July 30, 2019
30 Jul 2019

Political Update – July 30, 2019

Letter to Keystone Board from
John Tsarpalas, President
Nevada Policy Research Institute

July 29, 2019

Dear Keystone Board Member,

Since Keystone is officially one of the plaintiffs in the unconstitutional extension of the Modified Business Tax by the Democrats in the last legislative session, you as a Keystone member, should have a basic understanding of the issues (see points to the right). 

See the Nevada Policy Piggy Book story (below) that explains why the DMV is short on money.

The DMV: It’s all foreign to me 
The Nevada Piggy Book
Nevada Policy Research Institute, 2018

One has to hand it to the DMV: For being the poster-child for government inefficiency, the agency has recently been making some bold attempts to modernize. 

It likely won’t shock anyone to learn that the agency’s computer system is less than modern. To fix this problem the Legislature approved a $75 million contract to upgrade the Nevada DMV’s outdated and inefficient computer system in 2015. 

It had until 2020 to get with the times, and implement a “new and improved” computer system. 

The $75 million comes directly from an added fee tacked on to all DMV transactions — so yes, you’re paying for it. 

But at least we’re paying to modernize government, right? 

For reasons that are still unclear, the Legislature awarded the contract to Tech Mahindra — a multinational technology company headquartered in Mumbai, India. 

In hindsight, choosing a firm a bit closer to home would have been a much smarter move. 

According to an audit released in late 2017, it was revealed that the program was months behind schedule. The audit cited the DMV’s failure to “ensure compliance with requirements, protocols, and procedures” — aka providing basic oversight — as the primary cause for the delays. 

(Of course, the DMV didn’t have any trouble implementing the new fee. But that’s not really surprising.) 

There were a few other failures, however, that rested solely with the Indian-based multinational firm. First, Tech Mahindra had only delivered 6 employees to begin work, despite originally promising that 25 members of its so-called “A-Team” would be deployed on the project. 

The second, and admittedly much larger problem, was that not all of the employees could speak English. 

Naturally, the language barrier caused some issues. 

Under the section of the audit entitled, “Contractor Did Not Provide Personnel Proficient in English,” we learn that the “DMV had to edit project documentation and meeting minutes provided by the contractor for grammar and spelling because they were not written in a clear manner and were not useable.” 

Imagine awarding a $75 million technology contract to a foreign company, then receiving the meeting minutes written as if they were translated through Google — because that’s basically what the DMV seemed to be facing.

After the audit was made public, Tech Mahindra was finally fired.

One thing the DMV readily admitted would be a complete waste of taxpayer funds, was the $25,000 spent on a customized communications plan between the Nevada DMV and Tech Mahindra. 

That’s right: A $25,000 communications plan with a firm that couldn’t even provide reports in a language that DMV personnel could read! Ensuring someone at Tech Mahindra was fluent in basic English probably would have been a better place to start. 

“The $75 million comes directly from an added fee tacked on to all DMV transactions” Of course, that wasn’t the only loss. 

By the time the state had terminated the contract, roughly $17 million had already been spent with the firm. 

Of that, about $12 million is considered a complete loss. Another $4.7 million is considered “salvageable” and will be usable by a future contractor for the modernization project. 

“We are also still working to sell back some of the remaining equipment, although of course the return value isn’t as much as the paid value,” DMV spokeswoman Alex Smith told The Nevada Independent. 

So, for now, the DMV continues to use antiquated technology, the project continues to miss deadlines and we continue to pay an extra fee every time we are required to make a transaction with the Department of Motor Vehicles. 

But at least they give us our bills in a language we can understand.

