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Legislative panels dissect Nevada taxes

Sandra Chereb, Associated Press

CARSON CITY, Nev. (AP) -- Democratic legislative leaders in Nevada on Tuesday renewed their call to dissect the state's tax structure with a goal toward overhauling a system heavily reliant on discretionary consumer spending.

During a morning news conference, Assembly Speaker Marilyn Kirkpatrick, D-North Las Vegas, and Senate Majority Leader Mo Denis, D-Las Vegas, said examining taxes that fund state government is the first step toward proposing a plan.

They did not offer details of what might be considered later in the session

"It doesn't behoove us to come out with a plan that doesn't work," Kirkpatrick told reporters. But both said the time was ripe to tackle what state lawmakers and occupants in the governor's office have largely ignored for years.

"We've been kicking the can down the road," Kirkpatrick said.

Added Denis, "We're at a point, a perfect point right now to do this."

Republican Gov. Brian Sandoval has proposed a $6.5 billion general fund budget, to be funded in part by extending taxes that will otherwise expire June 30 for another two years.

During a joint hearing by Senate and Assembly tax committees, Kirkpatrick and others questioned whether approving temporary tax extensions to fill budget gaps is sound policy.

Sandoval's budget includes extending about $649 million of those temporary tax increases. Combined with shuffling money from other accounts to the state general fund, the overall effect totals about $1.2 billion.

While Sandoval has agreed to keep the extension on the payroll tax, his budget also includes raising the limit on exemptions to help businesses meet the costs associated with the federal health care reform law. Under his proposal, roughly 75 percent of Nevada businesses will avoid paying the tax at all.

"All businesses will benefit from the reduction in having to pay this," Budget Director Jeff Mohlenkamp told the committees.

But Kirkpatrick questioned what will happen two years from now and if the sunset will be extended again or allowed to expire.

"I think at the end of the day folks want stability and I don't believe this brings stability," she said.

Carole Vilardo, executive director of the Nevada Taxpayers Association, agreed.

"One of the problems you have with sunsets, exemptions ... if the fact that you don't give predictability to the structure," Vilardo said. "That is always a concern both to the people who pay the tax and those who are recipients of the revenue of the tax."

Sens. Ruben Kihuen and Debbie Smith, both Democrats, also raised concerns over taking $130 million from taxes that go to the state highway fund to fill a void in the general fund, despite assurances from Mohlenkamp that sufficient money would remain for road projects.

"The amount of projects that will go forward will still be significant," Mohlenkamp said, adding that "a short term reduction" won't reduce road maintenance.