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Nevada Study Sees Financial Squeeze in Mid-1990's

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Rapid growth in Nevada's school-age population may force the state to consider raising taxes or cutting expenditures by the middle of the next decade to maintain present levels of service, an independent study prepared for state lawmakers concludes.

But, barring an unforeseen economic shock, Nevada's tax base should be adequate to fund services at their present levels until then, according to the 900-page report.

It also calls for the reorganization of an "unfair" relationship between state and local governments, including school districts. That relationship, it says, is characterized by heavy-handed state control and "encroachment on local property tax."

Commissioned by Gov. Richard H. Bryan and lawmakers during the 1987 biennial legislative session, the sweeping survey of the state's tax structure--performed by the accounting firm of Price Waterhouse and the Urban Institute--is the first such review in 25 years, said Mark Stevens, the Assembly's fiscal analyst.

The Governor has appointed a 15-member panel to study the recommendations contained in the document. The panel is expected to present its findings when the legislative session convenes in January.

The report's major finding is that within 10 years, lawmakers either will have to slash expenditures or raise taxes by 5 percent to 10 percent "to just finance the current scope and quality of services."

"Growth in elementary and secondary education" is one of several "major factors leading to the projected budgetary imbalance," the report notes.

'Earmarking' Problem

But Lyndsey Jydstrup, a spokesman for the Nevada State Education Association, said a preliminary read8ing indicates the panel's findings conflict with the union's belief that a new tax should be levied to improve the state educational system. "We don't believe the status quo is adequate by any means," she said.

The nsea has successfully petitioned to have the legislature consider levying a tax on corporate profits, which would be earmarked for education.

Under state law, that measure must be considered within the first 40 days of the legislative session.

The report, however, criticizes the state's "unusually heavy use" of earmarked taxes, including a set-aside of local sales taxes for education, because such taxes fail to demonstrate a "strong relationship between the proceeds of the tax and the benefits derived."

It notes that a constitutional amendment would be needed to change the system.--p.w.

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