Federal judge: Obamacare unconstitutional

A federal judge in Florida has declared the Patient Protection and Affordable Care Act unconstitutional. From Reuters:

U.S. District Judge Roger Vinson, appointed to the bench by President Ronald Reagan in 1983, ruled that the reform law's so-called "individual mandate" went too far in requiring that Americans start buying health insurance in 2014 or pay a penalty.

"Because the individual mandate is unconstitutional and not severable, the entire act must be declared void. This has been a difficult decision to reach, and I am aware that it will have indeterminable implications," Vinson wrote.

Read more here.

'Twas the Week Before Session

With the start of the 2011 Nevada Legislative Session just a week away — and with NPRI having just released its own blueprint for addressing the state’s fiscal challenges — I thought I’d add something a bit on the lighter side to the raging debate. Enjoy:

’Twas the week before Session and all through the state
NPRI was plotting to make liberals irate
For Geoff at his keyboard and Steve with his pen
Had forged a new plan to send off to Carson

The data had all been compiled with care
With hopes that the hearing it would get would be fair
For though it could save the state billions in cash
The fear was that lawmakers would do something rash

There’d been talk of tax hikes, taking more from your check
For business owners and families, quite a pain in the neck
Couldn’t the Left see the plain budget truth?
Had they not read Suprynowicz, Mitchell or Muth?

The size of the deficit had been oversold
Leaving small-government advocates out in the cold
Liberals planned fiscal havoc, the private sector to loot
And to leave education in shambles to boot

Yes those Leftists were scheming and making their case
Meandering, slandering and pandering to their base
From Reno to Vegas, we could hear their loud call
“If we don’t raise your taxes, the sky will soon fall!”

“More spending we need,” that’s what Horsford did say
And Oceguera, too, at least twelve times a day
“It’s all for the children, have you Righties no heart?”
It was clear they thought voters were not very smart

The case had to be made that spending should be cut
Lest Nevada’s economy remain in its rut
Was it too much to ask, for that’s how it seemed
That government be made to live within its means?

Voters searched frantically for someone to trust
To stave off this cycle of boom and then bust
For the Left was now plotting to trump Sandoval
And spend away, spend away, spend away all

For Nevadans it seemed it was time to despair
Unemployment would rise as the markets turned bear
To whom could they turn to expose the Left’s lie?
And it was then that along came NPRI

Just as all were distressing, north, south, east and west
Those free-market champions proved up to the test
Their plan reined in spending, not a single new tax
Based not on crazed rhetoric, just plain, simple facts

They’d delivered a blueprint that could save our fair state
But the Session was looming — it would soon be too late
That free-market think tank still had much work to do
For hostile lawmakers numbered more than a few

As the Left’s talking points grew still more absurd
It was now up to Victor to go spread the word
On Ralston, on Harris, on Manders, on Stock
In papers, on TV, on radio talk

So the stage has been set for a big budget battle
Will Nevada find itself up a creek with no paddle?
Or will our economy get back on its feet?
And will we rise to the challenges that we must meet?

Only time will tell how it all will play out
But ’twill be entertaining, of that there’s no doubt
So a few final words as we prep for the fight
Happy Session to all! Now be sure to vote Right!

UNLV president shamelessly misleads the public on budget cuts

If there were one message I could impart to those interested in Nevada's budget debate, it would be this: Don't be manipulated.

For the next four months, advocates for higher spending will do anything to scare you into believing that the modest budget reductions in Gov. Brian Sandoval's budget will harm something you hold dear.

Does it matter if they have to claim that people are dropping dead in the streets, or deceive you by using misleading facts? Apparently not. These individuals will say anything — anything — to scare you. And they will certainly try to deceive you.

So take all the scare stories you're going to hear with an enormous grain of salt and search out the truth.

Speaking of scare stories, consider how UNLV President Neal Smatresk shamelessly attempted to deceive the public last night on “Face to Face” regarding the scope of the governor's proposed budget reductions to higher education.

The video is after jump, and his statement starts at the 6:43 mark.

Neal Smatresk: Our current budget's $172 million. It would go down to $125 million. That's a huge reduction by any measure. To put that in perspective, in the last four years, we've had a $49.6 million budget reduction. Over the next two years, we take another $47.5 million budget reduction for a cumulative $97.1 million and 52, 52 percent of our budget gone in a six-year period.

