet the revenue projections economic forecasters approved this week, and lawmakers are now bound by law to follow, differentiate between “major” and “minor” revenue streams, and the “net proceeds” tax that mining pays is a minor stream. Sources of Nevada general fund revenue that are bigger than the mining tax include but are not limited to: cigarette taxes, business license fees, insurance taxes, and the rental car tax.
If we want it funded we will fund it
Legislators and the governor can point (all too conveniently, perhaps) to one too many Republicans in the state Senate, blame the Jim Gibbons Anti-Democracy constitutional amendment, and say “aw shucks, we’d really love to find more money for education, but it just isn’t politically possible.”
Yes! There are powerful political barriers to raising taxes. Raising taxes is hard, unless it is for a priority that is widely identified as necessary and urgent.
Like, for instance, a football field.
Here are current members of the state Senate who, in a rushed special session with virtually no deliberation, voted in 2016 to raise $750 million in taxes to pay for a football field:
- Moises Denis, D
- Scott Hammond, R
- Joe Hardy, R
- Ben Kieckhefer, R
- James Ohrenschall, D (in the Assembly at the time)
- David Parks, D
- James Settelmeyer, R
- Pat Spearman, D
- Joyce Woodhouse, D
Here are current members of the state Assembly who voted for the Raiders giveaway:
- Richard Carillo, D
- Chris Edwards, R
- John Ellison, R
- Edgar Flores, D
- John Hambrick, R
- Ellen Speigel, D
- Tyrone Thompson, D
- Jim Wheeler, R
Such an inspirational demonstration of bipartisan cooperation, no?
And of course the football field had no more ardent champion than the former Clark County Commissioner who is now the state’s governor, Steve Sisolak.
All of these people, along with Brian Sandoval, Harry Reid, Steve Wynn, Jim Murren, Jan Jones, Sheldon Adelson and virtually every other VIG (Very Important Grownup) in Nevada knew there was enough money in Nevada’s economy — enough taxing capacity — to come up with $750 million.
Many of those same people also know there is enough money in Nevada’s economy — enough taxing capacity — right now, to find more money for education.
The difference is that the football field was a priority. Nevada wanted to fund that. So it got funded.
Education would get funded too if it was a priority. But it’s not.
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