I had the same issue:
http://www.diygokarts.com/vb/showpost.php?p=530238&postcount=27
I wasn't able to get it off with just the flathead, and even tried dremelling the clip off with a needle tip, as well as simply breaking apart the governor wheel into pieces until it was just, well, gone! Neither approach worked so spare yourself the grief. I had extra difficulties because I left the motor in place on the go kart (no unmounting, so a whole bunch of other things like the frame of the kart etc. complicated the removal even more).
Here is what I did. I used the flathead to try to open that existing gap as much as I could, but after a long time only was able to widen it a tiny fraction. I then used the same flathead to try to move the clip away from the gear just a little, by using the corner of the flathead tip in various twisting/prying motions. It was slow going, but once I stopped trying to 'get it done' I slowed down and made progress. I was able to slide that clip away from the gear maybe a 1/16 of an inch, but that was just enough for me to get the tip of my vice grips to bite down on it, and from there I just slid it the rest of the way off.
I don't think this method will work with pliers alone, or without first creating a tiny gap between the clip and nylon gear for the vice grips to be able to grab just the clip (and not the clip plus gear)
Does that make sense?