Nevada's GOP Gov. Brian Sandoval starts new term with tax-hike surprise

Nevada governor seeks tax increase for education, winning Democrats' praise and his fellow Republicans' anger

If 2014 was a good year for Republicans nationally, in Nevada it was an election for the ages.

Gov. Brian Sandoval won his second term with an extravagant 70% support. Republicans not only seized control of the Legislature — giving them full run of the Capitol for the first time since 1929 — but also staged an unprecedented sweep of statewide offices.

Sandoval then did something uncharacteristic for a Republican, especially one in a state with such a deep and abiding hostility toward government: He called for the largest tax increase in Nevada history.

And he did so after nearly 80% of voters in November rejected a tax hike that, while differing in size and scope, was touted as addressing the same problem Sandoval hopes to remedy with his plan: the state's woeful public education system.

"I know this will cause debate," Sandoval said after springing his plan in last month's State of the State address.

Indeed it has, along with a revolt by anti-tax Republicans, rumblings of a legislative recall and a man-bites-dog display of Democrats hailing the GOP governor and his brave leadership.

"The governor loves this state," said Marilyn Kirkpatrick, the Democratic leader in the Nevada Assembly. "And he has a vision of what it needs to look like moving forward."

Apart from turning Nevada politics upside down, Sandoval has launched a frontal assault against the tea party — perhaps the boldest in the country — in a state where the movement's minimal-government philosophy has one of its strongest followings.

The showdown promises no small amount of political drama. The Legislature has yet to convene and already there have been intrigues surrounding a GOP speaker shoved aside for racially insensitive and homophobic comments and a lawmaker booted from the Republican leadership over personal tax troubles.

The latter, Assemblywoman Michele Fiore, has emerged as one of the fiercest opponents of the governor, rounding up votes to kill his tax plan even before the Legislature opens for business Monday.

(In a separate headache, the state's new Republican attorney general, Adam Laxalt, last week joined a multi-state lawsuit seeking to overturn President Obama's order blocking deportation of millions of people in the country illegally. Sandoval, who was blindsided by Laxalt's move, said the matter should be worked out by Congress and the president, not the courts.)

To a large extent, the governor is a victim of his own political success.

He was so popular he scared off serious competition in November, giving Democrats little incentive to turn out. The result was a GOP wave of such magnitude it surprised even Republican strategists; no one expected the party to win control of the state Assembly, where Democrats held a near two-thirds majority, but they did.

Among the GOP newcomers are a number of deeply conservative candidates with scant political experience and, notwithstanding Sandoval's place atop the ticket, no allegiance to the governor. Many seem likely to vote against his tax plan.

Sandoval's $1.1-billion proposal would replace the state's $200 business license fee with a levy based on annual revenue and industry type. The tax on cigarettes would increase, and a 2009 tax hike that was supposed to end in June 2013 but was extended would become permanent.

The added revenue over two years would pay for a sizable investment in the state's public schools — among the worst-performing in the nation — including an expansion of full-day kindergarten, more money for English-language learning and special programs to benefit gifted students.

Delivering his State of the State address, Sandoval crowed about Nevada's comeback from the Great Recession, which hit harder here than just about anywhere else. He touted renewed job and population growth and the state's attraction of new business, including a huge factory to make batteries for Tesla's electric cars, which Nevada won amid stiff competition with California and other states.

But Sandoval said the prosperity would continue only if the state modernized its economy, ending its overreliance on up-and-down revenue from gambling and tourism, and thoroughly overhauled its schools and outmoded tax system.

"We must decide if [the state's next] chapter is about getting through the next two years" of the legislative session "or about creating a new Nevada for the generations to come," Sandoval said.

To critics, the tax plan sounded suspiciously like a ballot measure that voters overwhelmingly rejected in November. That proposal, pushed by organized labor, would have imposed a 2% tax on any business generating more than $1 million in annual revenue, with the proceeds going to the state's schools.

"We saw voters basically say 'no' to the idea that we can simply raise taxes and spend our way to greater education performance," said Andy Matthews, president of the Nevada Policy Research Institute, a libertarian-oriented think tank. "In the aftermath of that loud rebuke … the governor has basically proposed something that looks a lot like what got shot down."

But supporters point to key differences in Sandoval's plan, which they say makes it simpler and fairer than the measure voters rejected.

The governor, along with business leaders and prominent lawmakers in both parties, opposed the November ballot measure. But if one listened closely — Sandoval barely campaigned for reelection — there were hints of his far-reaching plans.

Meeting in late October with the editorial board of the Reno Gazette-Journal, Sandoval vowed to fix the state's troubled education system and change the way the state's penny-pinching government funds itself. Asked if that meant new taxes, he replied, "You'll find out."

While the backlash from Republican quarters has been fierce, Sandoval is viewed as politically unassailable. So critics have launched an effort to recall three of the GOP lawmakers who have refused to publicly oppose the governor's tax plan.

One of them is Assembly Speaker-designate John Hambrick, who was hastily chosen to replace Ira Hansen, a tea party favorite, after newspaper columns and past comments surfaced in which Hansen, among other things, compared homosexuality to bestiality and wrote that African Americans were insufficiently grateful to whites for ending slavery.

Sandoval helped push Hansen from the speakership, and that too has rubbed feelings raw. Hansen claimed he was ousted over his anti-tax beliefs.

Republican Assemblyman Jim Wheeler, whose job includes rounding up votes for the GOP leadership, said the governor was owed a respectful hearing of his tax and education proposals — but no more.

"We have three branches of government … that's what the checks and balances of this country and this state are all about," Wheeler said, after doffing his cowboy hat and settling in an office decorated with a lasso, among other western regalia.

He was undecided on Sandoval's tax plan, Wheeler said, but appeared to have his doubts. Any law that passes, however well-intended, is an infringement on personal freedom, Wheeler said.

"This is the freest state in the freest country on earth," he said. "And we plan to keep it that way."

mark.barabak@latimes.com

Twitter: @markzbarabak

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