In anti-tax Nevada, policy can be pawned

By David McGrath Schwartz (contact)

Wednesday, May 14, 2008 | 2 a.m.

Jan Jones

Steve Wynn

Lynn Warne

Casino moguls jetting to meet with the governor, clandestine sessions between gaming executives and the teachers union president, eleventh-hour jockeying over raising the room tax — this is how public policy gets made in Nevada.

You won’t find this scenario in a Civics 101 class. But you will find it playing out these days in Carson City, Las Vegas and Reno as the simmering debate over how Nevada funds public education approaches a critical stage.

With a Tuesday deadline looming, gaming companies are lining up on both sides over a proposal to increase the hotel room tax in exchange for the teachers union’s dropping its ballot initiative to raise the gaming tax.

Although nearly all agree that few issues are more crucial to the state’s future than the quality of its education, sound policymaking once again is off the table as officials grapple with it.

“Setting tax policy this way is absolutely insane,” said Carole Vilardo, president of the Nevada Taxpayers Association.

State Senate Majority Leader Bill Raggio, R-Reno, said it would be better for any tax increase to arise from a comprehensive study.

“Is this the preferable way to make policy? No,” Raggio said. “It would be better to have a complete analysis to give it some credibility.”

Since October, the teachers have been pushing a ballot initiative that would raise the gaming tax on the state’s largest casinos from 6.75 percent to 9.75 percent.

The union has until Tuesday to submit 59,000 signatures of registered voters to county clerks throughout the state. Once the signatures are submitted and a sufficient number is verified, the union cannot remove the initiative from the ballot, said Matt Griffin, deputy secretary of state.

Hence the flurry of last-minute meetings, phone calls and posturing to see whether a deal can be worked out.

Steve Wynn and former Las Vegas Mayor Jan Jones, now an executive at Harrah’s, met with teachers union President Lynn Warne and political consultant Dan Hart last week to propose raising the room tax rate.

Wynn flew to Reno to meet with Gov. Jim Gibbons and Raggio about the plan. Assembly Speaker Barbara Buckley, D-Las Vegas, also has been involved in the discussions.

So far Wynn Resorts, Harrah’s Entertainment and Station Casinos support the attempt to head off the ballot initiative, according to sources. Opposed, as of Tuesday, are MGM Mirage, Boyd Gaming Corp. and Las Vegas Sands.

Nevada is not alone in seeing attempts to pass laws via the ballot rather than in legislative chambers.

For an example of how initiatives have supplanted sensibly crafted public policy, Nevada need look only to California, where initiatives have dominated public policy in the three decades since voters adopted 1978’s historic Proposition 13, which significantly reduced and capped property taxes.

In California, looming ballot initiatives often lead to last-minute sit-downs aimed at striking compromises, as is occurring here.

“This happens all the time,” said Bob Stern, president of the Center for Governmental Studies, a nonprofit, nonpartisan think tank in California. “We’ll decide policy at the last minute, and oftentimes, policy is hastily written and will have to be fixed later.”

With special interests in Nevada having warmed to the initiative process only over roughly the past decade, the state is now getting a dose of what comes with that — patchwork public policy.

Sound public policy, though, was never the foundation of the teachers’ proposal to raise the gaming tax.

Warne has not concealed the fact that the union chose to pursue the gaming tax increase because polling showed it was the most palatable tax hike to voters.

Warne stressed that the union’s proposal came only after watching legislative session after legislative session go by without significant increases to education funding.

“Early on, we said that the initiative petition is not the optimal way to set tax policy,” Warne said. “Unfortunately in Nevada, neither is the legislative process.”

Gibbons has been resolute in his no-new-taxes pledge. Both Democratic and Republican leaders in the Legislature have shown no desire to increase taxes in the upcoming legislative session, in 2009.

After the union announced its gaming tax proposal, initial discussions with gaming companies stalled, Warne said. Attempts to sit down with the broader business community also went nowhere, she said.

“I wish these discussions would’ve taken place a long time ago,” she said of the recent talks. “We’ve been at the table for a long time alone. At least now we’re having these conversations.”

Some believe the teachers have had difficulty gathering enough valid signatures, particularly in rural counties. A recent opinion from Secretary of State Ross Miller makes it easier for county clerks to invalidate signatures.

Gibbons, meanwhile, will endorse the plan only if an advisory question on raising the room tax is approved by voters. The advisory question also would provide political cover to legislators, two-thirds of whom would have to support a tax increase for it to pass.

Las Vegas Mayor Oscar Goodman said he is concerned the last-minute negotiations don’t leave “enough time for perfect public policy.”

Jim Rogers, chancellor of the Nevada System of Higher Education, said he does not fault the gaming industry for trying to avert the ballot measure out of understandable concern for its bottom line.

Rogers also is no fan of the initiative process.

“The problem is the damn Legislature, with the governor, won’t do anything,” he said. “People should be calling their legislators to tell them they should care about education.”

The talks among gaming companies are ongoing.

A key indicator of where they stand may come Thursday, when the Las Vegas Convention and Visitors Authority board — with representatives from MGM, Harrah’s, Wynn, Boyd and Station — meets.

On the agenda are a discussion and possible action regarding ballot initiatives.