Senate touches up tax break for art

Scott Reeder

Thursday, May 27, 1999 | 11:26 a.m.

CARSON CITY -- It could be called an artful tax dodge.

Or then again, it might be just the final brush strokes to make Nevada an art mecca.

The one thing that is clear is that Mirage Resorts got its way.

The Senate passed a bill Wednesday that clarifies what it meant when it gave a special tax break two years ago for collections of fine art. The bill already has passed the Assembly. Gov. Kenny Guinn's Chief of Staff Pete Ernaut said the governor will sign it into law.

While Mirage Resorts' lobbyist Harvey Whittemore said many individuals and businesses may benefit from the legislation in the future, it is clear that Senate Bill 521 was tailored to shelter the art collection at the Bellagio hotel-casino from sales and personal-property taxes.

In return for clarifying the language in current law, Mirage proposed making its masterpieces at the Bellagio more accessible to children and admission less costly for Nevadans.

"We think the state will benefit from this law because it could attract more art collections to Nevada," Whittemore said. "Also we believe that it will increase revenues to the state in places where art collections are located in casinos. The collections should attract more people to the casinos, and that will increase the amount the state collects in gaming taxes."

Under current state law, the art must be publicly displayed 20 hours per week for at least 35 weeks a year. But there is confusion over what constitutes a "public display."

The Bellagio charges $12 to be admitted into the gallery. In November the state Tax Commission ruled the intent of the legislation was for the art to be displayed free of charge to the public. Mirage is suing over this matter.

Senate Bill 521 makes these changes:

The exhibit will be open to school groups free of charge for 60 days a year.

Nevada residents will receive a 50 percent admission discount.

Any net profits made by admission fees will be paid in taxes or given to charity.

Current law exempts certain collections of fine art that are open to public viewing from personal property taxes as well as most sales taxes -- except the constitutionally mandated 2 percent state sales tax. In Clark County, the sales tax ordinarily would be 7.25 percent.

But the clarifications of this law raised the dander of Sen. Joe Neal, D-North, Las Vegas.

Neal said the art tax exemption is bad public policy because it deprives the state of needed revenues.

Neal has earned a reputation for being the most vocal critic of the gaming industry within the Legislature.

Neal has estimated that during the first year, Mirage would save $17 million or $18 million in taxes.

But Whittemore said the state will benefit from the tax exemption. He added he believes that the $300 million art collection at the Bellagio is exempt from the taxes anyway because it is inventory that will be sold.

"We have said all along this is a belts and suspenders approach," Whittemore said. "If we are not covered by one, we are covered by the other."

"We think the state will benefit from this law because it could attract more art collections to Nevada."Harvey WhittemoreLOBBYIST FOR MIRAGE RESORTS