...

Neal Smatresk: I estimate we lose a third to up to half of our whole programs if that cut actually goes through. [Emphasis added]

Ignoring the erroneous 52 percent figure, Smatresk is telling you that UNLV's current budget is $172 million, which is completely false.

UNLV's current operating budget (Fiscal Year 10) is $625,578,929! This means that the $47.5 million budget reduction, which Smatresk claims is "unimaginable," is less than 8 percent of UNLV's current budget.

(UNLV's total operating budget includes General Fund subsidies, tuition, self-supporting funds, and grants and contracts. Also, I don't know if the cut Smatresk cites is accurate.)

It also means that when Smatresk says, "Our current budget's $172 million," he's failing to include about $450 million in revenue. Let me repeat that: He's failing to include an additional $450 million that UNLV will spend this fiscal year.

And you don't just forget $450 million in a $625 million budget. You choose not to mention it in an effort to scare the general public — by setting aside the truth because it doesn’t serve your purposes.

For some perspective, consider that UNLV's total operating budget in 2003 was $370,197,405.

Only $200 million more to spend than it had eight years ago? No wonder Smatresk says these cuts would "incite a reasonable amount of panic." (The $200 million figure is not adjusted for inflation or student growth.)

For more: Here is a spreadsheet of total higher education spending in Nevada from Fiscal Year 2000 to Fiscal Year 2010, as compiled by Regent Ron Knecht from NSHE data.

Video of Smatresk's remarks is after the jump.

Read more »

Sandoval's education plan based on proven reforms

One of the most exciting parts of Gov. Brian Sandoval's State of the State speech was the vision he laid out for education in Nevada. Gov. Sandoval's plan includes the following: end teacher tenure, give parents more choices through vouchers or open enrollment, end social promotion, grade the schools and institute a limited pay-for-performance system.

The good news for Nevada's parents and children is that similar reforms have worked wonders in Florida. Under the leadership of then-Gov. Jeb Bush, Florida instituted many of these reforms in 1999. And the results speak for themselves.

So will these reforms work in Nevada? Gary Peck, Executive Director of the NSEA, and I debated that question yesterday on Face to Face. Video after the jump.

Read more »

Borrowing is not a budget solution

While Gov. Sandoval's budget proposal has many positive elements — lower General Fund spending, significant education reforms, performance-based budgeting and no tax increases — there are a few worrisome items.

One of the biggest is this revenue source in the Executive Budget.

The Executive Budget securitizes a portion of the Insurance Premium Tax for the next five years in order to augment FY 2012 revenues by $190 million.

Basically, the governor is recommending using future Insurance Premium Tax receipts as collateral for a $190 million loan. While this is a better option than the sale-leaseback agreements that Arizona and California have entered into, it suffers from the same fundamental problem — debt is not a budget solution.

Senate Majority Leader Steven Horsford is already jumping all over this short-sighted proposal.

“This is like taking out a second on my house to pay my bills,” Senate Majority Leader Steven Horsford said. “I think a lot of families that have done that have seen the consequences of that approach. It’s put people in bankruptcy. How is that proposal by the administration any different?”

Of course, Sen. Horsford preferred method of paying Nevada's bills — raising your taxes — isn't ideal, either.

What's the real alternative? Reduce spending, ideally down to pre-2005 levels, through performance-based budgeting.

Why pre-2005? Because in 2005, Nevada raised inflation-adjusted, per capita spending by 30 percent (pgs. 5-6). That level of spending wasn't sustainable then and isn't sustainable now, despite Gov. Sandoval's best efforts.

Comparing cuts in the public and the private sectors

Gov. Sandoval's speech last night (if you missed it, Write on Nevada's live blog is here) and his proposed budget (2,942-page PDF here) are going to drive much of the conversation both in Nevada and on this blog over the next few months. This is especially true because Democrats likely won't release their plan to raise taxes until sometime in May.

Before we dive into the details, let's compare spending reductions in the public sector to those in the private sector. Gov. Sandoval's budget does contain some cutbacks — a 5 percent reduction in state worker pay, slightly less money for education, unfunded responsibilities for county governments and a smaller government subsidy for higher education, among other things. But these cutbacks only result in an 8 percent reduction in General Fund spending, to $5.8 billion, and several hundred million in spending outside of the General Fund for things normally funded by the General Fund.

Let's compare that to the private sector and the cutbacks some families, individuals and business have had to make.

"He's looking forward with optimism. I'm looking forward with skepticism," said Susan Beyer, who is unemployed and looking for work.

But Beyer also said Nevadans need to learn to cut back, as her family has had to do.

"We've had to cut back 70 percent," she said. Nevadans need to "put your big girl panties on and go ahead." [Emphasis added]

Cuts of 8 percent (plus hundreds of millions in additional spending) compared to 70 percent cutbacks. That's the perspective Nevada's lawmakers need to remember as they consider Nevada's budget in this next session.

Live blog of Gov. Sandoval's State of the State

If you're looking for Gov. Sandoval's speech online, you can listen live at kxnt.com or watch a live stream via the North Lake Tahoe Bonanza.

Overall thought: A good speech that provided a clear roadmap for how to balance Nevada's budget without raising taxes.

More from NPRI's Geoffrey Lawrence:

“Gov. Sandoval should be applauded for submitting a performance-based budget that reduces General Fund spending by 8 percent, and for seeking to reduce or eliminate many duplicative government agencies and boards, grant more educational control to school districts and universities, and implement education reforms that have worked in other states. The governor made a clear and compelling case that Nevada’s government needs to be driven by the pursuit of results and that an emphasis on performance can produce equal or better results with fewer resources.


“The governor’s Executive Budget successfully incorporates many of the reforms long advocated by NPRI. While not perfect, the proposed Executive Budget demonstrates that the state budget can be balanced with existing revenues, and without the need for a tax increase.

The live blog entries are after the jump.

Read more »

What's missing from Speaker Oceguera's talking point?

After Gov. Sandoval's State of the State speech tonight, Assembly Speaker John Oceguera is going to give the Democratic response.

And while he probably won't outline a particular tax increase he supports, he'll probably try to build the case for tax increases using a talking point he's grown fond of.

The state could make the largest cuts in history and the largest tax increase in Nevada history and still not close the gap, Oceguera said.

Let's review. In the last biennium, Nevada spent $6.4 billion from the General Fund. In this biennium, Nevada will have about $5.33 billion to spend. State agencies want to spend about $8.3 billion (although Oceguera is using an $8.1 billion figure).

Do you see what Speaker Oceguera's failing to mention in the quip above?

He's assuming the largest spending increase in Nevada's history — a 27 percent increase in General Fund spending, from $6.4 billion to $8.1 billion.

The largest tax hike and largest spending cut can't solve the gap created by the largest (proposed) spending increase in Nevada's history. Instead of being a shocking statistic, that makes sense. Wanting a 27 percent increase in state spending during an economic recession is going to give you a big hole to fill.

Let's see if Oceguera tries to use this misleading line tonight, and if anyone mentions what he's leaving out (besides NPRI, of course, via our live blogging).

Live blogging Sandoval's State of the State speech tonight

Write on Nevada will be live blogging Gov. Sandoval's State of the State speech, and Assembly Speaker John Oceguera's response, beginning at 6 p.m. tonight.

What will Gov. Sandoval say? I don't have any inside information, but this preview from the Reno Gazette-Journal is a good summary of what's been revealed so far.

"I can't give you the speech now, but obviously, the priorities within the speech are going to be the budget, economic development and education," Sandoval said. "Those are the three very important components for the future of the state."

Here is what NPRI is looking for:

1. Performance-based budgeting. As NPRI's “Better Budgeting for Better Results” study detailed last week, there's a better way to budget than simply rolling up existing costs. Gov. Sandoval has suggested that he's embraced some of the concepts of performance-based budgeting, so it'll be informative to see how he's incorporated performance-based budgeting in crafting his budget.

2. Controlling spending. If you're interested in controlling taxes, it begins and ends with controlling spending.

3. Refuting education myths. Specifically, the myth that Nevada doesn't spend enough. In the last 50 years, Nevada has nearly tripled inflation-adjusted, per-pupil spending, and our graduation rate is now 41.8 percent. A lack of funding is not the problem here.

