Veteran journalist Ed Vogel wraps up the 2011 Nevada Legislative Session.
Vogel notes “Nevada delivered a balanced budget while taxes stayed the same” but can’t fail to note that both candidates for Nevada Governor last year promised that they would not renew taxes scheduled to automatically expire. The promise – which appears to have been what most Nevadans wanted, if the polls that drove the major candidates’ campaigns were right – was not kept.
We’ve all heard about Nevada’s “structural deficit.” It’s a theory that Nevada’s tax system is somehow inherently unstable, and hard to predict. Using false logic, advocates of the theory typically want to make our tax revenue “more stable” by increasing taxes and expanding the functions of government. It was central to the debate surrounding Nevada’s job-crushing 2003 tax hikes, and frequently studied and discussed by local government employees and contractors even while rapidly increasing property values generated double-digit annual increases in property tax revenue.
Check out this report/proposal from the Nevada Policy Research Institute. It concludes Nevada’s tax structure is, in fact, too volatile, and recommends fixes other than simply increasing taxing and spending. The study suggests a flat consumption tax encompassing all transactions, at a lower rate, would reduce volatility, and also recommends some common-sense measures to make Nevada local government unions more interested in the mission of government.
The Tax Foundation’s new analysis of the 2010 US Census shows that little has changed – Nevada remains one of the states most successful in shifting its tax burden off of residents and onto non-residents. The new data shows us ranked 49th in the amount of personal income consumed by state and local taxation, but 37th in the amount of total state and local government spending as a percentage of personal income.
Driven by the highest local government (cities, counties) pay in the United States and moderated by less lucrative state-level worker pay, Nevada overall ranks sixth-highest government worker pay in a new study by the Las Vegas Chamber of Commerce.
PLAN has ranked Nevada’s elected officials. The average grade is a D. Here’s the full story.
The National Conference of State Legislatures has issued a reminder to Nevada’s Legislature: if you plan to increase spending during a time when revenue is falling, especially when all other states are trimming spending in line with revenue, you will end up with the largest budget gap amongst American States.
No doubt the Confused Wing of Nevada’s political and press corps will again complain that we need to raise taxes in Nevada, rather than do what all the other states are doing (which is reducing spending in line with revenue).
An Associated Press Wire Story that ran in today’s Review Journal and Reno Gazette Journal (read it here) is an example of embarrassingly bad journalism. It states, over and over again, that Nevada has the worst budget deficit in the United States, quoting:
as saying the Nevada has the largest budget deficit of any US state.
Paragraph three does, correctly, yet briefly, note that the gap is calculated by comparing revenue forecasts with what government thinks it needs.
In Nevada’s case, the legislature is planning to increase spending to a level 20% higher than our current revenue.
Meanwhile, our revenue is going to be around 10% less than current levels. 20% more plus 10% less equals a 30% budget gap, America’s largest.
Nevada has the largest budget gap because Nevada has the most unrestrained, irresponsible legislature of any state.
Here’s a reality-based look at Nevada’s actual revenue shortfall – sixteen states have it worse than us.
Worst in the nation, Jon Ralston flashed his audience today, citing the Wall Street Journal:
If you don’t believe what I and others have been saying about Nevada having the largest proportional budget hole, The Wall Street Journal says it’s true – just click on the map
The Journal’s article and chart actually rank Nevada’s tax shortfall as relatively mild, compared to many other states… at 6.5-percent, 16 states have a worse revenue shortfall than we do.
The data does rank Nevada’s legislature as one of the most irresponsible in America. When Nevada’s revenue started tanking, our legislature increased spending by draining all our savings and giving employees an average 6% raise last July. And our legislature plans on increasing spending again in three months – alot.
As a result, Nevada leads the nation in what the Wall Street Journal calls “Projected 2010 Gap as Percentage of FY2009 General Fund” and what Ralston more cleverly calls the “largest proportional budget hole”.
If our Legislature had acted responsibly, and trimmed spending when revenue flattened out instead of increasing spending, we would have an average problem on our hands. This is especially clear in retrospect, but should give the Legislature pause before raising taxes.
Remember, a “budget” is merely a plan to spend… or in Nevada’s recent years, a plan to overspend.
We recently had occasion to check out the new Open Government website from Governor Gibbons. I could spend hours here!
Great Review Journal editorial today:
…despite the fact both population growth and school enrollments have leveled off — even the “maintain services at current levels” spending Carson City Democrats apparently consider “as low as they’ll go” represents 17 percent more spending than the budget enacted by the Legislature two years ago — 26 percent more than actual spending of about $6.3 billion.
For months, the bureaucrats and Democratic legislators have been making a show of tearing their hair, weeping and moaning about “cuts,” lambasting Gov. Gibbons for submitting a budget that will supposedly leave schools and hospitals no choice but to close their doors, leave children and old people to starve in the streets, etc.
What cuts? Where are the cuts? Most Nevada taxpayers are figuring out how to tighten their belts and live on less. But a 17 percent spending increase — a revenue increase of 37 percent over what’s now flowing in to state coffers, new or increased taxes to generate an extra $2.16 billion, to a new record income level of $7.96 billion — is the minimum lawmakers will consider?
Yes, state government’s general fund actually spent $6.3 billion from the GF over the last two years, but the revenues were only $5.8 billion. Incidentally, that is just about the same amount of revenue we received in the prior biennium. For the coming biennium, the latest estimates (which are unofficial guesstimates from the Legislature, who has a long history of manipulating guesstimates for political purposes) say we will collect $5.1 billion, plus about $250 million from the new room tax, and about $400 million from the federal stimulus money.
So the actual revenue decline (assuming the federal stimulus and room tax) with no further tax increases is less than 1%. Those are the facts, pure and simple. Our population is barely growing now and the CPI is also very low.
To say a 37% increase in revenue is imposing harsh cuts is only possible in the delusional world of government spending. The problem centers on the fact that the government (particularly the state legislature) increases spending on autopilot by granting raises and expanding benefits every year, and any reduction in those automatic increases is falsely described as a draconian cut. The majority of the political media – Ralston and Sebelius – make no bones that they passionately desire more government, so they repeat the false descriptions from legislative leaders, and portions of their audience too lazy to check the math buy into and repeat it.
So now legislative leaders say it’s a cut if further increases are not implemented. There are a lot of private businesses that would be real happy to have only a 1% reduction in revenues and the spending adjustments needed to balance the books would be much easier than what they are facing now.
Oh, did we mention 20% of the employees at the Las Vegas Chamber of Commerce just LOST THEIR JOBS!