Economic Forum predicts revenue will be two sizes too small
Legislative Democrats scurried out of bed Wednesday morning hoping to find, with apologies to Theodore Geisel, “their presents, their ribbons, their wrappings — their snoof and their fuzzles, their tinglers and trappings!” Instead, they found the Grinch.
Democrats in Carson City had coveted a generous financial gift courtesy of the state Economic Forum, which issues revenue forecasts that must be used to build the biennial budget. All they got, however, was an empty box when the forum on Wednesday essentially stuck to its December forecast.
While members of the forum upped their projections by a few million dollars here and there, that won’t be nearly enough to cover the vast spending wish list coveted by the Democratic majority. Their failure to shower lawmakers with more cash may also give new relevance to outnumbered Republicans.
Without new revenues, Gov. Steve Sisolak’s budget proposal will need more than gimmicks to pencil out. For instance, Clark County School District officials say they currently aren’t able to fulfill the governor’s signature promise of 3 percent raises for teachers. Even more interesting, the budget now becomes more dependent on Gov. Sisolak’s proposal to keep certain vehicle registration taxes in the general fund and to block a planned decrease in the payroll tax, steps that would raise about $140 million.
Despite the governor’s vow not to raise taxes, the latter is a tax hike. The state constitution requires two-thirds legislative support for any bill that “creates, generates or increases any public revenue.” While Democrats enjoy a two-thirds advantage in the Assembly, they’re one vote short in the upper chamber.
Notably, the Legislative Counsel Bureau, which provides legal advice to lawmakers, has yet to issue a public opinion regarding the two-thirds threshold. The LCB has a history of telling legislators what they want to hear, so it would be no surprise for it to green-light Democratic efforts to impose the tax hike through a simple majority. But that approach could anger wide swaths of the electorate and carries political risks — consider the fallout from the Nevada Supreme Court’s infamous Guinn v. Legislature decision in 2003, which provided cover for lawmakers to disregard the two-thirds requirement.
A budget dependent on an illegal tax increase will likely be tied up in court — unless Democrats can secure a lone GOP vote in the state Senate to reach two-thirds support. Are Senate Republicans prepared to stand together? If not, what could they secure in return for sanctioning the Sisolak payroll tax hike?
Pass the popcorn. Even the Grinch might crack a smile at the impending legislative maneuverings.