Nevada’s Popular Governor Brian Sandoval a Puzzle for Some in GOP

T at Arlingto nBy Alejandro Lazo,WSJ

State’s first Latino chief executive is pushing controversial tax increase to boost education funding

Gov. Brian Sandoval, who wants to boost taxes to fund education, reads to a class in Las Vegas this month.

In a Republican Party hoping to woo Hispanic voters in 2016, few can claim the résumé of Gov. Brian Sandoval. He is the state’s first Latino governor and the national GOP’s ideal candidate to run for the U.S. Senate seat Harry Reid plans to vacate that year.

But Mr. Sandoval has upended GOP politics, declining to say whether he’ll run for the Senate and pushing for the largest tax increase in Nevada history. His tax-increase proposal has divided GOP state legislators here during a biennial session.

Advocates say the governor, whose supporters include independents, Hispanics and one of the state’s most powerful unions, serves as a model for how Republicans can broaden their appeal. He has been mentioned as a potential vice-presidential nominee.

Critics say the 51-year-old former federal judge is alienating conservative Republicans with his policies. This year, he has been at odds with two of the state’s top Republicans, the attorney general and treasurer, over immigration and taxes.

Mr. Sandoval has defended his proposals, including his $1.1 billion tax increase, saying they are worth his own “political peril.” “I’m as conservative as anybody, but it’s not conservative to have bad schools. It’s not conservative to have bad roads. It’s not conservative to have budget struggles every other year,” Mr. Sandoval said in an interview. “Growth isn’t paying for itself.”

Mr. Sandoval’s moves underscore how complex the political terrain is in Nevada—a swing state with a strong libertarian ethos, but also home to a highly transient and mostly urban population. Powerful labor unions, a rapidly growing Hispanic population and a weak state GOP infrastructure have all been part of the political landscape in recent years. The governor says he has tried to pave a middle path, saying his priority is to diversify the state’s economy from one based largely on tourism and gambling to one that demands a more educated workforce.

Last year, he lured Tesla Motors Inc. ’s $5 billion, advanced battery factory to the state. The governor hailed the move as a boon to the state’s economy though critics have questioned its value given the $1.3 billion in tax breaks granted the company.

Nevada has one of the lowest tax burdens in the country, including no income tax. The governor’s education initiatives, which would be paid for by his proposed tax increase, include boosting spending for English learners and the poor.

The most controversial part of his plan is a business-license fee projected to raise $438 million over two years. This levy would be based on a business’ gross receipts and its industry. The fee would help replace a tax system that has created “a crisis every two years,” Mr. Sandoval said.

Mr. Sandoval, a former state attorney general, was elected statewide three times, including a victory against Mr. Reid’s son, Rory, in the 2010 race for governor. He led the GOP to a sweep of statewide races last year and won his own re-election with more than 70% of the vote.

Bush logoWhile he has widened his appeal, Mr. Sandoval also has taken positions that could turn off a Republican base, including support for legal abortion and dropping the state’s court battle against same-sex marriage. Recently, he clashed with fellow Republican attorney general Adam Laxalt over Mr. Laxalt’s decision to join a multistate suit against President Obama’s executive order on immigration.

Mr. Sandoval’s ascendancy is partly a product of Nevada’s complex, small-state politics and demographics. While Republicans won big last year, registered Democrats outnumber them. Labor unions are a powerful source of voter turnout for Democrats and the rapidly growing Hispanic population is a key demographic. Last year, the governor won the endorsement of the influential Culinary Union Local 226, a vocal advocate of laws more favorable for immigrants that has a sizable Latino membership.

The GOP’s infrastructure is weak, particularly compared with the formidable turnout machine Mr. Reid built for Democrats, political experts said.

Eric Herzik, a political-science professor at the University of Nevada, said the governor’s 2014 electoral success “just scared off any serious Democrats from challenging him. The irony of that is, he so cleared the Democratic field at the top of the ticket that many conservative Republicans were swept into office.”

Republicans are watching Mr. Sandoval closely for signs he may enter the Senate race. Mr. Reid’s surprise retirement announcement puts pressure on the GOP. The Senate minority leader has thrown his support behind Catherine Cortez Masto, a prominent Latina Democrat. Some say running against Mr. Reid would have been easier. “Until people know what the governor is going to do, I don’t know that there are going to be a lot of candidates on the Republican side who are going to jump in,” said Mark Hutchison, the state’s Republican lieutenant governor.

For now, Mr. Sandoval is engaged in policy battles. The governor’s proposals have advanced in the state Senate while also spurring competing budget plans—including one from the Republican treasurer and controller. His business-fee increase could pass the state senate as early as this week, an aide to the state senate majority leader said. It would then move to the state assembly.

Conservatives in the assembly, meanwhile, have vowed to defeat it. “He is a popular guy—he has got a presidential resume—but his policies are not as popular as he thinks,” said Assemblywoman Michele Fiore (R-Las Vegas), who opposes the governor’s plan.

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