Think your job is difficult? How’d you like to be the one in charge of balancing Nevada’s budget – filling a gap between expenses and revenues that’s expected to reach $2.5 billion over the next two years? Governor Brian Sandoval is required by law to present a balanced budget to the Legislature, which he has done by crafting a series of concrete proposals that will take state spending back to 2007 levels.
Now that the session has begun, so has the complaining about the budget cuts. But the hard truth is that there’s no easy way to find $2.5 billion, and sacrifices have to be made to keep the state government running while the economy recovers. The Governor’s budget is a reasonable response to current economic conditions, and legislators should support it instead of giving in to the demands of tax consumers like public employee unions and education administrators.
Yes, it would reduce current spending levels by 6.4 percent, but that still leaves $5.8 billion of our money to spread around where it’s needed. The key is not to spread it around where it isn’t needed, just to satisfy political interests. And raising taxes to pay for all the spending proposed by tax consumers isn’t the answer, either. It may temporarily reduce the pain of cutting budgets, but the long-term impact would be disastrous.
Other states that have raised taxes to solve short-term budget problems have found themselves facing even greater challenges down the road. Several states passed income tax surcharges in recent years that penalized those with the highest levels of personal income. It was assumed that those people could afford to pay more – however, they could also afford to move away, which they did in droves. Maryland actually saw tax payments from the highest income levels decrease by 22 percent the year after its tax increase passed.
The same thing applies to business taxes. Whenever a state raises taxes on business, economic development agencies target that state to lure its companies away. Despite Nevada’s current challenges, our low-tax environment still gives us the ability to attract out-of-state companies that can help diversify our economy. We need that leverage, and increasing business taxes during this legislative session would cripple our economic development efforts for years to come.
Some of the loudest protests about the Governor’s budget have focused on education funding, with claims that children will suffer if funds are cut. Yes, a drop in state support will have consequences for school districts, but that doesn’t necessarily mean that classroom instruction needs to be sacrificed. Streamlining the system and eliminating some of the layers of administrative bureaucrats would pay off in increased efficiency and lower costs for the foreseeable future. Pouring more money into a broken system isn’t the answer to improving student achievement. The Governor’s proposals to end teacher tenure, create vouchers so parents can send their children to private or charter schools, and other reforms to the current system will have more far-reaching effects than any budget increase.
It’s up to us as citizens and voters to keep an eye on what’s happening in Carson City this session. Taxes cannot be raised without the support of at least three Senate Republicans and two Assembly Republicans, so it’s vital that they remain steadfast in supporting Governor Sandoval’s proposed budget. Republican Senator Dean Rhoads recently announced that the budget should be balanced by a combination of spending cuts and increased taxes and fees. Public pronouncements like that weaken the Republicans’ position at a time when they should be demonstrating their strength in numbers. Let’s make sure that we hold the line on taxes and fees this session. Our future depends on it.
Originally published in Nevada Business Magazine: