Money is fungible. This fact appears to have escaped the backers of a margins tax on businesses that

Thomas Mitchell

Money is fungible.

This fact appears to have escaped the backers of a margins tax on businesses that is supposed to raise money for K-12 education. The measure is on the November 2014 ballot.

The Nevada State Education Association teachers’ union estimates the tax would raise $800 million a year, a contention business leaders seriously doubt. But furthermore, the ballot initiative contains no language that would prevent the Legislature from simply taking tax money that currently goes to education and spending it elsewhere — the very definition of fungible.

“The only two things in the initiative that specify education is the title, which says ‘education first,’ and then the fact the initiative requires the money to be deposited in the DSA (Distributive School Account),” says Carole Vilardo, president of the Nevada Taxpayers Association. “There is no language in the initiative that says the money must go to education or that existing revenue that goes to education cannot be supplanted.”

Vilardo noted that a 3 percent tax on hotel rooms in Clark and Washoe counties was earmarked to improve student achievement and increase teacher salaries. “The Legislature turned around and changed the use of the revenue. It went to the general fund the first year, and then it went into the DSA. It was to come out of the DSA for July 1st of 2011 (and go into a special education support fund). In the 2011 session it was delayed until July 1st of 2013. In the last session it was further deferred to July 1st of 2015.”

The Associated Press reported that Gov. Brian Sandoval’s staffers called the room tax vote a nonbinding advisory question and said the Legislature ultimately authorized the room tax increase.

“This is what scares me about this upcoming election,” said Kelly Bullis, head of a Carson City certified public accounting firm. “I don’t think the average low-information voter is going to get this. The way this law is written, the money that is collected from this tax is put in the general fund that’s marked for education. What that means is that big pot that the Legislature basically has, this general fund, that they move stuff around. That’s what they vote on every two years. If you already have a lot of money in the education fund, then they don’t need to take money from something else to put in the education fund.

“So, in order words, in the past they’ve taken money that came from the modified business tax, that came from the mining tax, that came from the gaming tax, they’ve taken that money and a big chunk has been put into the education general fund. If there is already money in it, they don’t have to put as much more in it, therefore they will spend that money somewhere else. It’s not going to put any more money into education’s budget. It’s just going to give the Legislature some more maneuvering room to move the money over somewhere else and spend it.”

Asked whether the money from a margins tax would necessarily go to fund education, Bryan Wachter, director of public and government affairs for the Nevada Retailers Association, replied, “No, in fact the money does get deposited into the Distributive School Account, which is more of an accounting practice than a specific account. We’ve seen in the past the teachers’ union was successful in getting an increase in the room tax supposedly dedicated to education. It’s in the general fund and it has been transferred. The Legislature did that. So we’re not talking theoretical, oh, they might. The current budget is balanced with money that was supposed to go to education, but instead has been moved to the general fund.”

Even after all the problems endemic with the margins tax, Ray Bacon, executive director of the Nevada Manufacturing Association, pointed out there is nothing that guarantees the money raised will go to fund education. “There’s nothing which prevents the Legislature from pulling money that would normally go to teachers or to education out of the general fund and moving it to Medicaid,” he said, “which is where there is much of a screaming need. It’s going to be new revenue, but I think you’ll see a huge supplanting of the funds once they know what the hell the number is.”

The legislature could even decrease education funding and there is nothing in the margins tax initiative to stop it, Vilardo said.

Thomas Mitchell is a longtime Nevada newspaper columnist. You may email him at Read additional musings on his blog at