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Nevada is heavily dependent on one of the most regressive forms of taxation ever devised: The Sales Tax. [TNV] The chart illustrates just how regressive this type of taxation truly is — the lower one’s income the higher percentage of that income is expended on state and local taxation. The State Budget Office (pdf) estimates that 25.8% of the state government’s tax revenue will be derived from sales and use taxes over the next two years. The next largest amount, 22.3%, is predicted to come from gaming taxes. We know from the State Comptroller’s Office that fully 9% of this State’s total income comes from the sales tax. (pdf)
Making the situation even more tenuous, the National Council of State Legislatures projects sales tax collections in four states — Nevada, Rhode Island, Virginia, and West Virginia — will fall below FY 2010 levels. [NCSL pdf] It would be a far better situation should we be able to address taxation and revenue issues without having to continually question some of the more cherished myths and legends.
One of the myths that ought to be dispelled during this Legislative Session is that there is a “high tax burden” on Nevada citizens. Nevada has a “high tax burden” only if one is willing to completely discount the Tax Foundation’s Special Report in 2008, “State and Local Tax Burdens…” (pdf) which shows Nevada ranked 49th on its roster of “State and Local Tax Burdens By Rank, FY 2008.”
It might be suggested that instead of placing higher levels of tax liability on its citizens, Nevada has played the “Begger Thy Neighbor” game — raising tax revenues from tourists. Indeed, the Nevada Resort Association figures indicate the hotel and casino sector collected approximately 32.1% of the total sales and use taxes in FY 2009. [NRA] That still leaves 67.9% of the state sales tax revenues coming from the wallets of Nevada residents, and we’re still ranked 49th in terms of state and local tax burdens nationally.
The next myth that should be eliminated from further discussion is that “money isn’t the answer.” The “money isn’t the answer” mythology has taken a couple of common forms. One is simply the application of the slogan. There is a major problem with this approach: it excludes any rational discussion of what the money is going to be used to accomplish. In truth, “money” doesn’t solve any problems — however, what the money can purchase does. “Money” won’t extinguish a fire, but it will buy a fire truck, and pay trained firefighters.
A third common myth is that somewhere there’s a money pot waiting to be tapped. Local school districts often hear this refrain, “The School District needs to cut down on the number of administrators and increase the number of teachers, the elder Jensen said.” [LVSun] While there may, in fact, be a few branches that could be trimmed from administrative trees, the individual being interviewed seemed unaware that some teachers are more expensive than some administrators — the starting level for a Clark County school administrator is reported as $50,710. [CCASA pdf] The top range for teachers doesn’t match that for administrators ($70,060 in ’09) but to conclude that cutting out X number of administrators will automatically open Y amount for teacher hiring is unrealistic and uniformed.
This mentality will also produce comments that are slightly more specific: “I think we spend way too much on everything,” she said. “The way to improve education is to stop forcing kids to go to school if they don’t want to and to increase discipline.” [LVSun] Well now, this certainly would reduce class sizes. However, we might want to inquire: At what age is the child to be allowed to announce that he or she will no longer go to school? NRS 392 requires: “Except as otherwise provided by law, each parent, custodial parent, guardian or other person in the State of Nevada having control or charge of any child between the ages of 7 and 18 years shall send the child to a public school during all the time the public school is in session in the school district in which the child resides unless the child has graduated from high school.” So, if Johnny, aged 10, has decided that 4th grade is no longer sufficiently interesting — can he opt out? If 10% of Nevada’s approximately 119,832 high school students decided to drop out, what — precisely — do we do with 11,983 youngsters thus idled? [NVleg pdf]
Do we leave it to law enforcement to deal with the more recalcitrant among them? Do we put nearly 12,000 youngsters into the job market to compete with older workers who may have families to support? Further, what are the consequences for school finance when the basic school support funding is based on enrollment? The fewer students in the schools — the less money from the state for their education? Our commenter would both “free up” and drain the alternative money pot in the same action.
Adherence to the mythology that “money” can’t solve serious issues may also generate alternate suggestions like the one mentioned above — just “increase discipline.” We might take this to mean that if a youngster is disruptive or non-compliant, then the discipline in question is meted out in the form of suspensions? However, that implication isn’t clear from the comment. Suspensions can work, especially if some “time out” is required, and these are relatively common; expulsion is also allowed under Nevada statutes (NRS 392.461-464). What more might our commenter have in mind?
School management begins with classroom management — with the hiring of those who not only know what to teach, but how to teach it — who are supported by administrators who have the (a) time (b) resources and (c) support to make disciplinary decisions stick. “Discipline” improves in those schools which have high levels of parental participation, and specialists (counselors, psychologists, social workers, security personnel, etc.) available to provide programs and services which diminish the need for suspension and expulsion. Indeed, “increasing discipline” requires the expenditure and allocation of resources to accomplish educational goals. Again, “money” isn’t the answer — but funds allocated to hire and train personnel may well be.
There’s another myth popular in ultra-conservative circles: The Myth of Miraculous Effort. Somehow, all forms of government and all agencies are supposed to “Innovate and learn to do more with less because less is what we have in the budget. Show us how smart you are by making it work despite a tight budget.” [LVSun] The first problem with this is that capitalism works. Innovative, creative, competent people are employable — and if budget cuts become too draconian these people will be the first to leave. All too often the result of trying to do more with less is that the agency, school, or department simply ends up doing less with less, and taking more time to do it. Backlogs are longer, deadlines are extended, inspections are delayed or canceled. It takes longer to compile and report statistics useful to businesses and other enterprises, and it takes longer to secure licenses and permits. Those now complaining about standing in line at the DMV should try it after significant cuts are made to the agency’s budget. Those now upset by the curtailment of hours in which property transactions can be officially recorded, may have even more to complain about should more staff and hour cuts be in the offing. The Myth of the Miraculous Effort demands that we dismiss, out of hand, one of the oldest bits of advice from the ages — you get what you pay for.
There are some topics that need to be addressed by the Nevada Legislature. What can the state do to raise revenue in order to provide basic services in a structure which will be more equitable in terms of the tax burden carried by lower income earners in Nevada? Are there taxes not currently on the books which would enhance revenue without significantly curtailing commercial or industrial enterprise? Are the levels of taxation consistent with the provision of basic state services in the long term? Are all segments of Nevada’s economy paying their fair share to contribute to the economic, social, and physical infrastructure of the state? Perhaps, at this point in time our seriousness about discussing taxation and revenue issues may not be gauged by how many answers we have, but how many intelligent questions we raise.
Desert Beacon 