After presenting fellow lawmakers with three different proposals to limit state and local spending in 2005, all of which failed, Nevada state Sen. Bob Beers (R-Las Vegas) has decided to take the matter directly to voters.
Shortly before the New Year, Beers filed with the Nevada secretary of state’s office a proposed constitutional amendment to limit state spending. He and other supporters of the amendment–which they call the Tax and Spending Control Amendment (TASC)–have begun collecting the 83,157 signatures needed by June to get the measure on the ballot this fall. If the measure wins approval this year, it will also need voter approval in 2008 before it can go into effect.
Under the proposal, spending increases would be limited to growth in the consumer price index and population growth. Voters would have to approve spending increases above that amount.
“Residents love the idea,” Beers said. “They say it’s long overdue.”
State Spending Soaring
“Our state government is in the middle of a six-year stretch in which we are expanding spending and taxes about two times population growth and inflation,” Beers said. “When you overfeed government there is only one result: more government. The appetite for more expansion is insatiable. No amount is enough.”
Beers said the expansion has been “powered by the largest tax hike on a percentage basis” in Nevada history, which lawmakers approved in 2003. Among other things, the state that year implemented a gross payroll tax with no cap (which Beers described as “a stealth income tax”) and increased real estate transfer taxes, property taxes, and corporate registration fees.
“Polls indicated taxpayers were not in favor. Elected officials were definitely in favor,” Beers said. “I was serving in the Assembly at that time. My state senator, Ray Rawson [a Republican], engineered it. I ran against him in 2004 and won. The tax issue was a big one.”
Reserves Get First Dollars
The TASC is modeled on the Colorado Taxpayer’s Bill of Rights but has some important differences, according to Beers. The biggest difference is that surplus revenue (revenue that exceeds the spending limit) under the TASC would first go to fund two reserve accounts.
One of the reserve accounts would equal 3 percent of the total spending limit. That reserve could be tapped only if the legislature and governor agree the money is needed for an emergency. The second reserve account would hold an amount equal to 5 percent of the total spending limit. That is designed to be a “budget stabilization” fund in the event of an economic downturn.
Refunds Are Specified
Another big difference between the TASC and Colorado’s TABOR is that the TASC specifies how any additional surplus revenue would be refunded. Colorado’s TABOR left it up to lawmakers to decide how to refund surplus revenue.
Nevada does not have an income tax, so surplus revenue would be used to reduce motor vehicle registration fees and the gross receipts tax (which charges all businesses a 0.25 percent tax on gross revenues), Beers said. Local governments would reduce property taxes.
Measure Has Opposition
The measure has powerful detractors, including the state’s teacher union.
“The negative impact on education will be tremendous,” Terry Hickman, president of the Nevada State Education Association, told reporter Anjeannette Damon for a December 13 article in the Reno Gazette-Journal. “We are the fastest-growing state in the nation in terms of student population and we will have a difficult time paying for that growth with this.”
Paul Brown of Progressive Leadership Alliance of Nevada told Damon that Beers is “modeling this on a failed plan from Colorado. Here’s a guy who is saying, ‘I want to run for governor, but I’m really not smart enough to do the budget, so let’s just put it on automatic pilot.'”
Brown’s reference to Colorado concerned the outcome of a statewide referendum in November 2005, in which voters approved suspending constitutionally set spending limits for five years.
Beers said his measure addresses funding problems that could be caused by an emergency or recession, while the Colorado tax and spending limitation measure did not.
Steve Stanek ([email protected]) is managing editor of Budget & Tax News.