School bond request fuels funding debate

Adrienne Packer

Thursday, April 1, 1999 | 10:51 a.m.

Five-eighths of 1 percent might seem an insignificant figure, but it is enough to trigger a controversy that could be perceived as pitting tourism against schools.

Clark County School District officials asked the county's debt-management commission for permission today to issue a $100 million general obligation bond -- a fraction of a $3.5 billion school bond issue approved by voters in November.

But the commission delayed its decision until April 9 and asked the school district to better explain why it needs the money.

Critics say the school district does not need to issue another bond; it already is overfunded. District officials issued a $300 million bond two weeks ago and still have $87 million left from a 1996 school bond issue.

Even more controversial is the district's strategy to pay off the $100 million bond debt by using five-eighths of 1 percent of Clark County's room tax.

The 1997 Legislature decided that portion of room taxes -- which amounts to about $12 million a year -- would be taken from the Las Vegas Convention and Visitors Authority's special-events fund and allocated to the school district beginning in July 1999.

As the deadline approaches, the school district is being accused of hoarding more than it can possibly spend. And officials at the LVCVA are becoming nervous about their finances.

"It's a significant hit, and we are in the budget process right now," LVCVA spokesman Rob Powers said of losing the room taxes. "We're putting together, at the direction of our president, an austere budget; a no-nonsense budget."

With the number of hotel rooms in Clark County expected to jump from 109,000 to 130,000 by the end of 2001, the LVCVA's marketing campaign must be more aggressive to keep the rooms full and room taxes rolling in.

Clark County's 9 percent room tax generates $160 million a year, and about $82 million of it is funneled directly to the LVCVA.

"The beauty of the tourist industry is that it's visitors who fund our effort to bring in more visitors," Powers said. "A point that is lost sometimes is an empty room does not generate room tax."

Powers said the five-eighths of 1 percent amounts to 10 percent of the LVCVA's budget. The portion of room taxes at risk is used to promote special events such as professional golf tournaments, rodeos and races that draw thousands of tourists to the Strip during traditionally slow times of the year.

While the school district is entitled to the percentage of room taxes, LVCVA supporters are hoping that legislators will amend the 1997 law and allow the convention authority to keep the money.

Powers emphasized, however, that the LVCVA has not pressured lawmakers.

Not even the marketing wizards at the convention authority could overcome what certainly would be a public-relations nightmare: the appearance that LVCVA favors casinos over schoolchildren.

"The authority maintained then and maintains now that we support adequate funding for school expansion and construction," Powers said. "But we thought, through other means, it was adequately funded."

If the LVCVA chose to fight the room-tax transfer, it would not be an easy battle.

"The district now has the money," Walt Rulffes, the school district's chief financial officer, said. "They are not going to ask us for ways to get it back."

Many of the school district's revenue sources were created during the 1997 Legislative session when politicians and residents feared that Clark County schools were severely underfunded.

Legislators agreed to add a new 1 percent room tax, increase the real property transfer taxes and give the district the five-eighths of 1 percent of room taxes. They also authorized the district to place an item on the November 1998 ballot that would freeze property taxes at the maximum rate until 2008.

In all, the sources would bring $3.5 billion to the district, allowing it to build new schools and renovate older facilities during the next 10 years.

The school district also receives a portion of property taxes. And because assessed valuations in the county increased significantly last year, the district is receiving more money than it had anticipated.

The new 1997 money sources, the increased revenue from property taxes and the fact the district has yet to issue the entire $600 million school bond approved in 1996 have some convinced that it does not need the LVCVA money.

Rulffes emphasized, however, that Clark County is the fastest-growing school district in the country and 145,000 new students are expected during the next decade.

When the district planned its construction and renovation projects to accommodate those new students, it counted on collecting the LVCVA's portion of the room taxes.

"We built the project based on the revenue we expected to get from the 1 5/ 8," he said.

If the $100 million bond is approved, it probably will be issued in July.

Sun reporter Benjamin Grove contributed to this story.