Author Archive for: webmaster

September 10, 2019
10 Sep 2019

Political Update – September 10, 2019

EDITORIAL: Empty promises for Nevada tax breaks

Las Vegas Review-Journal
August 17, 2019

The competition to attract high-profile business expansions has in recent years fostered an arms race among states. The frenzy reached a crescendo when Amazon executives played hundreds of U.S. jurisdictions against each other last year after announcing their intention to build a second headquarters.

Nevada leapt into the fray a decade ago with the creation of the Governor’s Office of Economic Development, charged with dangling incentives in front of corporate titans, business owners and entrepreneurs in an effort to attract investment and jobs.

The push to convince Amazon to come to Nevada failed, of course. But the office did manage to land a big fish in 2014 when Tesla’s Elon Musk agreed to build his massive battery factory near Reno in return for $1.3 billion in tax breaks over 20 years, all dutifully approved by Nevada lawmakers.

But Telsa is just one of many recipients of state tax abatements. In total, Nevada economic development officials have showered tax breaks totaling hundreds of millions of dollars on more than 275 companies since 2009. In return, the companies promise to create a certain number of jobs and meet various investment thresholds. Some of these businesses are smaller enterprises, but major conglomerates and wealthy tech outfits also sidled up to the trough. In addition to Tesla, recipients include Apple, Switch, eBay and Scientific Games.

Critics have long argued convincingly that a more effective way to promote sustained economic growth is to create an overall tax and regulatory climate conducive to entrepreneurship and business expansion rather than to single out specific enterprises for special dispensation. An analysis published last month by the Reno Gazette-Journal provides plenty of ammunition for that contention.

*IMPORTANT*

Quote of
the week

 


Quote:

“There’s nothing wrong with letting individuals and companies keep more of their own money. But singling out some entities for tax relief, while others pay full freight, smacks of cronyism and rent-seeking.”

Las Vegas Review-Journal

EDITORIAL: Over 2,000 PERS retirees collecting pensions over $100K

Las Vegas Review-Journal
September 7, 2019

Over 2,150 people raked in at least $100,000 apiece last year from the Public Employees’ Retirement System of Nevada. That’s according to pension data now available at Transparent Nevada.

That number has been growing rapidly. In 2013, just over 1,000 people collected pensions worth at least $100,000. The number of retirees collecting over $200,000 a year has grown too. In 2013, 10 people received pensions greater than that amount. Last year, 23 people did.

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,

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September 3, 2019
03 Sep 2019

Political Update – September 3, 2019

Super Majority Vote Requirement Ignored by Democrats

Heidi Gansert
Nevada Business Magazine

September 1, 2019

In the final days of Nevada’s 80th Legislative Session, the Democrat majority in the Nevada State Senate and Assembly wielded their power to pass Senate Bill 551 (SB551) which raised Modified Business Tax (MBT) rates beyond their scheduled July 1, 2019 levels using a new simple majority voting threshold of 50 percent plus one vote. This vote was in direct conflict with the two-thirds supermajority requirement in Nevada’s Constitution.

The two-thirds vote has been used for extending taxes like the 2009 legislative session’s “sunset” taxes, for increases in license fees, room taxes and property taxes. Simply put, the two-thirds supermajority vote provision has not been ignored, rather it’s been respected and upheld for decades. In times when a single political party controls both houses of the legislature and governorship, the two-thirds supermajority vote provision in Nevada’s Constitution for increased revenue is the sole check on the growth of taxes and government.

How Will This Affect You?

The simple majority vote for SB551 created a new and dangerous precedent to increase taxes and fees as well as remove tax credits and exemptions.

Now, with a simple majority vote, you could face increased property taxes on your home by the removal of the 3 percent statutory cap, you could be taxed on life-saving prescription drugs like insulin and you could be taxed on your electricity, gas and water. For businesses, the Commerce Tax could affect more businesses with the elimination of the MBT tax credit, inventories could be taxed and much more.

The Democrat majority forced this vote for two reasons: to establish a much lower threshold to raise taxes and to secure a greater revenue stream to support continued expansion of government. This vote was not about filling a budget hole or shoring up a revenue shortfall.

During these robust economic times, legislative fiscal staff confirmed there was over a $100 million surplus of unallocated funds available when the 2020-21 budget was finalized in late May of this year. The total taxes raised by SB551 were forecasted to be less than this $100 million surplus. And, recently, Governor Sisolak confirmed no budget hole would be created if the revenue from SB551 was eliminated. Resetting the tax voting threshold to a simple majority was critical to Governor Sisolak and his Democrat colleagues because they substantially changed the trajectory of the cost of government by passing legislation to allow collective bargaining for state employees, by requiring higher prevailing wages for school construction, by increasing the minimum wage and more.

*IMPORTANT*

Quote of
the week

 


Quote:

“The Democrat majority forced this vote for two reasons: to establish a much lower threshold to raise taxes and to secure a greater revenue stream to support continued expansion of government. This vote was not about filling a budget hole or shoring up a revenue shortfall.”

Heidi Gansert

COMMENTARY: Right-to-work law boosts the Nevada economy

Mark Mix
Special to the Las Vegas Review-Journal

September 1, 2019

Nevada’s right-to-work is simple: It means no worker can be forced to join a union or pay union dues to get or keep a job. It’s basic common sense. And given the history of Big Labor’s power in Nevada, some find it surprising that the state’s had a right-to-work law for 66 years.

Right now, millions of workers around the country are forced to pay dues — or be fired — because they have the misfortune of being located in one of 23 states that do not have a right-to-work law. And every year, these workers cough up billions of dollars in forced union dues to union bosses just to have a job and feed their families.

This is just plain wrong and un-American.

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.
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August 27, 2019
27 Aug 2019

Political Update – August 27, 2019

 

GOP lawsuit vital to protecting our representative system of government

Robert Fellner
Nevada Policy Research Institute

August 12, 2019

In an effort to defend our state constitution and representative system of government, the Senate Republican Caucus recently filed a lawsuit to invalidate a pair of tax hikes that were passed without the constitutionally required two-thirds support.

After successive, landslide votes in 1994 and 1996, Nevadans amended the state constitution to require a two-thirds majority vote in both houses of the Legislature to pass any bill “which creates, generates, or increases any public revenue in any form.”

Thus, when Senate Democrats sought to pass a pair of bills that would prevent the expiration of one tax and the scheduled decline of another, most expected those bills would require at least two-thirds support to pass.

The Legislative Counsel Bureau, however, determined that a bill which prevents the scheduled decline of an existing tax does not increase revenue and, as such, can be passed by a simple majority vote.

While most would consider the two-thirds provision to be remarkably clear, the LCB found it vague and ambiguous, and ultimately concluded that it only applies to bills that create a new tax or directly increase an existing one.

The LCB claimed that when the constitution references a bill that “creates, generates, or increases any public revenue in any form,” it’s actually only referring to bills that “directly increase revenue,” either by overtly raising an existing tax or creating a new one.

But such an interpretation is strictly prohibited by the rules of statutory construction as articulated by the Nevada Supreme Court, which requires courts to avoid rendering any constitutional text “meaningless or superfluous.”

Because the text of the two-thirds provision references any bill that “creates, generates, or increases” any public revenue, even if one finds that text unclear and in need of further clarification, the resultant definition must be more expansive than just bills which directly increase revenue, in order to prevent rendering the terms of “creates” and “generates” meaningless.

In other words, the constitutional text of “creates, generates, or increases” cannot be reduced to just “increases.”

This is why the LCB’s citation to the state Supreme Courts of Oregon and Oklahoma is not persuasive, as both of those courts were interpreting the narrower phrase of “bills for raising revenue.”

So, what might Nevada’s much broader language apply to, beyond just new taxes or increases in existing taxes as the LCB contends?

*IMPORTANT*

Quote of
the week

 


Quote:

“At the Keystone Corporation, we believe it this provision of our Constitution is worth fighting to defend, and that is why we joined this lawsuit. Further, if legislators can simply ignore the Nevada Constitution to allow for tax increases on the Modified Business Tax (MBT) and on DMV fees this year, what will happen when they try to raise our sales taxes, property taxes, gas taxes, and on and on?”

Keystone Corporation

Emails raise questions about award of DMV computer contract

Arthur Kane

Las Vegas Review-Journal
August 24, 2019

Officials of a tech company that was awarded a contract to modernize the Nevada Department of Motor Vehicles’ computer system met with the agency’s former director and key staffers just months before the state issued a request for proposals for the project, emails show.

