Opposition to room tax hike building

By J. Patrick Coolican (contact) , David McGrath Schwartz

Thursday, June 12, 2008 | 2 a.m.

MGM Mirage and Las Vegas Sands, two of the state’s biggest private employers, are lobbying the Clark County Commission to keep an advisory measure about raising hotel room taxes for education spending off the November ballot, a county official said.

The commission must vote to put the measure on the ballot for voters to have a say on whether to raise the room tax 3 percentage points for teacher pay.

As an advisory matter, the measure wouldn’t become law if voters approve it. But its passage would provide political cover to legislators to enact it during the 2009 legislative session without fear of reprisal from voters.

The twists in the year-old story of teachers’ latest push for better pay and more money for education illustrate that the process has left the state’s most powerful industry sharply divided — some with the teachers, some against — and are far from finished.

MGM Mirage spokesman Alan Feldman said the company is committed to its own, broader-based solution and added that negotiations with other gaming companies are ongoing.

The new developments provide a glimpse of the idiosyncratic process by which public policy is created in Nevada, where special interests rather than elected officials often lead public policy issues and debate.

In this case, it’s the teachers union and the gaming companies, with the powerful Assembly speaker, Barbara Buckley, acting as a broker.

The current fight began with teachers leaving the 2007 legislative session frustrated and announcing they would go straight to the voters with a plan to increase funding for education. In October, the teachers union announced a signature drive to get an increase in the gaming tax on this year’s ballot.

The recent negotiated settlement, in which the teachers dropped the gaming tax increase proposal for an advisory ballot question on a room tax increase, pits some gaming companies, including Harrah’s Entertainment, Wynn Resorts and Station Casinos, against Las Vegas Sands and MGM Mirage, though the latter has expressed a willingness to continue negotiating.

The advisory question was to be placed on the ballot in every county, but anti-tax Republican county commissioners in rural Nevada balked, leaving only Clark and Washoe counties. Proponents dispute that and say there wasn’t enough time to get the question on every ballot.

Because the tax would be capped at 13 percent and most hotels in Washoe County are already there, most of the tax increase would fall on Southern Nevada — the Strip in particular.

That’s given ammunition to opponents, who note that money raised here will flow to rural schools, according to the state’s education funding formula. Moreover, opponents note, a chief argument against the teachers’ original idea, the gaming tax increase, is that it was too narrowly focused. The room tax increase, however, targets even fewer resorts.

Feldman denied that MGM Mirage is lobbying the County Commission, saying the company is merely voicing its opinion, not specifically asking commissioners to vote one way or the other. (The county official, granted anonymity to speak freely, said there’s no clear distinction to the person on the receiving end of the opinion-voicing.)

Feldman added that the company hasn’t decided whether it would mount a public campaign against the proposed ballot question, but then raised the company’s objections.

“We’ve let anyone who’s asked know this is a terribly flawed way of going about this,” he said. “The process is flawed ...

“The advisory question is flawed. It calls for specific earmarks for (the teachers union) when the entire state is in crisis. It places all of the burden on one industry. Since last fall we’ve been saying this needs to be a broader solution.”

The new coalition of gaming officials hit back, highlighting the divisions in an industry often seen as monolithic but in reality far from it.

“Why would anybody be opposed to the people having a right to voice their opinion?” said Jan Jones, a Harrah’s executive and former Las Vegas mayor. “It’s not like we’re asking county commissioners to take a position. We think the issue is important enough for the people to weigh in on.”

She also said the proposed room tax increase doesn’t prevent further solutions, such as a broad-based business tax that MGM Mirage favors. (MGM Mirage Chief Executive Terry Lanni was a major supporter of Gov. Jim Gibbons’ campaign. And though Gibbons is opposed to any new taxes, his spokesman said the governor would support a deal if the voters approve the advisory question in November.)

The current deal is far from perfect for everyone involved.

For the teachers union, the room tax increase would raise an estimated $150 million to $180 million annually, well below the estimated $250 million to $400 million a year that would have been generated by the gaming tax increase, the subject of its now-defunct constitutional amendment signature-gathering campaign.

That has led some to speculate the union negotiated knowing it would not be able to gather enough signatures for the original gaming tax increase by the May deadline.

Dan Hart, the teachers’ political consultant, disputed that and said the teachers avoided a brutal three-year battle and in the process gained valuable Strip allies by negotiating.

Hart explained that the teachers are working on two tracks: They’ll pursue the advisory ballot question, even while gathering enough signatures by November for a legislative initiative to increase room taxes. In a legislative initiative, voters essentially ask the Legislature to take action. If the 2009 Legislature does not approve it, the measure automatically would go before voters on the 2010 ballot and, if passed then, would become law.

In the first biennium after passage, the extra money would close the current budget gap; after that it would go to education.

Buckley, a Las Vegas Democrat, said the deal to swap the proposed gaming tax for a higher room tax amounted to a short-term fix that would prevent massive cuts to education, giving policymakers time to work on a long-term solution.

She also addressed the issue of rural counties’ sitting out the advisory vote.

“As a legislator, would I like to see them approach all the counties?” she said. “Sure, but at the same time, we’re facing probably the largest budget crisis the state has ever seen ... If this solution eliminates the need for draconian cuts, the state will be better served, even if the proposed solution isn’t perfect.”