4. Real education-reform proposals. Following Florida's educational reform model isn't the only way to improve education in Nevada, but it's a proven way.

Sandoval's aides have said that he's going to propose a constitutional amendment to repeal Nevada's Blaine Amendment, which would remove any constitutional problems with school vouchers. While Nevada would benefit from repealing the Blaine Amendment, that shouldn't be the only substantive reform Sandoval proposes. There are a lot of other educational reforms that should be pursued as well.

5. Refute the myth that government creates jobs or should "direct" the economy. If asked directly, most liberals will acknowledge that private enterprise is the key to long-term economic growth. But then in the next breath, they'll note how Nevada needs to decide what it wants to be when it grows up. Unfortunately, liberals don't believe that individuals working to pursue their own self-interest need to make the decisions that affect our economy — they think the government needs to pick the winners and losers in the economy and decide which industries they are going to favor with tax and regulatory breaks.

What's conveniently forgotten is that Nevada's government has been trying to do this for the last umpteen years. How's that worked out?

Nevada has taken a scattershot approach to economic development, which has resulted in numerous incentives that critics say dilute the state’s success. To point: More than a dozen studies have been commissioned in recent years to study how Nevada can diversify, with little coordination or overlap.

“A lot of people are working independently from each other, and I think it needs to be brought together under one vision,” former Assembly Speaker Barbara Buckley said. “People need to not get distracted by ‘Oh! Let’s give the film industry an incentive. Let’s try this, let’s try that.’ We end up trying to cater to everybody and end up not accomplishing anything.” [Emphasis added]

So what's Gov. Sandoval going to say? Come back at 6 p.m. tonight to find out.

Murphy v. Krugman

For those who haven't been following, there is a very interesting debate going on between Robert Murphy of the Mises Institute and Paul Krugman of the New York Times as to whether Keynesian or Austrian economic theory is more apt to describe current economic conditions and the business cycle in general.

It's riveting!

Is Clark County firefighters' abuse of sick leave criminal?

It's been apparent for years that Clark County firefighters have been gaming sick-leave policies to inflate their salaries.

Consider this egregious example of sick-leave abuse that an arbitrator noted in his decision to accept Clark County's final offer over the firefighters’.

In 2009, he took 48 days of paid sick leave, without ever taking 4 days in a row, so the Chief could require a certificate of illness. He worked 63 of his 121 scheduled shifts, took 11 days of vacation, and worked 92 shifts of overtime/callback. (County Ex. 16Y) He earned $232,187 for the year.

We've known for years these kinds of shenanigans have cost taxpayers millions of dollars, but now Commissioner Steve Sisolak is pointing out that these abuses might be criminal as well.

A Clark County commissioner has called for a criminal investigation into allegations of firefighters abusing sick leave.

Bolstered by critical comments from an arbitrator, Commissioner Steve Sisolak is sending letters to the FBI, the Metropolitan Police Department, the district attorney's office and the state attorney general's office asking that they look into whether some firefighters conspired to use sick leave to pad each other's paychecks and pensions.

When Commissioner Sisolak first started pointing out salary abuses by Clark County firefighters, some firefighters tried to intimidate him.

In retaliation, members of the union showed up at Sisolak’s public meetings to glare at him. He said he received death threats, which prompted county administrators to post park police at commission meetings. A city firefighter posted on Facebook that she’d like to shoot him.

Commissioner Sisolak should be applauded for not backing down in the face of these shameful intimidation tactics. Taxpayers need advocates who will stand up to powerful, politically connected and well-funded special interests like the firefighters union and ensure that taxpayer dollars are being spent appropriately. More lawmakers should join with Commissioner Sisolak to ensure that waste and fraud, especially potential criminal activity, are eliminated in all of Nevada's fire departments.

House votes to repeal Obamacare

245-189. Only three Democrats voted for the repeal.

While Obamacare has many negative impacts (including job-killing regulations), its supporters often claim that it's a deficit-reduction bill.

Watch as Rep. Paul Ryan destroys that myth and explains how Obamacare, as it currently stands, will explode the deficit.



The repeal bill now moves onto the Senate.

(h/t Hotair)

Is the fox auditing the hen house?