The emails raise questions about whether the company, Tech Mahindra, had an inside track for the failed $75 million contract. Officials involved in the meetings and representatives of other companies that bid for the project did not return calls or emails asking whether other bidders met with state officials before the RFP. 

According to the emails, Tech Mahindra vice president Aman Sethi met with then-DMV director Troy Dillard on Feb. 18, 2015, to discuss the modernization. Three weeks later, Sethi scheduled a meeting that included Karuppuswamy Manivannan and Anand Vijayaraghavan, two state IT employees who would end up on the selection committee that picked Tech Mahindra, emails show.

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.
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August 20, 2019
20 Aug 2019

Political Update – August 20, 2019

Keystone Corporation Joins Lawsuit to Protect Nevada’s Constitution

Keystone Corporation
August 20, 2019

The Keystone Corporation is proud to have joined in the lawsuit to protect Nevada’s Constitutional requirement that two-thirds of the legislature support tax increases before they can be enacted. As an organization, we didn’t just join this lawsuit, we are doing our part to help fund it.  But we need your help today.

As the leading conservative statewide business organization in Nevada, we would love for you to join us and become a member today so you can help us win this lawsuit and fight for our shared principles.  However, if you are unable to join at this time, you can still help us fight to protect our Constitution by going here.

Article 4, Section 18, Subsection 2 of the Nevada Constitution clearly states that this two-thirds vote is required in both houses of the legislature for any bill “which creates, generates, or increases any public revenue in any form, including but not limited to taxes, fees, assessments, rates, or changes in the computation bases for taxes, fees, assessments and rates.” 

Using what Senate Republican Leader James Settelmeyer (District 17) has properly called “a work of legal fiction,” legislative lawyers for the Democrat majority gave a green light to legislators to ignore our Constitution, along with the will of the voters.  In two consecutive elections, Nevada voters placed this tax restraint initiative into our Constitution with over 70 percent of the vote.  That is a clear, bipartisan statement by the voters of our state.  

At the Keystone Corporation, we believe it this provision of our Constitution is worth fighting to defend, and that is why we joined this lawsuit. Further, if legislators can simply ignore the Nevada Constitution to allow for tax increases on the Modified Business Tax (MBT) and on DMV fees this year, what will happen when they try to raise our sales taxes, property taxes, gas taxes, and on and on?  

Please consider joining Keystone Corporation today, or provide us with a contribution to help fund this critically-imporant lawsuit.  We appreciate any amount you can provide.

*IMPORTANT*

Quote of
the week

 


Quote:

“At the Keystone Corporation, we believe it this provision of our Constitution is worth fighting to defend, and that is why we joined this lawsuit. Further, if legislators can simply ignore the Nevada Constitution to allow for tax increases on the Modified Business Tax (MBT) and on DMV fees this year, what will happen when they try to raise our sales taxes, property taxes, gas taxes, and on and on?”

Keystone Corporation

GOP lawsuit vital to protecting our representative system of government

Robert Fellner
Nevada Policy
Research Institute

August 12, 2019

The long-awaited bill creating a new education funding formula is here. Many key details, however, are yet to be determined.

In an effort to defend our state constitution and representative system of government, the Senate Republican Caucus recently filed a lawsuit to invalidate a pair of tax hikes that were passed without the constitutionally required two-thirds support.

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

August 13, 2019
13 Aug 2019

Political Update – August 13, 2019



EDITORIAL: Nevada PERS counting on unrealistic investment assumptions

 

Las Vegas Review-Journal

 

August 10, 2019

The current stock market volatility is another reminder of the precarious position of public pension systems, including Nevada’s plan for state workers. That’s because public pensions invest heavily in volatile assets, like stocks.

Across the country, state and local pension plans are only 73 percent funded, according to a review of 180 plans by the Center for Retirement Research at Boston College. The Public Employees’ Retirement System of Nevada does slightly better, coming in at around 75 percent funded. But neither statistic is encouraging.

“State and local pension plans have about $4.4 trillion in assets according to the Federal Reserve,” The Wall Street Journal reported last week, “$4.2 trillion less than they need to pay for promised future benefits.”

