Gaming tax hike gets a ‘No way!’

David McGrath Schwartz

Tuesday, Nov. 20, 2007 | 7:39 a.m.

Some Nevada casino companies would agree to discuss higher gaming taxes with schoolteachers, but MGM Mirage has put up a roadblock, sources familiar with talks between the industry and the teachers union told the Sun on Monday.

MGM Mirage, the biggest player on the Strip, balked at discussing any increase in the gaming tax, the sources said.

The company does not believe the industry should bear the entire burden of any tax increase. It favors an overhaul of Nevada tax policy, which could lead to a general tax on businesses in the state - spreading the burden beyond gaming.

Other casino companies agree. As Lori Nelson, a spokeswoman for Station Casinos, said: "The burden shouldn't be put on one industry." Nelson said Station supports a broader tax base and is willing to be part of a solution.

Nonetheless, Station and others, including Harrah's Entertainment and Boyd Gaming, were willing to discuss some increase in the gaming tax with the teachers. An amount was not discussed, but presumably it would be smaller than the 3 percentage points sought by the teachers. The union proposes hiking the tax from 6.75 percent to 9.75 percent of gross gaming revenues on casinos that take in at least $1 million a month.

The rift between MGM Mirage and other casino companies indicates the teachers do have some support in the industry. The union is likely to try to tap into that support in the months ahead. But for now, with the biggest company balking, the Nevada State Education Association said it will go forward with its plan to ask Nevada voters to approve a ballot initiative raising the gaming tax.

The union filed its petition Monday and must gather 60,000 signatures by May to place the measure on the November 2008 ballot. The union says the measure would raise an additional $250 million a year for education.

The union's move - and its willingness to take on the state's most powerful lobby - comes after discussions between the union and major gaming representatives stalled. MGM Mirage was the hang-up, the sources said.

Lynn Warne, president of the teachers union, had one meeting with the Nevada Resort Association's president, Bill Bible, and its lobbyist, Billy Vassiliadis. Since that meeting, about six weeks ago, she said, the industry has been unwilling to schedule another meeting.

"Everyone we met with agreed we had a problem with education funding," Warne said. "No one has been able to provide an alternative."

So while gaming companies are united in opposing the teachers' initiative, they have offered no unified alternative. As it stands now, the teachers' initiative is overwhelmingly popular with voters, according to polls.

"Who are these people kidding?" said one observer who has knowledge of conversations among high-level casino executives. "If the casinos don't come up with an alternative solution, they'll be left holding the entire bag."

MGM Mirage did not return calls seeking comment. Neither did Bible, of the Nevada Resort Association, which represents many of the major casino players.

But some gaming representatives downplayed the differences among casino companies. "When you put together four or five, or a dozen, very smart, successful people, they will all have their own ideas," Vassiliadis said. "It's not a conflict. No one is going to take their ball and go home."

Terry Lanni, CEO and chairman of MGM Mirage, has called on Gov. Jim Gibbons to break his pledge not to raise taxes. Last week, Lanni directly addressed the teachers' proposal in a speech to the Nevada Development Authority.

Nevada needs a broader tax base, he said. "Initiatives are not the way. They are punitive, not productive," Lanni said, according to a transcript of his remarks provided by MGM Mirage.

He also said the legislative process was bogged down and that he was forming a company task force to work with the Nevada Development Authority, a nonprofit business advocacy group, to suggest a tax policy.

Warne said she believes Lanni's views are not universal within the industry. "I don't feel like all of gaming is behind what Mr. Lanni says," Warne said.

Jan Jones, executive vice president of communication and government affairs for Harrah's Entertainment, said she understands Lanni's position on the dangers of legislating by initiative.

But given Gibbons' firm stand against tax increases and the lack of the two-thirds majority required to raise taxes in the Legislature, initiatives might be the only course open right now.

"Speaking as a concerned Nevadan, we also have to address the political reality," she said.

"We believe we have some real issues facing the state of Nevada. We want to be part of the thoughtful discussion."

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