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Coalition calls for tax hike to fund public construction projects to create jobs

By ThisIsReno

By Sean Whaley, Nevada News Bureau: A coalition of construction industry groups today advocated for a tax increase to fund public works projects around the state to help put people back to work.

The Building Jobs Coalition presented its proposal, called the “Creating 100,000 Jobs” report, in press conferences in both Las Vegas and Reno.

The proposal will likely face significant challenges, however, with Gov. Brian Sandoval’s vow not to raise taxes, and from critics of Nevada’s prevailing wage law.

Described as a working draft, the coalition notes that the current economic downturn in Nevada has required the private sector to cut 179,400 jobs. The construction industry has cut its workforce by more than 50 percent.

The white paper offers five strategies to turn this around, the first being the creation of a Nevada Job Bonds Support Fund, a stable, dedicated revenue source for capital construction projects.

One option lawmakers should consider for creating such a fund would be a tax increase, either a one-quarter of a cent sales tax, a ten cent property tax levy, or an “infrastructure” surcharge imposed on all licensed vehicles, the coalition says.

Assuming $100 million in annual proceeds, this would increase bonding capacity to $1 billion over 20 years, enough to support 11,500 jobs and break ground on the hundreds of millions of dollars in state and local projects that have been on hold due to lack of funding but that are ready to build, the coalition says.

Pat Pusich, a Reno architect and the coalition’s co-chairman, said: “Without a comprehensive plan for exploiting its strengths and correcting its deficiencies, Nevada could find its position as an attractive place to live, work, invest and conduct business usurped as the nation’s economy heals.”

Senate Majority Leader Steven Horsford, D-Las Vegas, offered this statement on the proposal: “With nearly 15 percent of Nevadans looking for work, creating jobs is the top priority for everyone in our state. Any ideas to create jobs are welcome and needed. I’m thrilled that this collection of industry leaders has taken the initiative and I’ll be looking at their ideas closely.”

Sandoval on Wednesday reiterated his intent to veto any legislation that contains a tax increase, saying the Nevada business community cannot afford it.

Businesses are doing their fair share, and “they are doing whatever it takes to keep people employed,” he said. But talk of potential tax increases on the part of the Legislature is a concern in the business community, Sandoval said.

“They appreciate my position but there is a legislative session coming up,” he said. “So they are going to be watching very closely to see what the tax policy in this state is going to be.”

Specifically in response to the proposal, the Sandoval administration today said:

“The governor supports the goal of job creation, but believes it is best accomplished by private sector growth. The strategy of spending public money we don’t have may yield short-term gains for some, but do long-term damage to the economy as a whole.

“Since this is the first we’ve heard of the proposals, we are reviewing them with interest. The governor’s top priority is building and fostering a business environment which creates new jobs without adding to the tax burden or spending money Nevada doesn’t have.”

Sen. James Settelmeyer, R-Gardnerville, said the requirement that most public works jobs pay the prevailing wage is another concern with the proposal.

He cited a water quality project on the Carson River that Douglas County officials wanted to pursue with Question 1 bond funds approved by voters in 2002 for parks, water and wildfire needs. The project could have been done for $119,000, but because it exceeded the $100,000 threshold for capital projects, it fell under the prevailing wage law. The final estimated cost was $185,000 and there wasn’t enough money to do the project, Settelmeyer said.

The prevailing wage is set by an annual survey of both public and private construction projects. But with most of the projects in recent years being public works that must pay the prevailing wage, the surveys are skewed and labor rates are going up, he said.

“If we want to put people back to work, I’d rather put two guys back to work for $40 an hour each than give one guy $80 an hour, Settelmeyer said. “I’d rather help two families.”

It’s not right that prevailing wage rates are being pushed up each year while state workers are asked to take a pay cut, he said.

Settelmeyer, formerly a member of the Assembly, protested Nevada’s new prevailing wage rates along with several colleagues when they were announced last year by the Labor Commissioner, but the rates were allowed to take effect.

The Legislature, in a special session in February 2010 called to erase an $800 million shortfall, approved legislation removing a sunset on a voter-approved Clark County tax hike to use for bonding purposes for public works jobs.

The coalition says it is working with key lawmakers to pursue its proposals in the upcoming session.

Some of the projects the coalition says are ready to build include a new county jail for Churchill County at a cost of $50 million, and flood control improvements on the Muddy River in Clark County at a cost of $40 million to $50 million.

Members of the coalition include the Associated Builders and Contractors, the Builders Association of Northern Nevada, Electrical Workers Local 401, the National Association of Minority Contractors and many others.

Audio clips:

Gov. Brian Sandoval says the business community cannot afford a tax increase:

012011Sandoval1 :26 keep people employed.”
Sandoval says the business community is waiting to see what the Legislature does regarding taxes:

012011Sandoval2 :19 going to be.”
Sandoval says he will veto any budget with a tax increase:

012011Sandoval3 :06 will veto it.”

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