What on earth happened at the Nevada Legislature last night? How could a mining tax (deduction removal) bill come alive so quickly, then die so quickly? And why does this all feel like déjà vu all over again when it comes to Nevada’s budget blues?
What the hell happened last night?
For most of the day yesterday, the Nevada Legislature appeared awfully quiet from the outside. It turns out that was just the “calm before the storm”, and I absolutely don’t mean that in any kind of QAnon way. Apparently while U.S. Senator Catherine Cortez Masto (D) was promising constituents that she will fight for more federal resources for Nevada during Make the Road Nevada’s town hall, Assembly Democratic leaders were unveiling AB 4 inside “The Building” to finally take some action on their own.
So what exactly is AB 4 about? Here’s where we return to last weekend’s Sturm und Drang over mining taxes. Again, the mining industry enjoys a constitutionally enshrined 5% net proceeds tax cap that can not be altered unless and until the Nevada Constitution is amended. However, the additional tax cuts mining companies utilize via deductions are not constitutionally protected, so the Nevada Legislature can alter those deductions whenever they’re in session. AB 4 would have cut the amount of deductions available by 40%.
But wait, there’s another catch: Nevada has a ⅔ supermajority requirement to raise any (available) taxes, thanks to the passage of Question 11 in 1994 and 1996. In the years since, there have been numerous questions over the legal definition of “raise taxes”, and state courts must confront the question again due to Republican efforts to block the extension of the Modified Business Tax (MBT) rate that Democrats ultimately passed along party lines last year.
But really, what happened last night?
Because Democrats have 29 seats in the 42-member Assembly, they successfully passed AB 4 along party lines. But because Democrats have 13 seats in the 21-member Senate, it failed by one vote. During the Senate floor vote, Senate Majority Leader Nicole Cannizzaro (D-Las Vegas) referred to the ongoing fight over last year’s MBT extension as she vented, “[At] that point in time it was, ‘We didn’t need money. We have enough.’ Here we are talking about cutting education. There is no easy answer. There is not $1.2 billion hiding in the budget.”
And yet, Democrats and Republicans also released competing plans to restore some of Governor Steve Sisolak’s (D) proposed budget cuts. Now that SB 3 includes a full sweep of gas tax revenue into the General Fund, and with Democrats also taking $46.5 million in leftover Medicaid dollars, another $25 million cut from the state college and university system (NSHE), $11 million from a tax amnesty program, and additional cuts elsewhere, they’re now proposing to shave $127.6 million off Sisolak’s original budget cut plan, including $41.7 million to ease off Sisolak’s proposed layoffs and furloughs of state workers and $81.4 million to save multiple health care programs that federal authorities deem “optional” (such as optometry and select mental health services).
Republicans actually proposed more cut reversals, but their proposal relies on a longer-term extension of the federal Families First Act’s temporary expansion of FMAP Medicaid funding that’s set to expire later this month unless Congress and the White House reach an agreement on a new federal aid package. During her town hall with Make the Road Nevada yesterday, U.S. Senator Catherine Cortez Masto warned that U.S. Senate Majority Leader Mitch McConnell (R-Kentucky) may continue to delay such an agreement into August as President Donald Trump continues to demand a $300 billion+ payroll tax cut and an overall $1 trillion cap on the price tag that would severely limit the amount of aid Nevada and other states could expect.
So what comes next?
If this all sounds and feels so familiar, you’re not alone. Back in 2011, Democrats and Republicans seemed locked in a stalemate until the Nevada Supreme Court provided a Deus ex machina that gave then Governor Brian Sandoval (R) the perfect excuse to backtrack on his previous opposition to extending taxes that originally passed in 2009. Republicans had been dead-set against taxes they previously supported, and Democrats waited until the last minute to propose an alternative that was immediately “dead on arrival”.
Two years later (2013), it happened again when Democratic leaders pre-conceded with “revenue neutral tax reform” and Republican leaders talked up a mining tax bill that was never going anywhere because it was always illegal. Four years after that (2017), it happened yet again with a fierce war of words over a last-minute Republican budget blockade, seemingly over private school vouchers and marijuana tax revenue, that was never going to last because Sandoval never really wanted it to happen in the first place.
There have been occasional exceptions, such as the historic 2015 tax agreement, but those times have been the exceptions rather than the rule. So far, the rule seems to be playing out as usual again during this special session, with Sisolak and legislators preferring to pass the buck rather than raise the dollars needed to avoid total budget-pocalypse.
Unless we get any actual last-minute surprises (as opposed to highly choreographed political theater), we may now have this special session’s “end game” playing out in front of us. Basically, they’re all begging the federal government to save us. But with Trump caring more about what his niece says about him and what Anthony Fauci says to the nation rather than how many people have lost lives and/or livelihoods due to the COVID-19 pandemic, it’s far from guaranteed any Deus ex machina will swoop in from Washington to save us any time soon.