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April 20, 2014

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Teachers know: Taxes may be a certainty in life, but in Nevada, tax increases aren’t

Everybody needs a backup plan, particularly in politics and especially when you’re talking taxes.

In May, the state teachers union neared a deadline on its plan to raise the gaming tax. Instead, it struck a deal with casino companies to raise the room tax.

The teachers had the word of Steve Wynn and executives of Harrah’s Entertainment and Station Casinos that they’d support a room tax increase. They also had verbal agreement from leaders in the state Senate and Assembly, as well as from Gov. Jim Gibbons — provided voters pass an advisory question in November.

But they also had a Plan B, just in case things go sour during the 2009 session. If the Legislature balks, they would put the room tax directly to the voters.

On Thursday, a coalition of the Nevada State Education Association and three big casino companies filed paperwork to start collecting signatures for a room tax initiative.

The proposal would increase the room tax in Clark and Washoe counties by 3 percentage points, up to a maximum of 13 percent. (The tax varies by jurisdiction.) Clark and Washoe county commissioners have agreed to put an advisory question about the room tax on November’s ballot.

Proponents of the room tax hike will try to get 57,000 signatures by Nov. 11. If they succeed, the 2009 Legislature will have 40 days to pass it. If it isn’t passed within 40 days, the ballot initiative will go to a binding statewide vote in 2010.

“It’s a safety net,” said Lynn Warne, president of the Nevada State Education Association. “We’ve struggled every legislative session to find adequate funding for K-12.”

It would take “a clear mandate from the people” for the governor to support the room tax hike, Gibbons spokesman Ben Kieckhefer said. Gibbons has pledged not to raise taxes and opposed higher taxes even as the state cut $1.2 billion from the budget.

But, Kieckhefer said, “it has been the governor’s policy that the ultimate authority in state government is the people.”

Assembly Speaker Barbara Buckley, D-Las Vegas, who helped broker the deal, and the teachers union want to see the Legislature act during the 2009 session.

The state is forecasting more than $1 billion in additional cuts needed if tax revenue doesn’t pick up. This measure could bring in an estimated $150 million a year, at least softening that blow.

If the Legislature doesn’t act but voters approve the initiative, the room-tax money won’t be available until 2011. The additional money would be earmarked for education, including higher teacher pay. (If it passes in the 2009 legislative session, the money raised during the first years would go to the general fund.)

Increases in the room tax historically have been palatable to politicians and voters because most of it is paid by tourists.

But the teachers union and casino companies still would have to fund a campaign to sell the measure.

So far, some casino companies — notably MGM Mirage and Boyd Gaming — are not part of the coalition.

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