Casinos: Tax would prompt layoffs

Wednesday, Jan. 26, 2000 | 11:56 a.m.

CARSON CITY -- The gaming industry on Tuesday fired its first salvo to scuttle state Sen. Joe Neal's plan to raise the tax on the largest casinos in Nevada. Bill Bible, president of the Nevada Resort Association, said Neal's initiative petition to add 5 percentage points to the gross gaming tax -- which would bring it to 11.25 percent -- would force hotels to lay off workers.

"The proposal to raise gross gaming revenue taxes by 80 percent represents the most reckless taxation policy I have seen in more than three decades of public service," said Bible, a former state budget director and a former member of the state Gaming Control Board.

"Gaming already is the most heavily taxed industry in the state of Nevada and is the largest single source of state general fund revenue. Six out of 10 of the largest property taxpayers in the state are gaming-related, and the industry is both a substantial payor and collector of sales tax."

Neal suggests the industry's mention of layoffs is a scare tactic. "I'm not buying their argument," he said, suggesting that the more taxes the industry pays to the state, the more it can deduct from federal income taxes. Neal quietly registered his petition late Monday at the secretary of state's office in Las Vegas, then held news conferences in Las Vegas, Sparks and Carson City on Tuesday to promote the plan.

He must gather 40,009 signatures of registered voters and 10 percent of those in 13 of the 17 counties by Nov. 14. He predicts he won't have any trouble getting the people to sign the petition.

The North Las Vegas Democrat says he has the support of the Nevada Highway Patrol Association, a statewide union of patrol troopers, and the Nevada Classified School Employees Association, a labor organization in the Northern Nevada counties. The Nevada State Education Association, a schoolteachers union, is pushing its own tax petition for a new levy on all Nevada business.

So far, Neal has few prominent supporters. Gov. Kenny Guinn opposes any taxation by initiative petition and wants to complete his review of state government to see if any more money is needed.

Carole Vilardo, executive director of the Nevada Taxpayers Association, said she will present the issue to her board of directors. But in the past, the board has generally felt that "taxation by initiative is generally a poor idea."

The Neal petition, estimated to raise $338 million more a year, calls for 45 percent of that to go into public and charter schools.

Thirty-eight percent -- or $138 million -- of the estimated revenue would be used to reduce the motor vehicle privilege tax paid by car owners. The state Department of Motor Vehicles and Public Safety collected $183.3 million from the privilege tax last fiscal year. So that could mean a 75 percent cut in the privilege tax for motorists.

Eight percent would go for pay raises for highway patrol troopers and for employees of the state Gaming Control Board, 7 percent for economic development and 2 percent for programs to fight gaming addiction.

Assembly Majority Leader Richard Perkins, D-Henderson, said the petition by Neal is "premature."

"We're in the middle of a comprehensive review of state budgets and programs," Perkins said. "How can we put a number on what amount of money we might need, if any?

"I don't like to see the state becoming more reliant on any one industry." Perkins said the state now receives 70 percent to 75 percent of its revenue from gaming and sales taxes, part of which is indirect because it comes from other businesses that deal with the casinos.

"If we increase our dependence and if we hit slow times ... holy smokes ... we are going to be crushed," Perkins said.

In the 1999 Legislature, Neal sought to raise the gaming tax, but when he tried to get his bill out of the Senate Taxation Committee, he couldn't get a second on his motion.

If he gains the 40,009 signatures on his petition, the issue will again go to the Legislature, which must act in 40 days. If it refuses to approve the Neal plan, voters in 2002 will have a chance to decide.

Neal doesn't see any appetite by legislators to back his proposal, but if it gets on the ballot, he says it will be a "cake walk" in getting voter approval. He knows the gaming industry will not lie down and expects a legal challenge to his petition. He predicts the industry will launch a mass advertising campaign to defeat the proposal and that gaming employees will be told they may lose their jobs if the tax increase passes.

Neal said he's willing to publicly debate any member of the industry or any attorney representing the casinos.

Casinos that now gross more than $1 million a month pay a 6.25 percent tax before business expenses and federal taxes are computed. Neal's plan would raise that to 11.25 percent.

"They (the casinos) are bringing in growth, but they are not paying for it," Neal said. "The gamers have been successful in shifting the burden to private residents."