Senate Republicans reiterated Saturday they will oppose a proposed extension of the Modified Business Tax rate, saying there is roughly $142 million in unallocated funds still remaining in the state’s budget.
But Democrats are still making the case for their colleagues to get on board with the tax, noting that there is little outcry against an extension and much demand for the money.
Members of the Republican caucus said Saturday afternoon that they received confirmation from legislative fiscal staff that after the introduction of five budget bills plus millions of dollars in cuts made by budget committees, state lawmakers still have $142 million in additional money available even without extending a soon-to-expire payroll tax rate — a maneuver estimated to bring in $98 million over the two-year budget cycle.
Senate Minority Leader James Settelmeyer said his caucus has ruled out voting for extending the tax and presented a plan to put $30.5 million toward school safety programs cut from the governor’s recommended budget, $8 million to the Read by Grade Three program, and $20 million toward the Opportunity Scholarship program that helps low- and middle-income children attend private school. (Democrats generally do not support the Opportunity Scholarship program, but used funding for it as a bargaining chip in the 2017 session.)
The plan leaves between $45 million and $50 million in the ending fund balance each year, with another $33.5 million left over in 2020 and 2021 for other appropriations.
“We haven’t seen a need that has been presented to us for more taxes,” Settelmeyer said.
But by Saturday night, Republican lawmakers said that number had already dwindled by $5 million after the Assembly Ways and Means Committee voted to appropriate money for teachers at Title I and other underperforming schools, leaving ending fund balances in some years closer to $45 million. They also released a spreadsheet of their projections compiled by legislative fiscal staff showing when and where the money would be spent — including $10 million for Opportunity Scholarships and $17.5 million for school safety in 2019, $6 million in 2020 and $7 million in 2021 for school safety, and $4 million in each year of the budget for the Read by Grade Three program.
Though budget numbers are rapidly changing in the final days of the session, caucus members said they wanted to provide a snapshot of the remaining unallocated funds at this point in time, before they are appropriated for other purposes.
“If they’re deciding to spend money on other stuff, many of us will vote no on certain items,” Settelmeyer said. “We can’t stop anything.”
Asked for comment on Republicans’ calculations Saturday afternoon, Cannizzaro argued for her bill to keep the payroll tax at the existing rate and put the proceeds toward education.
“I don’t think that anybody here is hiding money. As far as my colleagues in the Senate are concerned, and I said this the other night as well, there’s a choice to make,” Cannizzaro said. “The choice is we can either continue to fund this state in a responsible manner, we can put money toward education, or we can give corporations a tax break for a tax that they don’t mind paying, and I think that that question should be the easiest question to answer and for some reason it’s still a question.”
Asked where the yet-to-be allocated funds will go, Cannizzaro said that is a conversation lawmakers are having right now.
“We have to be both fiscally responsible as a state and we also have to put our money towards the things we think are important, and that includes fighting for every Nevadan as we move forward, and I think that’s the question that we are answering right now,” she said.
Settelmeyer said that there’s also more than enough money to meet Clark County School District’s needs and provide for the teacher pay raises promised by Gov. Steve Sisolak, which has been a longstanding point of contention this session. The K-12 funding bill, SB555, that passed out of Senate Finance Committee Saturday morning allocates $6,067 for each student in Clark County, which Republicans say amounts to $66.3 million in additional money each year beyond what Clark County had initially been expecting.
“This is money that even if they were to add some of their pet projects, they’ve got $33 million to do it. They need to stay within the budget and we don’t have to touch taxes to be clear,” Republican Sen. Keith Pickard said.
Clark County School District Superintendent Jesus Jara said his district needs $111 million in the coming school year, which would leave the district about $45 million short of what it says it needs. The district has not directly pronounced that the funding is insufficient.
“We look forward to continuing to work with legislative leaders on education priorities in the final days of the session,” Jara said Saturday after the revelation of the amounts the state would be providing per pupil. “The per-pupil numbers demonstrate the inequities in how we fund public education. That’s why it’s critical that legislators support SB 543 and modernize our funding formula.”
The Republican response and promise to vote against the tax is a strong rebuke to Democratic Senate Majority Leader Nicole Cannizzaro’s SB551, a bill that would extend the payroll tax and funnel the sums to school safety and K-12 education programs. Although legislative attorneys have authored an opinion stating that extending the tax would not require the normal two-thirds majority vote needed for other tax increases, Republican lawmakers have promised to sue if Democrats pass the bill — which was heard earlier this week but has not yet passed out of committee — without a two-thirds majority. (Democrats are one vote shy of two thirds in the Senate.)
Settelmeyer and other Republican lawmakers said they had ruled out voting for an extension of the tax, saying the reduction in the rate was part of the arrangement made in 2015 when lawmakers approved a $1.1 billion package of new and extended taxes and that the idea of taking out the decrease had become politically untenable. In a hearing on the bill earlier this week, Cannizzaro framed the matter as lawmakers’ needing to decide between helping thriving businesses or struggling schools.
“The MBT has become very tainted because this process has been used as a stick on us,” Settelmeyer said. “I don’t think anybody disagrees with that, because that is the problem.”
The members of the Senate Republican Caucus indicated that they would not vote for an extension of the payroll tax rates even if legislative staff formally declared the bill needed a two-thirds vote to pass. Opponents of passing the MBT extension on a simple majority vote said they are concerned that doing so would erode the power of the constitutional two-thirds requirement to raise a tax.
“Why would we need that? We have the money,” Settelmeyer said.
But Democrats haven’t yet given up hope. Settelmeyer said that Assembly Speaker Jason Frierson met with several of his caucus members on Saturday “trying to peel them off.” He said that there hasn’t been a specific offer to his caucus members.
“Basically there’s been an indication that I’m not a nice person,” Settelmeyer said. “That’s okay.”
Republican senators did say they would likely support all five budget bills currently pending in the Legislature, including the capital improvement project budget that will require a two-thirds vote.
“I would imagine so, but we’ve got to finalize the numbers if they agree with us and they’re not trying to divert money to other things. So I would say probably yes,” Pickard said. “We’re not looking to make this a game of chicken.”
Settelmeyer also said that Republicans are willing to vote to suspend the constitutional requirement that bills be read three times — which slows down the legislative process — on a case by case basis.
“I have no problems with suspending that rule; they just need to talk to us on a case by case scenario,” he said.
Settelmeyer also expressed frustration that there are bills sitting in the Senate Finance Committee that don’t have fiscal notes and passed out of their policy committees that have languished without a vote.
“If they don’t like the issue, just tell us. We’re fine with that,” Settelmeyer said. “That’s how the body works.”
View the Republican budget projections below: