No clear winners emerge

Erin Neff

Wednesday, July 23, 2003 | 11:21 a.m.

The 2003 Legislature will go down in history for passing the largest tax increase in state history, and the consensus after six months of bickering is that no clear winners emerged.

Each faction in the debate can probably point to an opponent as a loser in the immediate aftermath of Monday's vote for $836 million in taxes.

The political parties blame each other and the business interests that were parties to the negotiations each claim the other will suffer consequences.

"Everybody looks bad," Senate Minority Leader Dina Titus, D-Las Vegas, said.

Senate Majority Leader Bill Raggio, R-Reno, said the business groups involved face difficult roads ahead.

"I think people can claim only Pyrrhic victories," Raggio said.

Business vs. Gaming

The heart of the policy dispute in the 2003 Legislature was which method of taxes should be increased or implemented to solve the fiscal crisis.

As the most influencial force in political circles, the gaming industry appeared to have a leg up on big business groups for control of the best lobbyists and, through them, lawmakers' attention.

For years gaming had been trying to shift some of its tax burden by backing moves to create a regular business tax.

The gross receipts tax emerged as the method gaming preferred, and chambers of commerce and other business representatives fought it.

"Clearly it was in gaming's self-interest and business interest to get a broad-based business tax," said lobbyist Billy Vassiliadis, a Democrat whose clients include gaming companies and public schools. "But it was gaming and most Nevada residents that didn't succeed in getting a tax that is stable in the long term for funding education.

The business group, led by the Las Vegas Chamber of Commerce, retailers and manufacturers, appears to be the bigger victor for now. No tax on a business' gross or net income was approved, and the payroll tax that passed is a proposal business lobbyists had sought.

"The business community had to play catch-up," said Republican consultant Steve Wark, who as past chairman of the Clark County GOP advised numerous legislative candidates in last year's elections. "Their ability to come together to block gross receipts and to really hold these things in place was remarkable."

But gaming can claim a partial victory, and the business group a potential loss.

The tax plan includes a 2 percent excise tax on banks and a $7,000 per-branch fee. That establishes precedence for taxing non-gaming businesses, and although the rates are fairly low, many say the rates could be increased in the future.

"Once a tax is in place, it is nearly impossible to get rid of," Nevada Taxpayer Association President Carole Vilardo said.

The current casino entertainment tax will be replaced with a live entertainment tax, subjecting non-casino venues from a tax now borne by the industry.

And some gaming companies remain so displeased with the business lobby's actions during the session that more of them are rumored to join Station Casinos in pulling out of the Las Vegas chamber. The move would likely come, sources said, when the companies are asked to re-up their dues.

"The real hurdles were the alliances the chamber made with their clients, the banks, manufacturers and retailers, that dug in the hardest," Vassiliadis said.

Las Vegas Chamber President and CEO Kara Kelley said her organization was in a difficult position, with its diverse members, and often found itself in a "damned if you do, damned if you don't" position.

But she said she believes the tax package that was approved contains the chamber's stated goal for a broad-based tax.

"This was a particularly painful session for gaming," Kelley said. "The industry probably needs to do a better job explaining its importance and place in the community."

This morning, MGM MIRAGE executives contacted the Las Vegas Chamber to inform the business group they would no longer be members. Kara Kelley, chamber president and CEO, said she was told "it was a long, thought-out" decision.

MGM MIRAGE also informed Kelley it was pulling out of the Nevada Development Authority -- a group which entices new business to the state.

Alan Feldman, spokesman for MGM MIRAGE, said the company also will be pulling out of the Nevada Resort Association, bringing all lobbying and communications efforts in house.

"There is a vacuum of understanding of our company and its role in the industry," Feldman said. "We're the largest taxpayer in this state, and this means we have the largest responsibility to advocate issues."

Feldman said that while the decision was in the works for years, the comments about the gaming industry that occurred during the Legislature helped seal the deal.

He called it "shocking to see the lack of awareness of our industry and the role our company plays specifically."

Resort association representatives were not available this morning.

The parties

Republicans are already crowing about small victories over the Democrats, particularly in the Assembly, where the GOP is in the minority.

Assembly Minority Leader Lynn Hettrick, R-Gardnerville, said regardless of people calling his bloc of votes the "Mean 15," negotiations sparked by his caucus led to reductions in the overall amount of taxes needed to fund the budget.

"We made a very good point that we're not irrelevant," said Hettrick, referring to a statement by Gov. Kenny Guinn in which he labeled some opposition irrelevant.

Wark said the 14 Assembly Republicans who "held firm against the taxes" have the advantage in potential primary election contests and will be remembered for their resolve.

Democrats disagree. Assembly Majority Leader Barbara Buckley, D-Las Vegas, said the GOP will be remembered for the way they "held out."

"They filed lawsuit after lawsuit and their tactics were delay, delay, delay," Buckley said.

Wark said it was Democrats who played games -- tying education funding to the tax plan and "holding schools hostage."

On the tax plans themselves, Democrats claim victory for blocking proposed property or sales taxes and for offering employers who provide health care benefits a discount in the payroll tax. Republicans say it was their efforts to block the gross receipts tax that shaped the final debate.

Leaders

Guinn has been wearing a bright red target since he proposed a $1 billion tax increase on Jan. 20.

Conservative Republicans are displeased with his actions, with many suggesting a recall could be pending.

Republican Attorney General Brian Sandoval has taken some criticism from within the party for representing Guinn in a lawsuit against the Legislature, and for defending a controversial Supreme Court opinion.

"Brian Sandoval took hits he normally wouldn't take in a legislative session," Wark said.

The Nevada Supreme Court has been lambasted since a July 10 ruling to set aside the constitutional provision requiring a two-thirds vote on taxes in favor of a provision requiring funding of public schools.

Efforts are under way to recall the six justices who joined the majority decision.

The author of the two-thirds amendment, U.S. Rep. Jim Gibbons, R-Nev., stands to gain more recognition as a result of the court's action and the initiative petition drive he launched in response.

That could prove beneficial if the he decides to run against Sen. Harry Reid, D-Nev. next year.