Imagine the uproar if pension plan officials announced they were going to pay out only 75 percent of promised benefits. Yet that’s all the assets most of these pension plans currently have — assuming they hit their investment assumptions.

This is especially concerning, because pension systems are riding a 10-year-wave of positive investment returns. The S&P 500 has more than tripled in value since the beginning of 2009. If pension systems are only 75 percent funded after a decade of healthy growth, what happens to the unfunded liability during the next downturn?

Pension managers, however, assure the public that there’s nothing to worry about. To make up for the deficits and growing obligations, they assume pension plans will earn a 7.4 percent return, on average. Nevada PERS assumes annual returns of 7.5 percent.

In fact, these projections disguise the real problem by likely underinflating long-term obligations by overestimating portfolio performance. Thirty years ago, a level of return of around 8 percent may have been realistic. As the Wall Street Journal reported last month, a 30-year U.S. Treasury bond had a return rate of almost 9 percent in 1987. This week, the yield on a 30-year U.S. Treasury bond was 2.25 percent.

Quote of
the week

 


Quote:

"When returns fall short, however, the amount the government must contribute increases,” the Journal noted, “potentially diverting money from other public services.” Or leading to tax hikes on the private sector taxpayers who are ultimately responsible for funding these generous retirement plans."

Las Vegas Review-Journal

 

NEVADA SHOULD END TAX BREAKS FOR THE SELECT FEW

Thomas Mitchell
Lincoln County Record

August 8, 2019

For the past decade Nevada’s Governor’s Office of Economic Development (GOED) has doled out billions of dollars worth of tax breaks to select companies in order to entice them to make capital investments here and create jobs. The companies getting the tax breaks include giants such as Tesla Motors, Apple, Amazon, eBay and Switch.

The office has done this despite the fact the state Constitution declares, “The Legislature shall provide by law for a uniform and equal rate of assessment and taxation …” It’s not uniform or equal if a select few get breaks while others don’t.

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.
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It’s time for GOED to go

Robert Fellner
Nevada Policy Research Institute

July 31, 2019

The RGJ’s recent report, Nevada got a fraction of the jobs, investment promised by Tesla-style tax breaks, confirms what experts have been warning about for years: Nevada’s corporate welfare program is a bad deal for taxpayers.

The Governor’s Office of Economic Development (GOED) provides billions of dollars in tax breaks to large corporations like Apple and Tesla, based on the idea that the added jobs and investments they bring to Nevada will more than offset the cost.

But that claim has been repeatedly debunked by academic research, which finds that programs like GOED tend to be a wash or, in some cases, a net negative. A study published in the peer-reviewed Journal of Regional Science, for example, found that tax incentives actually reduced job growth and business expansion. The study also found that businesses who received the incentives consistently overestimated the economic benefits they would deliver, just like what has happened here in Nevada.

Unfortunately, while the promised benefits have failed to fully materialize, the costs imposed on taxpayers are here to stay. In an effort to quantify that cost, experts at the Mercatus Center recently estimated that eliminating corporate incentives would yield enough savings to reduce Nevada’s sales tax by 7 percent.

That bears repeating: Nevadans are effectively paying more in sales tax just so some of the world’s richest companies can receive a tax break, like the $13.6 million tax abatement given to eBay for a project which created a grand total of two new jobs.

While free markets require that businesses serve the needs of consumers in order to profit, politics rewards insiders who can afford to hire the best lobbyists. This explains why so many legislators support giving tax breaks to giant corporations rather than ordinary Nevadans: the former tends to spend much more on lobbying efforts than the latter.

There is also the issue of concentrated benefits and dispersed costs. Jobs created through GOED give politicians a great opportunity for free press, while the costs are widely dispersed and thus unseen.

Speaking of that which is unseen, it was quite troubling to read that GOED refused to answer the RGJ’s questions “about whether or how it pushed companies to meet the state’s performance measures,” particularly given the tax-funded agency routinely claims it does just that when responding to reports of underperformance.

Quote of
the week

 


Quote:

“That bears repeating: Nevadans are effectively paying more in sales tax just so some of the world’s richest companies can receive a tax break, like the $13.6 million tax abatement given to eBay for a project which created a grand total of two new jobs.”