In yesterday's Wall Street Journal, President Obama announced an executive order for a "government-wide review of regulatory agencies." The president wrote:

This order requires that federal agencies ensure that regulations protect our safety, health and environment while promoting economic growth. And it orders a government-wide review of the rules already on the books to remove outdated regulations that stifle job creation and make our economy less competitive.

While President Obama correctly notes that many government rules make the economy less competitive, he fails to mention "reviewing" the job-killing regulations he helped pass, such as the Consumer Protection Bureau in the Dodd-Frank Bill or health care reform. Also, just last week the president touted tougher regulation for the oil industry as opposed to investigating the Bureau of Ocean Energy Management, Regulation and Enforcement.

Reviewing and eliminating government regulations could help businesses create jobs, but to do that you actually have to review and eliminate government regulations. Let's hope the president's actions follow his rhetoric.

Greg Brower replaces Raggio; promises not to raise taxes

Details from the Nevada News Bureau.

The Washoe County Commission today selected former state Assemblyman and U.S. Attorney Greg Brower to replace retired GOP state Sen. Bill Raggio in the 2011 session of the Nevada Legislature.

Brower, the first applicant interviewed for the remaining two years of Raggio’s term in Washoe District 3, said he was seeking the seat purely as a public service. Brower said he agrees with GOP Gov. Brian Sandoval that the upcoming two-year state general fund budget must be balanced with existing revenue.

“The governor is right,” he said. “We can, we must balance the budget without raising taxes.”

For those of you keeping score at home, Glenn Cook's column from two weeks ago is looking more and more accurate.

Budget cutting is a national trend

It isn't just Gov. Brian Sandoval. It's not just tea partiers. It's not just us liberty-lovers at the Nevada Policy Research Institute.

Democrat or Republican, budget cutting is a national trend.

The dismal fiscal situation in many states is forcing governors, despite their party affiliation, toward a consensus on what medicine is needed going forward.

The prescription? Slash spending. Avoid tax increases. Tear up regulations that might drive away business and jobs. Shrink government, even if that means tackling the thorny issues of public employees and their pensions.

And why is cutting government budgets a national trend? Because as NPRI pointed out months ago, the unsustainable spending in which most states have indulged is unsustainable.

On the other side of the country, and in the other major political party, [Democrat] John Kitzhaber, the new governor of Oregon, elaborately described the state, which needs to bridge a projected budget deficit of $3.5 billion, as an old house in need of an overhaul.

“There are too many rooms, and they aren’t the right size,” Mr. Kitzhaber said. “There’s no insulation, and the windows are drafty. And the cost of keeping this house is more than the family can afford. The roof needs to be replaced, and the siding is falling off.”

In 2005, Nevada increased inflation-adjusted, per-capita spending by 30 percent [pgs. 5-6] (a 50 percent in unadjusted dollars). In 2009, the Legislature chose to avoid the inevitable spending correction and propped up the budget using one-time monies. Now Nevada must face fiscal reality, not make things worse by kicking the can down the road.

The good news is that Gov. Sandoval appears ready to join with numerous other governors in cutting state spending and has stated, "We're only going to spend the money we have."

Sen. Kieckhefer ‘supports balancing the state budget with existing revenue’

So reports the Review-Journal:

Kieckhefer said he is "very friendly" with Gov. Brian Sandoval and supports balancing the state budget with existing revenue.

"We need to look at the state as a whole," he said. "See how much we have in tax revenue and how it best can be spent." [Emphasis added]

This isn't the first time Sen. Kieckhefer has said this, either. On the Nov. 13, 2010 episode of “To the Point,” he told Anjeanette Damon this. (Video after the jump):

Damon: Is there any circumstance under which you would vote for a tax increase?

Kieckhefer: Not that I can envision right now. The governor has said he's going to put forward a budget that does not raise taxes and I'm obviously a strong supporter of Brian Sandoval. I think he's going to be an excellent governor and we'll be evaluating his proposal that will not have tax increases.

There's a big difference between saying and doing (not just for Kieckhefer, but for all politicians committed to limited government and not raising taxes, starting with Gov. Sandoval), but this is encouraging for taxpayers.

The proof is in the pudding, but if Sen. Kieckhefer and his liberty-minded colleagues in the Senate (including Sen. Lee?) hold fast, it will be impossible for leftists to raise taxes this session.

