Skeptics like myself, having gone through the “Read my lips, no new taxes” pledge by George Bush senior and his almost immediate breaking of it, had our doubts. Would Gibbons be true to his word?
I am writing this on Friday about 4 p.m. having just returned from the Legislature. Gibbons, true to his word, vetoed a series of bills that increased taxes. And Gov. Gibbons’ vetoes were overturned, the taxes have gone dramatically up (in fact the second highest tax increase in Nevada history) and his own party, the Republicans, have sold him down the river.
The GOP, a minority in both the Assembly and Senate, had the votes to sustain the governor’s vetoes — had they stayed together. Raising taxes in what is truly the worst Nevada economy in at least half a century, with businesses failing right and left, foreclosures skyrocketing, gas prices rising rapidly, layoffs hanging over everyone’s head and unemployment rising off the charts, is remarkably stupid both economically and politically. At the very least leaving things alone would be prudent; the GOP standard doctrine of tax cuts to stimulate economic growth was never even part of the equation.
In the 1990s, a strong Nevada economy produced huge tax revenues and the state budget greatly outpaced both population and inflation rates. In 2000, Nevada had a $400 million surplus. This trend coupled with the highest tax increase in Nevada history (a whopping $836 million passed in 2003), gave Nevada government, just between 2002 and 2005, a 56 percent revenue increase. Taxes poured in. Unfortunately, proportionately governmental bureaucratic growth soaked up every penny and now demands more.
It is true that tax revenue recently took a steep decline, on the magnitude of 30 to 40 percent. But think about that for a minute. What is that truly saying about our economy?
Government revenue is a percentage of the economy as a whole. If the revenue for the government is down like that, it simply means the economy has, for all practical purposes, collapsed. The Nevada economy is in a free fall, and Jim Gibbons knows it. It is a horrible time to even contemplate tax increases, and his budget, which was “dead on arrival” at the Legislature, was a realistic, pragmatic attempt to deal with the true state of the economy.
The Legislature has a disproportionate amount of people receiving money from the government in one form or another. Public-sector employees or their spouses typically range from 40 to almost 60 percent of the legislators. This obviously grossly biases the “pull” of the government side of the equation.
To refresh our memories, that 2003 tax increase (the massive $836 million tax hike) fueled an unprecedented 33 percent increase in state spending. This increase was almost blocked by true fiscal conservatives, led back then by Lynn Hettrick of Gardnerville.
But, true to the national trend, other Republicans, led by Sen. Bill Raggio, undercut the true fiscal conservatives. The tax increase passed. Government went on a spending binge, the results of which are now touted as “essential” services. Of course, at that time the Nevada economy was rolling along — the exact opposite of today.
Yet the same sell-out behavior, the same caving in, the same old GOP leadership pattern of abandoning its own base, repeats again. And yet again, in a near repeat of 2003, it is GOP Sen. Raggio & Co. who failed to support Gov. Gibbons in his attempt to protect Nevada’s taxpayer.
I expect Democrats to side with higher taxes and more government. Disillusionment of the GOP conservative base is a national trend. Why? Simple. The GOP turned into liberals, and it cost them severely in the election. By failing to support Gov. Gibbons the state GOP follows the same trend. Having this tax increase around your neck is an albatross of lethal proportions. Unless Nevada’s economy does a huge turnaround, expect an angry, even vengeful, voter at the polls.
In the meantime, thank you Gov. Gibbons for, in very difficult circumstances, honoring your promise.
Ira Hansen is a lifelong resident of Sparks and owner of Ira Hansen and Sons Plumbing.