Gibbons, lawmakers hit snag on budget

CARSON CITY -- After a day spent tantalizingly close to agreement on the state's budget, legislative negotiations broke down Monday evening over one hundredth of a percentage point in the state's business tax.

Gov. Jim Gibbons insists on keeping the state business tax at 0.63 percent rather than letting it rise to 0.65 percent, as it would automatically under current law.

Lawmakers on both sides of the aisle had reached a compromise on the budget that included allowing the tax rate to rise to 0.64 percent for one year, but Gibbons rejected it, Senate Minority Leader Dina Titus, D-Las Vegas, said late Monday.

By making any budget agreement contingent on the tax staying level, Gibbons is preventing the education budget from being passed, despite his campaign rhetoric of putting education first, Titus said.

"He's hypocritical," she said. "If he's for education first, we should fund it first. He's holding it hostage for a rollback on the (business) income tax."

Gibbons backed the Education First constitutional amendment, ratified by voters, which requires the Legislature to pass education funding before other budgets.

Gibbons' chief of staff, Mike Dayton, said Gibbons would not budge on the rate change because he considers any rise in the rate a tax increase that would violate his campaign pledge not to raise taxes.

"He is holding the line at 0.63. That's his campaign promise that he's going to live up to," Dayton said. "The most important thing to him right now is keeping his word to the voters."

Titus urged Gibbons to sign the education budget and let other things be worked out later.

The difference in the tax rate amounts to a difference of about $4.5 million in state revenue per year.

"The voters said, 'Do not hold education hostage,' but that's exactly what he's doing," Titus said. "We can't move on. We can't finish up the session. We can't hire teachers. We can't plan for the future because of this line in the sand that he's drawn that's totally contrary to Education First."

Legislators had been close to finalizing an agreement on the $7 billion state budget Monday until hitting the tax snag.

"We are so close to closing down the budget," Assembly Speaker Barbara Buckley, D-Las Vegas, said Monday afternoon. "We have a framework."

Buckley, Senate Majority Leader Bill Raggio, R-Reno, and a few other legislators reached preliminary agreement on a budget deal over the weekend that Buckley said she thought was workable.

Raggio said Monday he was "disappointed."

"I thought we were close to an agreement, but at this point we don't (have one)," Raggio said. "I've talked to the governor and I don't have any details to give you, other than that there are still hang-ups. I had hoped that we would have an agreement today that everybody, including the governor, could support."

The Progressive Leadership Alliance of Nevada rallied about 20 protesters in front of the legislative building Monday morning, calling on legislators to pass the budget quickly.

"Now is not the time to provide special tax breaks for favored business interests," the group said in a statement.

Some legislators said without a budget bill for staffers to start drafting Monday, the Legislature was unlikely to finish by a June 4 deadline and probably would have to convene a special session to complete its business.