Read more »

Sandoval: Furloughs out, pay cuts in

In a letter to state employees dated yesterday, Gov. Sandoval told them that he is proposing a 5 percent pay cut in his budget and ending the furlough program (and the accompanying 4.6 percent pay cut).

Thoughts:

1. From a policy perspective, this makes sense. As Gov. Sandoval wrote in his letter, the Cabinet officers have noted that "the furloughs are difficult to manage." It's also an encouraging sign for Gov. Sandoval's budget that will be released on Jan. 24. To keep his promise to spend only what the state has, he must reduce spending to around $5.3 billion.

2. As a courtesy to state workers, this letter makes sense. The letter (the best I can tell) wasn't sent to the media. It was sent directly to state employees. If you're going to cut someone's salary, telling the person directly is better than letting him or her hear about it in news reports.

3. This is not, NOT, a tax increase on state workers. While it's great to see leftists and state workers acknowledge the negative impact of tax increases, cutting state worker pay is exactly that — a pay cut, not a tax increase.

Exit question: How long until we hear someone say that if both a husband and wife work for state government, this would be a 10 percent pay cut?

And if you believe that it would be a 10 percent cut — think about it, think about it ...

Nevada or ... Somalia?

I was on KNPR's State of Nevada last week discussing the new Brookings report titled “Structurally Unbalanced” with Matthew Murray (the report's author), John Restrepo (a Nevada economist) and Launce Rake (PLAN's communications director). (Additional thoughts on the report are here.)

During the course of the conversation I noted that many of the so-called deep cuts that happened during the 2009 session and 2010 special session were either smaller-than-desired increases in state spending or small overall reductions.

The host then asked Launce to respond. Instead of addressing the facts that I presented, Launce accused me of being a "snake oil salesman" (22:40) and uttered this unbelievable bit of hyperbole (23:40).

"... a little dark humor here, but people are dropping dead on the sidewalk because of a lack of health care services. This is a reality that we're dealing with [in Nevada]. As long as the governor [Sandoval] is just going to parrot that snake oil and say, 'No new taxes,' and that's some sort of magic panacea, we are going to fail as a state. We are going to be the Somalia of the United States. We are no longer the Mississippi of the West. We are the Somalia of the United States."

Yep, some leftists think Nevada is the Somalia of the United States. In the spirit of one of my favorite “Daily Show” segments, let's consider that statement.

Nevada:

Somalia:

Nevada:

Somalia:

Not sure...

Nevada:

When they don't have facts on their side, some individuals will use rhetorical hyperbole to try and scare people and discredit their opponents. Pretending that the situation in Nevada even holds a candle to the tragedy that has occurred and continues to occur in Somalia is beyond the pale.

Let's keep the debate focused on the issues and facts, not on fear-mongering rhetoric.

Speaker Oceguera using old data to exaggerate the scope of Nevada's budget problems

In the past few weeks, Assembly Speaker John Oceguera has made presentations in front of the Reno, Las Vegas, North Las Vegas and Henderson city councils. In each appearance he's presented this PowerPoint, which he is using to describe Nevada's fiscal situation.

Unfortunately for anyone interested in having an accurate discussion about Nevada's budget, Speaker Oceguera is using old data to make Nevada's situation seem worse than it is.

His third slide:

His fourth slide (click to enlarge):

In case you can't read the bold print, it says: "States Reporting a Budget Shortfall for Fiscal 2010-2011." Fiscal Year 2011 runs from July 2010 to June 2011. The budget for Fiscal Year 2011 was set two years ago in the 2009 Legislative Session and modified in 2010's Special Session.

In other words, that shortfall is over! Fiscal Year 2011 (and its supposed "budget deficit") has already been taken care of. Instead, Oceguera's using this slide to make the case that Nevada's budget situation is the worst in the country and the state needs a tax increase. His misleading slides and testimony are, unfortunately, making their way into the media:

Oceguera noted that the deficit is 54 percent of Nevada’s budget — the largest percentage of any state in the nation. The deficit is estimated at $2.7 billion, Oceguera said.

Completely outdated … as Oceguera's own slide shows! The 54 percent statistic is also of dubious accuracy, because of the baseline-budgeting process and the denominator used, but that's an entirely different discussion.

