By Sean Whaley, Nevada News Bureau: A firm hired by the Nevada Legislature to produce a report on the state’s revenue structure has been sent a notice of default for failing to turn in the document by a July 1 deadline.
Lorne Malkiewich, director of the Legislative Counsel Bureau, said the notice was sent Wednesday to Moody’s Analytics, the contractor hired to perform the study. The company has 10 days to respond by producing the final report or the contract will be terminated, he said.
Malkiewich said an effort was made to negotiate an extension with the West Chester, Penn., based firm without success.
The firm has not been paid the $253,000 for its work on the study, he said.
Mark McMullen with Moody’s, the author of the draft report, referred an inquiry to the firm’s legal department, which could not immediately be reached for comment.
Malkiewich said an arrangement may still be worked out with Moody’s.
Members of the Interim Finance Committee’s Subcommittee to Conduct a Review of Nevada’s Revenue Structure were advised Wednesday in a memo of the decision to issue the notice of default.
The firm produced a draft report that was rejected in May by the Vision Stakeholder Group, a panel of 19 Nevada residents appointed by the Legislature to assist in the revenue study. The group’s charge was to produce a document highlighting what the group wanted Nevada to look like over the next several years.
The draft report included a discussion on taxes but did not include any specific recommendations.
The draft report said Nevada should: “Stabilize government program funding levels by diversifying the tax base, using alternatives to general funds to support public investments, expanding rainy-day funds and securitizing future revenue streams.”
After rejecting the draft at its May 14 meeting, Moody’s was expected to work on a new draft and bring it back to the group for review and approval. No new meeting of the Vision Stakeholder Group has ever been scheduled.
The revenue study has been controversial from the beginning, with critics, including Gov. Jim Gibbons, calling it a thinly disguised effort by some to push for new taxes in the 2011 legislative session. Gibbons rejected a measure passed by the 2009 Legislature to fund the study.
Lawmakers, lead by Senate Majority Leader Steven Horsford, D-Las Vegas, then decided to use legislative funds to pay for the review instead.
Supporters say there are no pre-ordained conclusions for a tax increase expected from the study.
Lawmakers are facing a revenue shortfall in the next budget that could total as much as $3.5 billion. The shortfall could mean huge cuts to state programs and education without new revenue. A collection of temporary tax hikes approved by the Legislature in 2009 to balance the current budget are set to expire next June 30.
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