Modified Business Tax Extension Facts

Nevada Policy
Research Institute

Under Article 4, Section 18, subsection 2 of the Nevada State Constitution,
“…[A]n affirmative vote of not fewer than two-thirds of the members elected to each House is necessary to pass a bill or
joint resolution which creates, generates, or increases any public revenue in any form, including but not limited to taxes,
fees, assessments and rates, or changes in the computation bases for taxes, fees, assessments and rates.”
• This provision was added to the Constitution via ballot initiative in 1994 and 1996 (Question 11). It passed by an
overwhelming majority in both years.
What is the Modified Business Tax?
The MBT is a payroll tax on (taxable) wages above $50,000 for private business.
• The current rate of 1.475% was set during the 2015 Legislature. (The MBT itself had existed for years prior, at a
lower rate.)
• However, that 2015 legislation contained a provision which automatically lowered the MBT rate if certain tax sources
brought in more revenue that what was projected by the state’s Economic Forum.
Thus, due to robust tax revenues over the past biennium, the Modified Business Tax rate
was set to decrease to 1.378%.
• But, instead of allowing the partial sunset to occur, Democrats passed SB551, which eliminated the sunset provision from
law, effectively maintaining the current rate of 1.475% in perpetuity.
• Eliminating the sunset provision is expected to produce an additional ~$100 million over the next biennium.
• SB551 also eliminated ESAs from law
Why the lawsuit?
• Democrats passed SB551 without a 2/3 majority vote, as required by the Nevada State Constitution.
• They relied on a legal opinion from the Legislative Counsel Bureau which suggested a 2/3 vote was not required because
a tax “extension” did not constitute an increase.
• The plain text of the Constitution is unambiguous. Seemingly, the LCB lawyers did some mental gymnastics to arrive at
their preferred conclusion.
• Sen. Settelmeyer called the LCB opinion “a work of legal fiction.”

Keystone’s Mission:

To recruit, support and advocate for candidates for public office who support private sector job creation, low taxation, a responsible regulatory environment, and effective delivery of essential state services.

Keystone’s Mission:

• To focus on candidate support on state legislative races and the governor’s office.
• To oppose any form of corporate income taxes or other business taxes that discourage capital investment and therefore job creation.
• Support limiting Nevada state government spending to the rate of population growth.

P.O. Box 93596 | Las Vegas, NV 89193-3596

To ensure that you continue receiving email updates,

please add Info@KeystoneNevada.com to your address book or safe list.
Click here to unsubscribe 
Having trouble viewing this e-mail? View it in your browser

 

July 23, 2019
23 Jul 2019

Political Update – July 23, 2019

Nevada Senate Republicans sue over bills eliminating reduction of business tax and extension of DMV fee

Nevada Appeal staff report

July 19, 2019

Eight Nevada Senate Republicans on Friday followed up on a May promise to challenge the extension of the Modified Business Tax sunset.

The senators led by Senate Minority Leader James Settelmeyer, R-Gardnerville, filed suit in Carson City District Court alleging Gov. Steve Sisolak and Senate Majority Leader Nicole Cannizzaro violated the Nevada Constitution.

The challenge involves Senate Bill 551 and Senate Bill 542 passed by the 2019 Nevada Legislature. SB551 extends the existing Modified Business Tax rate and generates $98.2 million. SB542 extends the DMV technology fee set to sunset in 2021. That fee generates about $7 million.

The suit alleges the bills are unconstitutional because the Senate approved them 13-8 — one vote shy of the two-thirds majority.

During the session, lawmakers obtained a legal opinion from Legislative Counsel that the two-thirds rule didn’t have to be applied since it was extending an existing tax rate rather than raising a tax.

In May and again when Sisolak signed the bill Settlemeyer vowed to take the passing of the MBT and DMV fee to court.

He said Nevada’s constitution requires a two-thirds majority to pass “anything that increases revenue in any form.” He said that has been the ruling on sunsets in the past as well as new or increased taxes.

Quote of
the week

 


Quote:

“We have checks and balances for a reason and eroding the two-thirds requirement is an unprecedented disregard for the constitution and creates a dangerous precedent.”

James Settelmeyer
Senate Minority Leader

Analysis: Nevada got a fraction of the jobs, investment promised by Tesla-style tax breaks

James DeHaven
Reno Gazette Journal

July 22, 2019

It was a different time. 