What's even more outrageous about this is that NPRI e-mailed Oceguera about this inaccuracy two months ago — and he's still using it.

NPRI's original email (click to enlarge):

Speaker Oceguera responded to that email and even acknowledged that percentages, in this context, are "somewhat irrelevant" and are largely dependent on the chosen denominator.

While I give Oceguera credit for taking the time to engage in a substantive discussion with NPRI, it's distressing that he's now knowingly misleading elected officials, the general public and the media about the size of Nevada's budget deficit using an outdated statistic.

Don't be deceived and manipulated. When politicians — especially those looking to increase taxes — start talking about Nevada's budget deficit, make sure you have the facts handy.

Sandoval: 'We're only going to spend the money we have.'

One of the most important takeaways from Gov. Brian Sandoval's interview on “Face to Face” with Jon Ralston is this comment at 1:30.

(Update: The embedded video is crashing the site. You can view the video here. You may have to scroll through some old episodes. Look for Face to Face block 2 - 01/07)

[Making a pitch to a potential business looking to move to Nevada]

Sandoval: Unlike other states, we're taking the prudent approach, which is we're only going to spend the money that we have.

Our Economic Forum in our state has said we have $5.33 billion to spend. We're going to stick to that. We're not going to tax you.

You're leaving a state that has just increased taxes. You're leaving a state that's been, [where] you've been over-regulated. You should come to the state of Nevada where you will have a stable tax policy, where you'll have a stable business environment...

As part of Gov. Sandoval's commitment to making Nevada more business-friendly, his first executive order was a one-year freeze of new regulations [PDF].

Sandoval's comment on the budget gets right to heart of the tax-and-spend debate. As NPRI has noted previously, controlling taxes means controlling spending, and many of Nevada's current budget problems are the result of the per-capita, inflation-adjusted, 30 percent spending increase the Legislature passed in 2005 (p. 6).

Public comments are no guarantee that Gov. Sandoval will present a $5.33 billion budget or that he'll stick with his no-new-taxes promise, but he's certainly making all the right arguments.

Bolick: NPRI's litigation center can increase freedom in Nevada

Last month, Clint Bolick, the director of the Scharf-Norton Center for Constitutional Litigation with the Goldwater Institute, gave a speech on how NPRI's new Center for Justice and Constitutional Litigation can use Nevada's Constitution to protect liberty.

It's a great speech and includes a lot of great examples of the good they've done in Arizona. In case you missed it, enjoy.



To learn more about NPRI's Center for Justice and Constitutional Litigation, check out its website at http://justice.npri.org/

Does Sen. Lee oppose tax increases?

This is the first time I've seen this statement, and it includes a big "if," but this could be great news for taxpayers and businesses in Nevada.

Sen. John Lee, D-Las Vegas, has signaled he isn't convinced a tax increase is necessary.

"If I was signaling anything ... it would be I'm not for raising taxes," Lee said recently.

Sen. Lee is absolutely right that a tax increase isn't necessary in Nevada. As NPRI has previously noted, a large part of Nevada's current budget difficulties come from the per-capita, inflation-adjusted, 30-percent spending increase that occurred in 2005 (p. 5).

(The red line shows how much Nevada's budget would have been if it increased only by the rate of population growth and inflation since 1994)

Raising taxes instead of bringing Nevada's spending in-line with historical levels would simply create a bigger boom-and-bust cycle in the future.

Decreasing a subsidy is not a tax increase

Nevada's higher education officials either don't understand the difference between decreasing a subsidy and a tax increase or they're conflating the two terms for political purposes.

You decide.

Gov. Brian Sandoval’s guiding philosophy in building a state budget has been his promise not to raise taxes or fees.

In this economy, he argues, businesses and families just can’t afford to pay more to fund their government. Except, that is, for students.

Sandoval this week suggested to higher education officials that they could “significantly” increase tuition to colleges and universities to offset his proposed cuts in state funding, according to higher education officials.

They were unhappy, wondering why they appeared to be exempt from Sandoval’s viewpoint on the budget and economy.

“The statement that Nevada can’t afford higher taxes, but (higher education) can afford higher fees is hard to understand,” said Gregory Brown, a professor at UNLV and vice president of the Nevada Faculty Alliance. “It runs counter to principles he seems committed to.”

