It is, of course, incumbent upon any newly elected Governor, in his first major address, to exude optimism. So it was striking to many observers that Brian Sandoval, optimistic by nature, began the substance of his first State of the State Address with a bracingly frank assessment of where Nevada stands in early 2011.
“Nevadans are confronted on all sides with bad news,” Sandoval began. “Our friends have seen their credit ruined. Someone in our family has lost a job. The house around the corner stands vacant. A neighbor has closed her business. A relative is one trip to the doctor away from financial or physical ruin.”
One wonders if the Governor’s staff considered creating a paper mache black cloud as a speech prop.
So with the economy in dismal condition, a slew of newly elected legislators taking their seats in Carson City for the first time, a politically ambitious Speaker and Majority Leader looking to make their respective marks on the process, a granite icon suddenly departed from his long-held Senate seat and leadership role, and a young, telegenic Governor getting settled into his Capitol office, Legislative Session 2011 is under way.
The Situation
At stake, it is not an exaggeration to say, is the economic future of the Silver State. And despite the harsh realities, optimism does exist. At least one veteran of Nevada politics and the legislative process says enough common ground exists for real improvement in the near future. “The story of this session will be less about the disagreements and more about what Governor Sandoval, Speaker Oceguera and Senator Horsford agree upon,” says former Assemblyman, former gubernatorial chief of staff and current head of public affairs for lobbying giant R&R Partners, Pete Ernaut.
“While subject to sometimes extreme peaks and valleys, the Nevada economy is still resilient,” says Ernaut, also a close adviser to Sandoval. “There is plenty of fertile ground to undertake the process of building a new future for our state. But it’s a long-term process, not something that can be accomplished completely in two or four years. This is a very different endeavor.”
Among Sandoval’s stated goals is not just struggling through the current economic malaise but actually improving Nevada’s standing in the many business, social and economic areas in which the state regularly ranks at or near the bottom nationwide.
“I’ve taken an aggressive stance on improving education and ensuring we remain a low-tax, business friendly state. I am personally calling new companies and meeting with executives,” the Governor said. “On education, I have proposed a number of reforms to increase our graduation rate, end the social promotion of our children and increase accountability. I believe these steps will begin to put Nevada where it belongs as a leader in the country. On economic development, I am personally working with agencies to recruit new businesses to our state and will do everything I can to get our fellow Nevadans back to work. If we begin with these reforms, I am confident we will be able to move up.”
Read My Lips…
Brian Sandoval certainly doesn’t look like any governor Nevada has seen before. Young, handsome and Hispanic, Sandoval cruised to victory in November exuding charm, confidence and a friendliness that put doubters at ease. Those attributes were essential on the campaign trail and will be during his gubernatorial tenure, especially considering the one policy he articulated as the bedrock of his plan to tackle Nevada’s economic woes: No new taxes.
In describing his budget in his State of the State Address, Sandoval said, “…we made $1 billion of public money work harder so as to mitigate cuts to services and programs. None of this money comes from new taxes. We made better use of existing dollars. The public does not think of revenue as yours or mine. All of it, every last penny, is theirs. Whether it’s in this bucket or that bucket does not matter.”
Days after the speech, Sandoval was encouraged by the reaction to his no taxes pledge.
“I believe there is strong support. I am meeting with every single Nevada legislator and each Republican caucus,” he says. “My meetings with Republican legislators have reinforced that they are strongly supportive of my intent to balance the budget without raising taxes.”
And the Governor knows he is being watched not only by the people and industries of Nevada, but also those in other states whom he would like to recruit for a Silver State relocation.
“I think there are a number of factors businesses look at when they want to relocate. It’s not about how much we spend, it’s about the results,” he says. “I have introduced a number of reforms to our education system. I’ve spoken with a number of businesses and institutes of higher education and technical education and I know Nevada has a ready made workforce for new businesses because we can create curriculum at the college level to meet the needs of any new employer.”
Budget Cuts
Sandoval’s conundrum boils down to this: He’s committed not to raise taxes. He needs to attract new business to Nevada. He needs a tax-friendly atmosphere to do so. So far, so good, but here’s the big catch: attracting new business ventures to Nevada requires an educated workforce and Sandoval’s budget, say critics, not only fails to support education but will make the education landscape in Nevada even more dismal.
Representatives from several of the state funded colleges have already expressed their concerns over the proposed cuts. They are aggressively opposing the cuts the Governor has proposed.
“There is currently not an alternative plan to balance the budget other than what I have put forward to balance the budget without raising taxes,” Sandoval says. “I understand the Legislature may have different priorities, but as long as they work within the lines of available funds, I support and respect their prerogative to do so.
I am acting on what I campaigned on – no new taxes, making jobs and economic development the priority of my administration, and improving our state’s education system.”