Robert Fellner
Nevada Policy Research Institute

LETTER: No such thing as a ‘temporary’ tax in Nevada

Daniel Honchariw
to the Las Vegas Review-Journal

August 3, 2019

Kudos to state Senate Republicans for challenging the unconstitutional modified business tax extension. The voter-approved, two-thirds constitutional requirement for any tax increase is too vital a taxpayer protection to diminish.

But on the heels of this legal challenge, one may be inclined to ask: Do taxes ever actually sunset as planned? There’s plenty of recent evidence to suggest “temporary” taxes, in practice, are about as rare as unicorns. Besides the MBT extension, here are a few other “temporary” taxes that have already been, or are likely soon to be, extended into perpetuity:

— DMV technology fee — This $1 fee was supposed to expire in June 2020, but Senate Bill 542 of the 2019 session extended the fee for at least two years. This extension is also being challenged in the pending litigation, having been approved with less than two-thirds support in the Senate.

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 
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August 7, 2019
07 Aug 2019

Political Update – August 7, 2019

It’s time for GOED to go

Robert Fellner
Nevada Policy Research Institute

July 31, 2019

The RGJ’s recent report, Nevada got a fraction of the jobs, investment promised by Tesla-style tax breaks, confirms what experts have been warning about for years: Nevada’s corporate welfare program is a bad deal for taxpayers.

The Governor’s Office of Economic Development (GOED) provides billions of dollars in tax breaks to large corporations like Apple and Tesla, based on the idea that the added jobs and investments they bring to Nevada will more than offset the cost.

But that claim has been repeatedly debunked by academic research, which finds that programs like GOED tend to be a wash or, in some cases, a net negative. A study published in the peer-reviewed Journal of Regional Science, for example, found that tax incentives actually reduced job growth and business expansion. The study also found that businesses who received the incentives consistently overestimated the economic benefits they would deliver, just like what has happened here in Nevada.

Unfortunately, while the promised benefits have failed to fully materialize, the costs imposed on taxpayers are here to stay. In an effort to quantify that cost, experts at the Mercatus Center recently estimated that eliminating corporate incentives would yield enough savings to reduce Nevada’s sales tax by 7 percent.

That bears repeating: Nevadans are effectively paying more in sales tax just so some of the world’s richest companies can receive a tax break, like the $13.6 million tax abatement given to eBay for a project which created a grand total of two new jobs.

While free markets require that businesses serve the needs of consumers in order to profit, politics rewards insiders who can afford to hire the best lobbyists. This explains why so many legislators support giving tax breaks to giant corporations rather than ordinary Nevadans: the former tends to spend much more on lobbying efforts than the latter.

There is also the issue of concentrated benefits and dispersed costs. Jobs created through GOED give politicians a great opportunity for free press, while the costs are widely dispersed and thus unseen.

Speaking of that which is unseen, it was quite troubling to read that GOED refused to answer the RGJ’s questions “about whether or how it pushed companies to meet the state’s performance measures,” particularly given the tax-funded agency routinely claims it does just that when responding to reports of underperformance.

Quote of
the week

 


Quote:

“That bears repeating: Nevadans are effectively paying more in sales tax just so some of the world’s richest companies can receive a tax break, like the $13.6 million tax abatement given to eBay for a project which created a grand total of two new jobs.”

Robert Fellner
Nevada Policy Research Institute

LETTER: No such thing as a ‘temporary’ tax in Nevada

Daniel Honchariw
to the Las Vegas Review-Journal

August 3, 2019

Kudos to state Senate Republicans for challenging the unconstitutional modified business tax extension. The voter-approved, two-thirds constitutional requirement for any tax increase is too vital a taxpayer protection to diminish.

But on the heels of this legal challenge, one may be inclined to ask: Do taxes ever actually sunset as planned? There’s plenty of recent evidence to suggest “temporary” taxes, in practice, are about as rare as unicorns. Besides the MBT extension, here are a few other “temporary” taxes that have already been, or are likely soon to be, extended into perpetuity:

— DMV technology fee — This $1 fee was supposed to expire in June 2020, but Senate Bill 542 of the 2019 session extended the fee for at least two years. This extension is also being challenged in the pending litigation, having been approved with less than two-thirds support in the Senate.

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 
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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

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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

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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

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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 
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