That’s what Nevada lawmakers say these days when asked about the massive, recession-era tax breaks approved for companies such as Tesla, Amazon and Apple.

It’s also what legislators tend to say when defending new efforts to rein in incentives now that the state has rebounded from the downturn.

Keystone’s Mission:

To recruit, support and advocate for candidates for public office who support private sector job creation, low taxation, a responsible regulatory environment, and effective delivery of essential state services.

Keystone’s Mission:

• To focus on candidate support on state legislative races and the governor’s office.
• To oppose any form of corporate income taxes or other business taxes that discourage capital investment and therefore job creation.
• Support limiting Nevada state government spending to the rate of population growth.

P.O. Box 93596 | Las Vegas, NV 89193-3596

To ensure that you continue receiving email updates,

please add Info@KeystoneNevada.com to your address book or safe list.
Click here to unsubscribe 
Having trouble viewing this e-mail? View it in your browser

 

July 16, 2019
16 Jul 2019

Political Update – July 16, 2019

VICTOR JOECKS: Letter from Nevada Democrats hints at quid pro quo

Victor Joecks
Las Vegas Review-Journal 

July13, 2019

Even by swampy congressional standards, a letter signed by three Nevada Democrats to a local casino company reeks of demanding quid pro quo.

In May, 13 congressional Democrats sent a letter to Frank Fertitta, chairman of Red Rock Resorts. The signers, including Reps. Dina Titus, Susie Lee and Steven Horsford, urged Fertitta to “respect the rights of employees at Red Rock Resorts Inc. properties to form a union and collectively bargain.” That seems like little more than another poke in the eye from allies of the Culinary union.

But the letter took an unexpected turn. It started talking about tax policy.

In 2017, Republicans passed tax reform. In their haste — insert joke about “passing the bill to find out what’s in it” here — a drafting error changed the depreciation schedule for certain capital expenditures. Before the bill, companies could depreciate interior remodeling projects over 15 years. After the bill, businesses had to spread those expenses over 39 years.

The letter points out that Red Rock Resorts is seeking to revert that provision to its original form. The company is hardly alone. Hundreds of businesses — including Wendy’s, Best Buy and Target — have asked Congress to make the change. A bill to do just that has 169 co-sponsors. Titus, Lee and Horsford are among the 88 Democrat co-sponsors.

There’s not a policy link between the two issues, but there is a political link. The letter notes that Red Rock Resorts “is currently completing a $690 million renovation of the Palms Casino Hotel.” The drafting error in the new tax law is likely costing Red Rock Resorts tens of millions of dollars.

“We were disappointed, however, to learn that the company has refused to recognize the union at this facility, even after 84 percent of employees voted to form a union,” the letter reads.

Quote of
the week

 


Quote:

“It’s fine for congressional Democrats to support the Culinary. What’s unacceptable is using their political power to threaten Red Rock Resorts for not acquiescing to union demands.”

Victor Joecks
Las Vegas Review-Journal 

Segerblom wants sales tax hike to fund schools

Ray Hagar
Nevada Newsmakers
Las Vegas Sun

July 14, 2019

Clark County Commissioner Tick Segerblom said on “Nevada Newsmakers” that he is ready to start working to get more funding for the Clark County School District through a sales tax hike.

The Nevada Legislature recently gave county commissions the authority to implement a quarter-cent sales tax increase for education.

“I ran a campaign with the platform of ‘give me the authority for a 1-cent sales tax so we can give $400 million to the School District,’” he told host Sam Shad. The district faces a $17 million budget deficit entering the new school year.

Keystone’s Mission:

To recruit, support and advocate for candidates for public office who support private sector job creation, low taxation, a responsible regulatory environment, and effective delivery of essential state services.

Keystone’s Mission:

• To focus on candidate support on state legislative races and the governor’s office.
• To oppose any form of corporate income taxes or other business taxes that discourage capital investment and therefore job creation.
• Support limiting Nevada state government spending to the rate of population growth.

