Jeff Simpson proposes a compromise to Gibbons’ transportation plan that might make everyone happy

Sunday, May 13, 2007 | 7:04 a.m.

Gov. Jim Gibbons' transportation-funding plan has some problems, but it shouldn't be dismissed out of hand. The biggest problem is his philosophical aversion to raising taxes, regardless of the need.

Folks I've talked to, including people who served on the commission that identified the state's transportation needs, say those needs are now well above $4 billion and may be closer to $6 billion or $7 billion.

That's a huge chunk of change in this state, but ignoring it will make our lives miserable and our businesses less efficient and therefore less profitable. Tourism, the lifeblood of our economy, will suffer as visitors won't want to brave Interstate 15 (or Interstate 80 up north), and they won't want to contend with gridlock once they get here.

The most logical and fair way to pay for the needed roads and other transportation infrastructure is to target the roads' users.

Diverting live entertainment taxes to pay for our state's inadequate roads doesn't make sense - what does attending a show have to do with roads? - but using sales taxes from new motor vehicles clearly has a relationship to transportation, and I think that funding element makes sense.

The biggest controversy appears to be shaping up over Gibbons' plan to target room-tax revenue.

Using room-tax funds for roads doesn't make a lot of sense either, but transportation projects already get a share of it.

Gibbons' proposal tries to make our state's visitors pay too great a share of the transportation funding burden. In addition to paying car-rental taxes, sales taxes and, effectively, gaming taxes, they also pay a hefty amount in room taxes.

Right now, one percentage point, or 11.1 percent of Clark County's 9 percent room tax, goes to transportation, while 47 percent goes to the Las Vegas Convention and Visitors Authority.

Room-tax revenue has skyrocketed for two reasons: The number of rooms has grown as megaresorts have opened up and down the Strip and, even more significantly, the luxury trend with more upscale rooms and resort amenities is allowing hotel operators to charge ever more for their rooms.

As Sun and In Business Las Vegas tourism reporter Rick Velotta reported in the May 11-17 issue of In Business Las Vegas, average daily room rates have enjoyed a meteoric climb.

In 2000 the average daily room rate was $74.30. By last year it was $119.66.

And with the next round of ultraluxury resorts slated to begin coming on line by December, including Palazzo, Encore, CityCenter, Cosmopolitan, Echelon Place and Fontainebleau, the price of rooms should continue to climb even as tens of thousands of rooms are added.

Gibbons' proposal would take 4 percent of the LVCVA's room-tax revenue, beginning in July, with that amount increasing by 4 percent every fiscal year until it reached 32 percent, almost one-third of the authority's piece of the room-tax pie.

It would be a mistake to capture such a large share of the LVCVA's chief revenue stream just as a huge new wave of resorts open. The authority has done a masterful job helping to create an unrivaled brand for the city in its advertising.

As more than one casino executive has said: "Don't kill the goose that laid the golden egg."

But a much smaller piece of the room-tax revenue might be appropriate. The effect of Gibbons' proposal would be to increase transportation's share of the room-tax pie by about 135 percent, reducing the LVCVA's by 32 percent.

Perhaps a 16 percent reduction in the LVCVA share of room-tax revenue (starting with 2 percent in July and jumping 2 percent every year until it hits 16 percent) and a 68 percent increase in transportation funding from the room tax would be a sensible compromise, making up for the change with reasonable tax increases targeting users.

A sensible starting point: A sizable increase in the gas tax. Indexing it to the cost of living would be a good start, with some kind of levy on weight and mileage tacked on to bigger vehicles, although that part would take time to implement.

Tackling tough issues takes compromise. The gamers and the LVCVA should give a little, and Gibons should too. And so should we, as Nevadans, in the form of higher gas taxes - in exchange for better roads.