Lanni sees hope for Gibbons, blasts teachers union

Tuesday, April 29, 2008 | 2:54 p.m.

Here is a partial transcript of an interview with MGM MIRAGE CEO Terry Lanni that will air on Tuesday evening on "Face to Face" on Las Vegas ONE. Lanni talked about the governor and the gaming tax petition:

I supported Jim Gibbons. I continue to support him. I don't agree with everything Jim believes in. I think a pledge of no new taxes is a major mistake. We saw a former president do that, and it certainly had an effect on his re-election campaign.

I don't agree with the governor on this particular pledge. I'm hopeful that through the processes, that he will actually find a way to change that.

I think it's very easy when you take a poll and you ask people, 'Who should we tax?' It's always going to be tax someone else, just don't tax me. Generally, there's a view in this state and it has been, and will continue for a long period of time. I think we're very proud of the fact there's no personal income tax. Many businesses are very proud of the fact there's no business tax.

Others have to participate. Last time I looked, bankers, automobile dealers, have sent kids to school. Shouldn't they be paying for part of this process? Part of education is everyone's responsibility.

I think most of the people in the teachers union, if they took the tests the kids here do in the eighth grade and high school for algebra, they'd get about the same level of results for mathematics. They don't understand it.

They don't understand how this affects a single industry. You have a wonderful balance in this state, and for a long period of time, companies like ours and this business, this industry, the gaming business, has been able to afford all the needs of this state. But, this state has grown dramatically. To take and work on that balance, maybe upset that balance is a major mistake in my opinion.

They want to build into the constitution. I mean forever, it's going to be there, setting aside just a certain number of public employees. What about firefighters? What about policemen? They don't have it built in, a guaranteed amount of increases in wages. Not there.

What does this do to help education? I see the test scores. You see them. 79 percent of kids in the eighth grade in pre-algebra failed in Clark County. It gets worse when they get into high school. 90 percent of them failed Algebra 1. What are they doing? More money does not get more education.

(on the public's lack of sympathy for the gaming industry)

I don't think they should have sympathy for the industry. The industry is a for-profit industry. What I would have sympathy with, if were an average citizen in the state of Nevada, is I wouldn't want to upset this balance that exists.

We're going through some difficult times right now. The numbers will be reported, and I think your are going to see a number of reductions, probably in the low double digits, in earnings. That has an effect on your ability to borrow money. Just look at the credit markets right now. If I were that average Nevadan, I'd look at it and say, 'Gee, are they going to be able to afford to finish CityCenter?' Because, when it's finished, there are 12 thousand people working there. There are eight thousand people working on constructing it.

Sure, we're going to be able to finish it. The issue is we've got a five billion dollar project we're proposing across from the Sahara with Saul Kerzner, Atlantis 3000. Will the credit markets be there for that? Will Wall Street say, 'Wait a minute. This is not the stable tax rate that we expected.' That's one of the reasons these projects: Echelon, our project CityCenter, why Elad with the Plaza project were able to move ahead and develop these projects. Because, it's a stable tax rate. Wall Street looked at it and said, 'It's predictable.'

(on what to do with a crumbling infrastructure and a governor with a no-new-tax pledge)

I'm not governor, so I can't particularly change that. I've said before. I've said on this show, in an earlier segment right now, is that the view is I believe (in) working with the governor and the governor may see this as a reasonable alternative.

I believe he is a decent human being. I think he does care about where Nevada stands. He ran on a no-taxes pledge. I was sorry that he did that. He has many supporters who believe in it. I'm sure some of his polls show the best way to be re-elected is to stay with that, because there is a very strong prevalence in this state for no taxes.

I wouldn't write off the possiblity in the legislative session where a veto could be overwritten. I can see that happening. I've seen comments by Senator Raggio that he believes there needs to be other things on the table to talk about. I'm just not a negative thinker. I think the glass is always half full.

(on his message to employees)

We have a non-partisan presentation we make every election cycle, pointing out the pros and cons of individual candidates, who they support, what they support, what their points of view are. We encourage our people to vote. We've helped them get to the polling places, given them time off to do that. That's something we've done for years.

(on the difference between that policy and his message which takes a stronger stance)

It (the gaming tax initiative) is a bad thing. It's very, very, very malicious and not accurate. If you tell someone, 'Vote for this. Sign for this,' because it's going to help education. How does this help education?

When you compare it to other states, the teachers salaries in Nevada are about 25th out of the 50 states, right in the middle. You tell me where the students' scoring and their educational success is. 47th, 48th, 49th, depending on what you look at. So, you're not getting much for your money right now.

$38,000 a year, the teachers' average salary in this state. By the way, no state income tax here is compared to other states. So, maybe they'd be a little bit higher than 25th. That's 40 percent higher than the average Nevadan.

People are coming here to teach. California's economy is in shambles. Their deficit makes this deficit look like a rounding error in this particular state. They're talking about raising the taxes significantly there on business and on individuals. More people will come from California and Arizona, two states hurt most by this current recession, and I believe as you do we are in a recession. They're going to come here.

Better teachers don't necessarily become better teachers because they are paid more money. We have some great teachers in this state. Look at the empowerment schools. Our company sponsors an empowerment school, Culley School. Significant work by those teachers at the same salaries have improved the scores for those individuals.

There are some good teachers and some bad teachers. The point is it's pay for performance. If they had a proposal that said, 'We're going to take some of this money give it for performance.' But, teachers unions hate performance.

Our company represents 11.3% of the general fund in taxes paid. We pay a fortune. 40 percent of the room tax we pay in this state. Our company. And a good portion of it, 20 percent, of that room tax goes for education here in Clark County. They never talk about that. They never talk about the monies we raise in sales taxes that go to them. We fund the educational system here dramatically in this state. We don't get any credit from the teachers for it.

That's a 44 percent increase as you've pointed out. Our particular company, that's about 75 million dollars a year and growing because of the investments we've made here to build more facilities with more employees. What's going to happen is frankly, we have positions that could be jeapordized. Frankly, that represents about 23 hundred individuals based upon average salary.

(on recent layoffs)

We are very much driven by volume. We saw it after 9/11. We had to lay off a lot of people after 9/11, because our business disappeared. If we don't heads in beds and people sitting in seats at gaming tables and in restaurants and at entertainment facilities, that's a very difficult thing for us to do. To continue that, we had to lay those people off. I hated that.

In this instance, we had 400 people throughout the company in management positions that were let go. It's definitely volume-driven. I don't think it's necessarily seasonal. I don't necessarily agree with that. I think it's the aspect of the down economy that this country is facing right now.

We have 66 thousand employees in this state. I never expected to have every single employee agree with me on any particular situation, and that's their right. There's not going to be any aspect of their jeopardizing their positions as a result of that. That's just something we wouldn't do.

I think it's responsible and appropriate for us to talk about the financial good of our particular industry and our company. That's the reason I did it, and I would do it again tomorrow.

If anyone were out of a job as a result of signing a petition, there are wonderful greivance policies within our company that deal with that. I guarantee you that is something I would never condone.

(on whether the business community will ever agree to a broad-based business tax)

We tried before, and it doesn't seem to be the case. For some reason, they believe they don't have kids going to school. They they don't have need to be on the roadways. They don't have people coming in and out of these airports.