It’s not the first inconsistency in Sandoval’s ideology, which he has embraced with surprising gusto since entering the race for governor in September 2009.

The difference between a tax or fee and tuition should be obvious, but in case it's not, let's review how a tax works, using the sales tax as an example.

If you purchase a product for $10 and the government charges you an 8 percent sales tax (80 cents), your total bill is $10.80. If the government increased the sales tax to 9 percent, you'd pay 90 cents to the government and your total would be $10.90. What you buy is your purchase. The tax is simply an additional cost.

Let's review how higher education works. Nevada state government gives the Nevada System of Higher Education hundreds of millions of dollars a year. For the sake of discussion let's say $500 million (although University Ron Knecht has noted that the current government subsidy to NSHE is substantially higher).

This $500 million a year allows the NSHE to charge its students less than it would if the government wasn't giving it taxpayer dollars. If Nevada decides to "only" give the NSHE $250 million a year, Nevada's colleges and universities will either have to cut back (employees' salaries or programs), raise tuition or increase their private fundraising (or some combination of all three).

If the NSHE decides to increase tuition, that's not a tax increase. Tuition is the cost of the service a student purchasese. Claiming that a tuition increase is a tax increase would be like a saying it's a tax increase if McDonalds raised the price of Big Macs. The price of the product shouldn't be confused with taxes.

Don't be fooled or manipulated by this type of rhetorical game. Decreasing or even eliminating the subsidy given to the NSHE isn't a tax or fee increase and would be entirely consistent with Gov. Sandoval's commitment not to raise taxes or fees.

'Structurally Unbalanced': The good and bad of the new Brookings report

Yesterday, Brookings Mountain West released a report on Nevada's budget situation. The report, Structurally Unbalanced, analyzed the structural and cyclical deficits of Nevada, California, Arizona and Colorado.

The report deserves and time-premitting will get a full response next week from NPRI, because it will be used to try and justify raising taxes in 2011. While I don't have time for a full rebuttal right now, I wanted to address some of the report's main elements very briefly.

While there are some very good elements in the report (a validation of TABOR in Colorado, calls for a rainy-day fund and greater budget transparency and an acknowledgement of the burden Obamacare will place on Nevada), one of its main contentions — that Nevada needs a gross receipts tax — is a terrible idea.

The Tax Foundation reports, "Gross receipts taxes suffer from severe flaws that are well documented in the economic literature, and rank among the most economically harmful tax structures available to lawmakers." [Emphasis added]

Additionally, the report's assertion that Nevada's budget can't be balanced with cuts alone is a generally unsupported assumption and ignores the massive increase in inflation-adjusted, per-capita spending that took place in 2005 (p 6) and is a major factor in Nevada's current budget problems.

I was on KNPR yesterday to discuss the report with Matthew Murray, the report's author, Launce Rake, PLAN's communications director, and John Restrepo, a Nevada economist. Needless to say it was an interesting conversation and you can listen to it here (click on the "Download MP3" link underneath the player).

Also, I'm going to be discussing the report tonight on Face to Face with Brookings Mountain West director Dr. Robert Lang, who some may remember chaired the Nevada Vision Stakeholder Group. Be sure to tune in.

Ernaut: $500 - 600 million in duplicate spending in Nevada's budget

The clip is from an interview on Face to Face conducted earlier this week and contains a startling revelation from Gov. Sandoval's close advisor Pete Ernaut about Nevada's budget.

Ernaut: We spend so much money in duplicate areas, because there's pet projects that do virtually the same thing. You know and I know that people are not being truthful, not being truthful, with how much there is in ways of savings and efficiencies.

Ralston: How much is there? Give me an estimate.

Ernaut: I'll bet you right now. I'll bet you right now that if you just went through it with a businessman's mentality of just taking away the duplication and waste, there's a good $500 or $600 million that we just throw away.

His comments come at the 4:38 mark.



Remember this clip the next time you hear someone claim, "But we've cut to the bone." There's plenty to cut and plenty of waste. Ernaut's statement is the perfect example of that.

(h/t Nevada News Bureau)

Breaking: Sen. Bill Raggio retires

Wow. The Review-Journal has the breaking story here. He was the longest serving Senator in Nevada's history.

More later.