Tax debate begins to boil: Cox, Culinary Union battle over television ad

Friday, Nov. 22, 2002 | 11:23 a.m.

Culinary Local 226 and Cox Communications are engaged in a standoff over a union advertisement that the cable television company refuses to air.

The dispute involves a 30-second spot in which Culinary suggests that Bank of America pay its fair share of state taxes. It's part of a campaign Culinary has launched to encourage the state Legislature to approve new broad-based business taxes to help pay for education.

Local 226, whose members include food servers, bartenders and cocktail waitresses, said it can back up everything it asserts about Bank of America. But Cox said it won't air the ad unless it is redone and includes other companies, rather than singling out the bank.

An irony in the dispute is that Cox supports a proposed new one-quarter of 1 percent state tax on gross business revenue, something banks oppose.

Culinary political director Glen Arnodo said Thursday that union attorneys are reviewing the matter to determine whether they will litigate the issue. Culinary had planned a cable TV ad campaign, although officials didn't specify how much they planned to spend or how long they wanted the ads to run.

A spokeswoman for the Federal Communications Commission who requested anonymity said that television stations can refuse to run issue-oriented ads under a 1987 federal court ruling.

"Basically, the ad says that casinos pay for over 50 percent of Nevada's budget and working people pay the rest," Arnodo said. "Companies like Bank of America pay no taxes on the money they make in Nevada. We say that Bank of America should pay the same taxes in Nevada that they pay in California and Arizona.

"I suppose if we had unlimited amounts of money and could reshoot an ad every time Cox censors something, that's possible to do. But this ad is completely accurate. The idea that we would have to change it because someone says it's too strong is absurd."

In a prepared statement issued Thursday, Culinary Secretary-Treasurer D. Taylor also said that "this is clearly the case of one big business, Cox Communications, covering for another big business. Cox and Bank of America share one very important thing in common -- neither pays taxes on the money it makes in Nevada."

But Cox Vice President Steve Schorr objected to Taylor's comments and said his company was willing to run the ad if Culinary made the requested changes. Schorr said he was surprised by the tone of the press release since he and Taylor sit on the board of Nevada Partners-Culinary Training Academy and Taylor did not bring up the subject to him when the two men met earlier in the week.

"We told them that we would accept it if, instead of singling out one company, they listed a variety of companies," Schorr said of the ad. "What Bank of America is doing is legal. The ad suggests that Bank of America is doing something against the law but they're not.

"We asked the union to take another look at it so that it is not an attack against a specific company."

Schorr also said his company pays $11 million annually to local government in franchise fees for the right to operate in Southern Nevada and also pays state business activity taxes of $100 per year per employee.

"To say that we don't pay taxes is not true," Schorr said.

Bank of America spokesman Rich Brown, who is based in Portland, Ore., declined comment on the ad or the controversy pitting the union against Cox.

"Any proposal for a tax should be fair among all industries and shouldn't be a disincentive for more investment in the state," Brown said.

Taylor urged Las Vegas Sun President and Editor Brian Greenspun, whose family owns 20 percent of Cox Communications, to "allow the ads to be aired."

"I'm sure Mr. Greenspun would agree that Nevada will never solve its budget crisis without healthy discussion and debate," Taylor stated. "The citizens of Nevada have the right to hear more than the big business view."

Greenspun, a member of the Governor's Task Force on Tax Policy that recommended the gross receipts tax, said he would review the ad today before reaching an opinion about its contents.

"I agree with D. Taylor that this is an issue that needs to be aired fully in the media, the Legislature, around the office and in work rooms," Greenspun said. "What we learned about the state of Nevada's finances is that we are on the brink of disaster unless we get them fixed.

"Where I do not agree with Mr. Taylor is where he lumps Cox Communications in with some of the companies that are opposed to the business tax recommendations we made to the governor."

Schorr testified before the task force that Cox would support the gross receipts tax proposal. That tax would raise more money than any of the other proposed new or increased taxes that have been recommended to Gov. Kenny Guinn as a way of solving projected state budget deficits.

The issue of whether Cox and other cable and network television operators have the right to refuse controversial advertisements gets into areas of federal law.

Arnodo and Taylor both argued that their ad should be treated no differently than the political advertisements that filled the airwaves leading up to the Nov. 5 general election.

"Did Cox Communications censor those political ads?" Taylor asked.

But the FCC spokeswoman said federal law distinguishes candidate ads from those involving issues. She said that television and cable stations are required to provide access to all federal candidates, such as those running for president or Congress.

She said that TV stations are not required to sell ads to state and local candidates. If they choose to do so, opponents of those candidates who buy air time have seven days to demand access to the airwaves as long as they are willing to buy their ads.

Issue ads are an entirely different matter, the FCC spokeswoman said. She said that up until 1987, the federal Fairness Doctrine stipulated that if ads were aired expressing one point of view, TV stations also had to grant access to opposing positions. Federal courts at the request of the FCC struck down the Fairness Doctrine in 1987 as an unconstitutional violation of broadcasters' First Amendment rights.

She said the ruling meant that broadcasters could dictate the content of the ads they choose to run on issues, even if it means allowing only one side of a dispute to air ads.

Schorr conceded that there have been many other times when local advertisers were told by Cox to change their ads if they wanted them aired. He cited ads from topless clubs as an example.

"We have had local entertainment establishments sometimes that have tried to place an ad that we didn't feel was in the community's interest," Schorr said. "We're a company that has 1,000 employees that live in Southern Nevada. We're a company that is responsible to the community and we take that responsibility seriously."

Jim Spinello, Clark County's assistant director of administrative services, said that local government franchise agreements with Cox require the company to provide stations for county and city government programming. But Spinello said the local governments have no control over the content of Cox programming, including ads.

"We don't get into the issue of content except for our ability to have local government access," Spinello said.

Culinary isn't the only party attacking banks on the issue of taxation. Mike Sloan, another member of the governor's task force who is senior vice president of Mandalay Resort Group, has been vocal about the need of banks and other large businesses to pay their fair share of taxes. He has said a gross receipts tax would help accomplish that fairness.

In a letter he sent Monday to Jay Kornmayer, chairman of Wells Fargo Bank Nevada and chairman of the Las Vegas Chamber of Commerce, Sloan wrote that "it would be helpful to understand the pricing breaks that Nevada customers of your bank currently receive as compared to your customers in the many other states where you do business and pay a corporate income tax."

"Frankly, I am perplexed by the chamber's opposition to both a profits and gross receipts tax, while it supports taxing businesses on the number of employees they have," Sloan wrote. "As you well know, the number of employees a business has probably has less relationship to economic performance than gross revenue.

"For example, major out of state businesses like yours, headquartered in San Francisco, are able to operate with fewer and fewer Nevada employees thanks to ATMs (automated teller machines) and the Internet, and yet may derive substantial economic benefit from doing business in Nevada."

Kornmayer said he planned to respond to Sloan and would reserve his comments on the letter until then. But Kornmayer also expressed his opposition to a gross receipts tax, saying that it would be unfair to high-volume, low-margin businesses.

In the case of banking, he said it is possible for banks to experience a rapid increase in gross revenue through higher interest rates on loans without enjoying a similar increase in net profits.

"The banks have no problem paying a tax that is fair and equitable," Kornmayer said.

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