Governor Brian Sandoval's plan to increase business license fees has essentially died in the State Assembly. But now he has a new option that will combine his bill with another one to help raise about $500 million for education reforms. Sandoval says Senate Bill 252 would have broadened the tax base in a fair and easy way, but some Assembly conservatives worry the fees would hurt small businesses. He hopes his new proposal will get more support to meet his $7.3 billion budget.
His plan for a business license fee increase is part of his new proposal. The current fee of $200 per year would increase to $300. Corporations would pay $500. Companies that gross more than $3.5 million would pay the rates, originally proposed by the governor.
"A lot of work has gone in by the governor and staff to meet with legislative leaders and to come up with an improved compromise that we believe can move forward," Mike Willden, Governor Sandoval's Chief of Staff said.
That compromise includes part of Assembly Bill 464, known as the Anderson-Armstrong Plan. The intent of the bill would increase the rate and the amount of companies that pay the Modified Business Tax, without hurting small businesses.
"These are incubator companies that are trying to grow and expand, and we certainly don't want to hinder them with a tax that might slow their progress down," Assemblyman Paul Anderson, (R) District 13 said.
About one-fifth of Nevada's 330,000 companies pay the Modified Business Tax.
"Our concern with their plan was that's still a very narrow base of taxpayers and is not something that we expect to be able to grow, going forward," Willden said.
Still, Sandoval's plan would increase the Modified Business Tax rate from 1.17% to 1.47%. It would also reduce the exemption from $340,000 to $200,000. But some lawmakers are looking at a more modest budget around $6.9 billion.
"I think that we need to look at what we want to spend and then what we can spend," Assemblyman Jim Wheeler, (R) District 39 said. "And that's when you decide whether there's more revenue needed, not before."
Willden says the revenue is needed and that the legislature has only made $100 million of adjustments, with just one budget left to close.
"After 100 days of careful consideration, their conclusions, to-date, is that the governor's $7.3 billion is in the ballpark of what we need to be spending," Willden said.
Willden says the education budget will likely be closed by Saturday. So, lawmakers will be faced with two options. They can either re-open the budgets and start cutting or find a revenue source. If Sandoval's new plan passes, Willden says it would generate nearly $525 million.