P.O. Box 93596 | Las Vegas, NV 89193-3596

To ensure that you continue receiving email updates,

please add Info@KeystoneNevada.com to your address book or safe list.
Click here to unsubscribe 
Having trouble viewing this e-mail? View it in your browser

July 9, 2019
09 Jul 2019

Political Update – July 9, 2019

Will new Nevada law lead to state income tax?

Steve Wolford
News3LV

July 3, 2019

On June 13, Governor State Sisolak signed a bill giving state employees the right to collective bargaining, but the Nevada Policy Research Institute says it may have put Nevada taxpayers on a trajectory that will increase the cost of government for state employees who work for agencies like the Nevada Department of Transportation and the Department of Motor Vehicles.

“The price tag associated with this is something that really worried us,” said NPRI Communications Director Michael Schaus. “simply because we’re already straining our budgets.”

Local union leaders disagree. Harry Schiffman, president of the American Federation of State County and Municipal Employees Local 4041 says it’s too soon to even know because a deal hasn’t even been negotiated yet, and safeguards are built-in to the law to keep raises in check.

“Even if they all agree to a deal, it’s still the governor,” said Schiffman, “the governor still has a say whether he agrees, or he wants to veto it or to change it, and also, it has to go back to the legislature.”

That’s something the NPRI says could be difficult to do because of the intense political pressure unions can exert on politicians, and eventually, the growing cost of state government could hit critical mass.

“The big concern is, sooner or later the income tax is going to be an issue that is going to be talked about simply because lawmakers are going to run out of existing revenue sources to keep on increasing our tap,” said Schaus.

Shiffman, however, says if a state income tax goes on the table in Nevada, collective bargaining won’t be the reason.

Quote of
the week

 


Quote:

“The big concern is, sooner or later the income tax is going to be an issue that is going to be talked about simply because lawmakers are going to run out of existing revenue sources to keep on increasing our tap.”

 Michael Schaus, Communications Director
Nevada Policy Research Institute

PUBLIC WORKER CONTRACTS SHOULD BE NEGOTIATED IN THE OPEN

Thomas Mitchell
Mesquite Local News

July 4, 2019

Despite being duly warned, Nevada’s Democratic lawmakers and Democratic governor this past legislative session lit the fuse on a huge budget bomb — passing and signing into law Senate Bill 135, which gives state public employees the right to collectively bargain for wages and benefits.

A study commissioned by the Las Vegas Metro Chamber of Commerce estimates this unionization could in two decades increase the cost of state public employees as much as $1.75 billion a year in inflation-adjusted dollars. The entire current general fund budget amounts to about $4 billion a year.

Keystone’s Mission:

To recruit, support and advocate for candidates for public office who support private sector job creation, low taxation, a responsible regulatory environment, and effective delivery of essential state services.

Keystone’s Mission:

• To focus on candidate support on state legislative races and the governor’s office.
• To oppose any form of corporate income taxes or other business taxes that discourage capital investment and therefore job creation.
• Support limiting Nevada state government spending to the rate of population growth.

P.O. Box 93596 | Las Vegas, NV 89193-3596

To ensure that you continue receiving email updates,

please add Info@KeystoneNevada.com to your address book or safe list.
Click here to unsubscribe 
Having trouble viewing this e-mail? View it in your browser

July 2, 2019
02 Jul 2019

Political Update – July 2, 2019

EDITORIAL: Why government pension plans are failing and what to do about it

Las Vegas Review-Journal

June 29, 2019

The stock market continues to flirt with record highs, yet government-run pension plans are far from fully funded. That should concern every taxpayer.

The Public Employees’ Retirement System of Nevada, which is officially only 75 percent funded, falls into that category. The funded ratio would be much lower if PERS were held to the same accounting standards that government regulators demand of private companies.

Starting on July 1, contribution rates are increasing to 29.25 percent for regular employees. That’s the fifth increase since 2009, when the rate was 20.5 percent. Government agencies (read: taxpayer) and employees split the contribution rate increase equally.

In a recent National Affairs article, Manhattan Institute senior fellow Josh McGee traces how government pension plans, such as PERS, have ended up in this precarious predicament.

The plans started small and promised modest benefits. For instance, PERS’ initial contribution rate in 1948 was 5 percent on the first $400 in salary. But rates didn’t stay that low in Nevada or around the country. Mr. McGee points out that employer pension costs grew from 9.6 percent to 16.9 percent of payroll from 1988 to 2017.

As workers grew older, the plans expanded by taking in new members. They also grew, because government hiring expanded rapidly. Unfortunately, governments didn’t fully fund the cost of their promises. Part of the reason was that plans unrealistically assumed they would earn investment returns of at least 8 percent annually. For instance, PERS assumed an 8 percent rate of return for decades, before lowering it to 7.5 percent last year.

An 8 percent rate of return wasn’t as risky during the 1980s, when interest rates were high. Pension plans could earn those returns primarily by investing in bonds. But as returns lagged, pension plans moved more money into stocks and hedge funds. Those are riskier, but offer higher returns. Currently, PERS’ target allocation is 72 percent of assets in stocks, real estate and private equity compared to just 28 percent in bonds. In 2003, PERS aimed for an even split between bonds and investments in stocks and real estate.

When the inevitable next downturn comes, it’s going to hit PERS harder than before, because the system has taken on greater risk.

“The upshot of this history is that public pensions are bigger and riskier than ever,” Mr. McGee writes. “Pension liabilities and debt have never been so large relative to taxpayers’ capacity to pay, and pension investments have never been so uncertain.”

All this should sound like alarm bells to an elected officials, starting with Gov. Steve Sisolak. Unfortunately, there’s little evidence he or most politicians — particularly Democrats — care to be bothered. They’re far more interested in currying favor with government unions, which shower them with campaign contributions in return for ignoring the issue and even expanding benefits. Or, in Nevada, for allowing PERS to keep confidential from taxpayers certain information regarding the pension payouts they are forced to fund.

Quote of
the week

 


Quote:

“[Politicians — particularly Democrats are] far more interested in currying favor with government unions, which shower them with campaign contributions in return for ignoring the issue and even expanding benefits.”

Las Vegas Review-Journal

Free Market Watch:
There is Nothing ‘Progressive’ About Big Government

Nevada Business
Michael Schaus 

July 1, 2019

If progressive voters really want the kind of “bold” and “transformative” changes big-government politicians keep promising, they had better change their voting habits. Despite the lofty-sounding rhetoric, there’s nothing inherently progressive—new, innovative or revolutionary—about the policy proposals being touted by big-government proponents. In fact, far from effecting sweeping change, such policies largely serve to cement the status quo. For a prime example, look no further than the education debate that took place in Nevada’s last legislative session.

Far from fundamentally transforming the state’s educational status quo, progressives doubled down on the very policies that have been failing Nevada’s youth, even going so far as to decimate the one innovative alternative available to low income students: Opportunity Scholarships.

Far from embracing any bold innovation to the way we deliver education in Nevada, progressives actively worked to erode any educational reform or program that didn’t enrich the same government special-interests that have been running the show for decades. Public schools received more funding, scholarships for low-income students were kneecapped and, at one point, even public charter schools found themselves in the cross-hairs of “progressive” politicians. In other words, it was “more of the same” from the education establishment that has run public education into the ground—and it was hailed as a victory by “progressive” activists and lawmakers.

Keystone’s Mission:

To recruit, support and advocate for candidates for public office who support private sector job creation, low taxation, a responsible regulatory environment, and effective delivery of essential state services.

Keystone’s Mission:

• To focus on candidate support on state legislative races and the governor’s office.
• To oppose any form of corporate income taxes or other business taxes that discourage capital investment and therefore job creation.
• Support limiting Nevada state government spending to the rate of population growth.

P.O. Box 93596 | Las Vegas, NV 89193-3596

To ensure that you continue receiving email updates,

please add Info@KeystoneNevada.com to your address book or safe list.
Click here to unsubscribe 
Having trouble viewing this e-mail? View it in your browser