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Thursday, May 5, 2011

Nevada Democrats define "compromise" as tax hike and more spending

Senate Majority Leader Steven Horsford and Assembly Speaker John Oceguera - the leaders of the Nevada Democrats - have long claimed the need to compromise and work together on the budget issue. They describe this compromise as the need for both spending cuts and tax increases - but what they mean is something else entirely. I've stated all along that what they really mean by "compromise" is really "tax increases and spending increases." The spending cuts are almost always imaginary.

Just like the 2009 session the Democrats are pulling the same stunt - claiming the need to cut the budget without actually cutting the budget. Between 2007-09 and 2009-11 we went from a $6.9 billion budget to about a $6.9 billion budget (to much wailing and gnashing of teeth by state Democrats and public officials). We didn't actually cut the budget until the 2010 special session.

But instead of holding steady as they did in 2009, Democrats are actually shooting for the more spending, they want $7 billion (estimated, their official figure comes out today, but I've predicted $6.8B to $7B). This is about $600 million more than we're currently spending.

The Democrats budget proposal is more ridiculous than that....

Perhaps the Republicans started off the debate on the wrong foot after all.

Sandoval's budget was about $500 million above projected revenue and Democrats attacked him for it. At the time they were claiming the need to spend a ludicrous $8.3 billion - about 20 percent higher than the state's largest budget in history. Democrats should have been laughed off the stage at the time, but the media gave them a pass. Today, no Democrat quotes the $8.3 billion figure, they've brought it down to a more "reasonable" $7.8 billion.

The difference in what they claim is necessary ($7.8 billion) and what their budget proposal will be (about $7 billion) means an imaginary budget cut of $800 million and a very real increase in spending of $600 million.

To pay for this Democrats want a gross reciepts tax on all businesses earning $1 million or more - that includes a host of small businesses. As many know, gross reciepts taxes are paid regardless of whether you turn a profit and as such is a highly destructive tax, especially to those businesses operating on the margin.

Is this a lesson learned for Nevada Republicans? Sandoval may have compromised too much from the start as Democrats never once showed any signs of being realistic or engaging in any real compromise. See my blog post "If you give a Nevada Democrat a tax hike."

The Sandoval administration has clearly played their cards better than the previous Gibbons administration, but Gibbons, at least, held Democrats to a flat budget in 2009 and achieved real budget cuts in 2010. If Sandoval wants to best Gibbons on making responsible budgets he's going to have to keep the "compromised" budget below $6.4 billion.

Please note: I am not now, nor ever have been a Republican. In fact, I've never joined a political party or donated to one.

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