Jewish World Review Sept. 25, 2003 / 28 Elul, 5763
A cure for Nevada's growing pains
Kenny Guinn, a blunt-speaking, gray-haired 67-year-old, is everything Las Vegas isn't: stolid, understated. In his blue suit and white shirt, he is as glitzy as Newark in February. After much business experience and a year as president of the University of Nevada-Las Vegas, tidying up a -- no surprise here -- basketball scandal, he was first elected Nevada's governor in 1998.
Since then, his state's population has grown by 400,000, including 70,000 school-age children. Yet on his watch the prison population is down, and more than 800 jobs have been trimmed from a state payroll of 15,000 by completely privatizing the workers' compensation system, which no other state has done. If he had not reduced the ratio of public employees to population, the state payroll would be 3,000 persons larger.
So why are some conservatives around the country so cross with him? Because he, with judicial help, forced a tax increase. Nevada illustrates this paradox: Some of the conditions conducive to a state's rapid growth -- minimal government, negligible taxes -- can be casualties of growth.
Shortly after Guinn was reelected 11 months ago with 68 percent of the vote, Nevada became paralyzed by its populist constitution. With a robust frontier faith that government is best that rarely convenes, in 1998 Nevadans -- Guinn included -- voted to amend the constitution to forbid the legislature to meet more than 120 days every two years. The constitution also says that funding education is a priority. And that the budget must be balanced. And, for good measure, Nevadans have decreed, by initiative, that there must be a two-thirds legislative majority for a tax increase.
So, earlier this year, with the legislature sitting more days than is permitted, and the budget not balanced, and education not funded, and there being no two-thirds majority for the governor's proposed tax increase, the governor asked Nevada's Supreme Court to order the legislature to finish its work. The court, as contemporary courts are wont to do, went further.
It proposed to solve what it calls "the calamitous conditions facing our state" by resolving what it says is "tension" in the constitution between the supermajority requirement and the requirement that education be funded and the budget balanced in 120 days of work. It said the legislature should act on taxes by a simple majority.
The legislature trimmed the governor's two-year tax increase (from $994 million to $836 million). Then, to avoid a precedent contradicting the people's will, it passed it by a two-thirds majority. Of that sum, $704 million (more than half of it for education) was necessary just to maintain current services for the increased population.
From 1992 to 2002, about 7,000 people a month moved to Nevada, most of them to Clark County -- this city and environs. The county opened 10 schools last year and needs 41 more in the next three years. Thirty-two percent of students in grades K through 12 are Hispanic, and the percentage is even higher in the lower of those grades. Nevada's high-school dropout rate is among the nation's highest. The elderly come here for the climate and low taxes, but when Guinn became governor, 36 percent of convalescent homes were facing bankruptcy.
There is no state personal or corporate income tax or inheritance tax. The state's principal source of revenue is the gaming tax, but whereas 90 percent of Las Vegas's revenue used to come from gaming, now more than 50 percent comes from ancillary entertainment revenue, which is taxed at a lower rate.
"We're almost like Alabama," he says, speaking of the inability of Nevada's school system to produce the educated work force to diversify the state's economy beyond services associated with gaming and tourism. Las Vegas has almost 50,000 more hotel rooms than New York City. But Nevada would be better off with some additional industries.
"You can't," Guinn insists, "cut your way to prosperity." And: "I don't like raising taxes any more than the next person. But I dislike taxes less than I dislike shutting down schools." Which he dislikes more than orange juice.
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