Renowned taxpayer advocate Carole Villardo of the Nevada Taxpayer’s Association, while expressing reservations about the Governor’s pledge (“I don’t believe in absolutes”) gives him credit for opening the dialogue on the state’s overall tax structure. A discussion, she says, that is long overdue.
“He is going to be under a lot of pressure from those people who benefit from the services he proposes to cut,” Villardo says. “State employees, those who receive job benefits, mental health advocates…they’re going to make a lot of noise. But the system has to change and it won’t change until we start talking about improving the existing system and have a real dialogue about money and services.”
Villardo says Sandoval is right not to be adding to the current tax burden in Nevada. “Business is not spending, individuals are not spending, no one is spending,” she says. “People are the reason the state doesn’t have money because they’re tightening their own belts and not creating that revenue. And you can’t change that if you’re talking about making their situation worse with more and higher taxes and fees.”
Triple Whammy
James Wadhams, an attorney with Jones Vargas and one of the most seasoned and respected lobbyists in the state, says Sandoval is facing what he calls a “triple whammy” of political and economic land mines as he begins his first session: the overall recession, the problem of generating revenue without taxation and the specter of redistricting adding to the political tension in Carson City.
“We not only have a budget with the potential to cause divisions but redistricting is going to put every politician on edge,” Wadhams says “Sometimes two sitting legislators will be drawn into a single district and one of them is going to have to go. Also, the migration of seats from Northern Nevada to Southern Nevada will be significant. The politics of this session are extremely difficult.”
And, Wadhams says, it’s almost impossible to predict outcomes with so many freshmen weighing in.
“It’s going to be a real challenge for the leadership of both houses and the political caucuses to find common ground,” Wadhams says. “Some freshmen are coming into the process with a very strong sense of independence.”
But will those factors cause Sandoval to waver? Ernaut dismisses the possibility immediately.
“This Governor is committed to the best interests of the state, and it is not incongruent to be holding the line on taxes and spending,” Ernaut says.
The case for Sandoval’s commitment to trying to chart a new economic course for Nevada is easy to make. After all, he was set up with gainful and prestigious employment for life, having been appointed to a federal judgeship, when he decided to chuck it all and run for Governor during one of the state’s most tumultuous eras.
“His willingness to walk away from a lifetime appointment clearly shows his passion at a time when we most need passionate leadership,” says Ernaut. “He is, and will be, extremely hands-on and intimately involved in the process. His talent for consensus building will apply to all regions and across party lines.”
New Faces
The Governor better hope so. New, inexperienced faces will greet him at every corner during every trip across the Capitol compound to the Legislative Building. Among the new senators is a former assemblyman given a key role in this session by virtue of who he’s replacing. Greg Brower will step into the void left by the surprising departure of universally esteemed former Senate Majority Leader Bill Raggio.
“It’s a daunting challenge, no doubt about it, because Bill Raggio was responsible for so much good over the course of his career,” Brower says. “We’re very similar in some respects and very different in others, but among those who have reminded me to ‘be your own man’ is Senator Raggio himself.”
All eyes were on Brower even before the ’11 session got underway because Raggio was seen as someone who might be open to tax increases should Democrats propose them and attempt to override a veto. Brower from the outset showed that his admiration for Raggio would not impact his own views on taxes, especially how new levies would impact small businesses. Brower lent his voice right away to Sandoval’s “no new taxes” chorus.
“We need to do our best not to add to the burdens of small businesses in Nevada,” Brower says. “These times are tough, but it’s also a tremendous opportunity, in a time of great need, to make a difference, to change things, to change the process. There’s no rapid rebound right around the corner. This will be a slow, steady climb.”
Villardo agrees. “There are no quick fixes and the discussion can easily be affected by politics and personal agendas,” she says. “The examination must be of the whole structure, the whole system. That’s the only way to get meaningful improvement.”
So will small businesses buy into Sandoval’s optimism, articulated in his statement that if Nevada was a stock he’d buy now as it is sure to head skyward soon? The phrase “cautiously optimistic” might be cliché, but it seems to apply to the small business outlook for session 2011.
“I think small business owners should be…watchful,” Wadhams says. “I think the Governor did a good job of structuring his budget and his agenda and we’ll see how it holds up under examination. There are issues about taxes that have been sunsetted that might be reconsidered, for example. And it’s not just taxation, directly. Health care reforms could add to the burden of small businesses, local governments might respond to the Governor by increasing fees, and so on. These issues are still developing.”
And they will be developing long after the freshmen and veteran legislators, the lobbyists, the journalists and the staff members wrap up the 2011 Legislative Session and head home with their state still facing unprecedented economic challenges. And a new Governor, who began his first State of the State Address with an acknowledgement of the dire straits Nevada faces, insists his sunny outlook will remain intact.
“I believe there is a lot of optimism in our state because a low-tax, business friendly environment is a priority of the Governor,” Sandoval said.
