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November 25, 2014

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Taxes:

Legislature pressed into action on ‘revenue enhancement’

Lawmakers face deadline to hike room tax in this session

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COURTESY of the FLAMINGO

Hotel rooms in Clark and Washoe counties will be assessed a 3 percent tax under a room tax expected to pass today in the Legislature.

Nevada seems poised to enact its first significant tax increase since 2003, with the Assembly likely to approve a 3 percentage point hotel room tax increase today.

The measure, which would affect Clark and Washoe counties only, requires Senate approval and the signature of Gov. Jim Gibbons, though both are expected.

The room tax increase is likely to be the first of several of what some legislators are euphemistically calling “revenue enhancements.”

The state faces a $2.3 billion budget hole caused by exploding caseloads for public assistance and Medicaid, as well as rapidly declining tax revenues.

The governor built the proposed room tax hike into his budget, breaking from his anti-tax principles because the voters approved the increase in a nonbinding advisory ballot question in November, he said recently.

Some gaming companies have opposed the increase because they think consumers — already battered by the deepest recession in a generation — will spend a little less at resorts to compensate for the room tax increase.

They also don’t think it’s fair that their tourists should pay for, say, schools in Douglas County.

So why the room tax now, before a final budget deal is worked out?

The Legislature is under pressure because the teachers union collected enough signatures last year to force the action within 40 days of the bill’s introduction, three weeks ago.

If the Legislature does not act by then, the revenue the increase would generate won’t be available until after 2010, when the measure would go on the ballot to be decided by the voters. All polling suggests the measure would pass by a wide margin.

“We have to do it now,” said Assembly Speaker Barbara Buckley, the Las Vegas Democrat. Buckley helped engineer a compromise last year among the teachers and industry giants Harrah’s, Station Casinos and Steve Wynn.

The teachers agreed to back off a plan to seek a gaming tax increase for teacher pay and other education money in exchange for help at the Legislature and a kind of non-aggression pact with some of the gaming companies.

The urgency of the vote offers a slight obstacle in an otherwise focused approach by the Legislature’s Democratic leaders, who say they want to craft a disciplined and efficient budget before considering new taxes.

Senate Majority Leader Steven Horsford, the Las Vegas Democrat, did his best to stay on the same message during an interview.

“We’re going to make sure every member has ample opportunity to examine the policy,” he said.

He expressed concern at the wide disparity between the governor’s estimated revenue from the increase ($292 million for the biennium), and the industry’s own estimate of $120 million to $130 million.

Alan Feldman, a spokesman for MGM Mirage, seemed resigned to the increase, though not thrilled: “We’ve never been a fan of the initiative petition and we’re still not. We’ve got to get to the discussion that needs to be had, and that’s about a broad-based tax.”

When asked whether he thought policymakers and lobbyists from other industries would remember this contribution from gaming, Feldman laughed and said, “I don’t think they’ll remember it by the end of tonight.

“The industry historically has never gotten credit for stepping forward and offering money. Were that the case, we would share an equal tax burden with other industries making gobs of money,” he said.

Sun reporter David McGrath Schwartz contributed to this story.

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