Senate passes hotel room tax hike

By J. Patrick Coolican

Published Tuesday, March 10, 2009 | 1:33 p.m.

Updated Tuesday, March 10, 2009 | 2:27 p.m.

CARSON CITY -- The state Senate passed a significant tax increase for the first time since 2003, approving a 3 percentage point hotel room tax increase in Clark County and a smaller increase in Washoe.

Voters approved a non-binding advisory ballot question on the room tax increase last year by a wide margin. The money will support the general fund during the first two years but will be dedicated to education and teacher salaries after that.

Nearly 99 percent of the new revenue, predicted to be about $230 million during the next two years, will come from Clark County.

Dan Burns, press secretary for Gov. Jim Gibbons, said the governor will let the room tax increase become law without his signature in five days. Burns said the governor did not support the petition initially and he is against raising taxes.

Gibbons, however, included the more than $290 million in revenue from the room tax in his budget for the next two years.

The bill is the result of a ballot initiative. If the Legislature had refused to pass the measure, voters would have had a chance to approve it in 2010.

The teachers union and three gaming companies, Station Casinos, Wynn and Harrah's, negotiated the deal after teachers originally threatened to go the voters with a gaming tax increase.

Five Republicans voted against the measure, objecting to the use of the initiative process to create tax policy and warning of job loss in the event that tourists spend less money in casinos because of the tax.

Senate Majority Leader Steven Horsford, D-Las Vegas, said he disliked the process but supported the bill reluctantly so that in the future the Legislature could change the measure.

This is the first of what is expected to be a painful process of budget cuts and tax increases to close a $2.3 billion budget shortfall the state faces.

Sun reporter Cy Ryan contributed to this story.