Inside Politics - January 2003

Freshman Legislators

Face Baptism by Fire

by Scott Craigie

Nevada’s 20 freshman legislators are going to get the roughest initiation in history when the session opens for business this month.

This is the Year of Great Tax Wars, and history teaches that freshman legislators who face taxing sessions often have difficulty surviving. This year, there’s double the pressure. Because term limits will summarily discharge over half of today’s legislators from their jobs before the 2009 legislative session, many freshmen are being assigned leadership positions in this, their first session. Three freshman Democrat assemblymen and one sophomore have been appointed vice-chair of important standing committees – a head start toward leadership. Similarly, four first-time GOP senators are vice-chairs of standing committees.

Twenty-three freshman legislators opened the 1991 session. That was a big tax year – the dreaded Business Activity Tax (BAT) passed that year. Fully 13 of 1991’s 23 new legislators failed to return in their next cycle. Three of four freshman senators and 7 of 10 freshmen GOP assemblymen did not return.

The 1991 session was a cakewalk compared to 2003. The National Governor’s Association reports cash reserves for all states have fallen to $14.5 billion, compared to $48.8 billion just three years before. Total state receipts fell 6 percent last year, the first decline in more than 50 years. Nevada’s fiscal year 2003 budget gap is the third-largest in a hurting nation. As of this writing, the governor has set $850 million as his minimum revenue goal for the biennium.

Freshman Senator-elect Warren Hardy is uniquely qualified to relate to his current situation. He was a freshman assemblyman in 1991, and lost his 1992 reelection bid despite having voted against the BAT tax. His assessment: "Governor Guinn’s done a good job, done more than cut costs – he has really cut programs," Hardy said. "Problem is, how in the world do you take $800 million out of a weak economy? This economy is just starting to recover."

Hardy hit the nail on the head. Nevada’s revenue base is built on taxes that are extremely sensitive to shifts in the economy. Over 70 percent of all revenues come from tourism and gaming, primarily through gaming and sales taxes. During every recession, Nevada’s receipts take a dive, putting education, Medicaid and all other state services in jeopardy.

Yes, we all know that. What we often fail to appreciate, though, is this means we are always fixing our budget crises in the midst of a weak economy … the most painful time to raise taxes. In 1990, a big-six accounting firm did a study of Nevada’s tax structure and how it is affected by growth. It found a single family of four moving into Clark County added over $6,000 a year to the state government’s budget requirements. Yet, that same family contributed less than $1,000 a year to the state’s revenues.

We won’t achieve long-term reform without dramatic changes in how and what we tax. New taxes must grow with growth, or we are condemned to continue this chronic cycle of biannual revenue crises. Gaming, mining or even sales taxes won’t fix the real problem. All the easy ones are gone.

No doubt, if Kenny Guinn could do so, he’d create the right amount of the right taxes to forever end Nevada’s chronic cycle of crippling deficits. And he’d shoulder the responsibility entirely himself.

Unfortunately, that’s not an option. He must turn to 63 legislators, old and new, to take the plunge with him. Those freshmen who survive may actually be ready for leadership in record time.

Scott Craigie
Scott Craigie served as Governor Bob Miller’s Chief of Staff through three regular legislative sessions. He currently is a legislative lobbyist representing numerous business interests.