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June 4, 2012

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POLITICS:

Why Horsford took on gaming; what’s next?

Senator wants all parties at table to talk about new revenue, while industry balks

Image

Sam Morris

Senator Majority Leader Steven Horsford delivers a speech in which he calls for corporations to step up and pay their fair share on Day Four of the special legislative session Friday, February 26, 2010 in Carson City.

By (contact)

Friday, March 5, 2010 | 2:01 a.m.

Billy Vassiliadis, the president and majority owner of R&R Partners, inside his office at R&R Partners in Las Vegas Friday, Aug. 21.

Leila Navidi

Billy Vassiliadis, the president and majority owner of R&R Partners, inside his office at R&R Partners in Las Vegas Friday, Aug. 21.

Sun archives

Special Session - Day 4

The cheerleading team from Legacy High School, in town for the state cheerleading championships, arrive for a tour of the legislature building on Day Four of the special legislative session Friday, February 26, 2010 in Carson City. Launch slideshow »

It was a dramatic showdown.

State Senate Majority Leader Steven Horsford, trying to close a nearly $900 million budget deficit, demanded that the gaming industry come to the table and contribute.

The industry’s chief lobbyist, Billy Vassiliadis, said the suffering industry has nothing to give, that others in the Nevada business world must participate after years of getting off scot-free.

The conflict even had a touch of the Shakespearean: When Horsford was a teenager, his father was murdered. Vassiliadis would later hire Horsford, in his 20s, as a lobbyist for R&R Partners and act as mentor on matters of policy, politics and press.

That relationship provided extra tension as Horsford took to the floor of the Legislature during the special session and blasted the gaming industry for its hard line.

“How will you find your next generation of educated workers?” said Horsford, a Las Vegas Democrat elected in 2004 who quickly rose the ladder to become the youngest majority leader in Nevada history.

He scoffed at the industry’s claim of poverty and its unwillingness to come up with $32 million to fund the agency that regulates it. The sum amounted to just three, $10 million high rollers, he said.

The conflict between the lobbyist and legislator was emotional and real, according to the principals and lobbyists for gaming and other industries.

What emerges from their accounts of Horsford’s clash with gaming are important developments: an increasingly frustrated gaming industry steeling itself for the 2011 Legislature, and an evolving Horsford growing into his progressivism while keeping the state’s traditional power players in the business community at greater distance.

These trends will have significant effect in the coming months and years.

Horsford and his political team are managing five highly competitive races this year in their drive to retain the majority and even pick up two seats to achieve veto-proof status. To do so, he’ll need money from gaming and other business interests that he carefully cultivated for years. And when the Legislature meets in 2011, staring down a $2 billion to $3 billion budget hole, it will face choices both scarce and scary — and the interaction between Horsford and gaming will be a key dynamic.

Finally, there’s Horsford’s own career: His name is frequently mentioned as potentially Nevada’s first black governor or congressman. No candidate has ever risen to that level of high office in Nevada by opposing the state’s small political clique dominated by gaming, Nevada historian Michael Green noted.

There are three important things to know about the Horsford-gaming dust-up, said a Democratic operative who was granted anonymity to speak freely:

First, Horsford left the powerful R&R agency years ago to become CEO of a nonprofit organization, the Culinary Training Academy, a partnership of the Culinary Union and Strip hotels. This contradicts Horsford’s image as close to the state’s business interests, including gaming and development. “In fact, he’s very liberal in his core politics,” the operative said.

Second, the conflict was not manufactured for the cameras. Horsford showed genuine and uncharacteristic anger at gaming. “He was livid,” the operative said.

“And finally,” the Democratic source added, “There’s no consensus in the industry, which makes it more difficult for (Vassiliadis) to broker a deal.”

But the phrase “No consensus” was a bit of a euphemism used to explain gaming’s inability to negotiate on paying more to close the deficit, according to industry lobbyists.

“No consensus” was the message that went out to the public, but there actually was consensus on whether to pay more: No way, no how.

Last year some of the industry’s key companies, including Wynn and Harrah’s Entertainment, compromised with legislative leaders on a $300 million tax increase to support education as a way to fend off a more threatening voter initiative to raise gaming taxes.

The promise at the time, several gaming lobbyists said, was that in the next round of raising revenue, gaming would not be singled out.

As far as they were concerned, Horsford’s entreaty was a broken promise.

Moreover, they wanted to make a statement in advance of 2011: “You are not coming after us,” a Strip lobbyist said. The reason: By their own estimates, gaming and its customers generate half of the revenue of the state general fund, and the industry says enough is enough.

But Horsford was in a jam. He and other Democrats in the Legislature were coming under withering attack for not offering an alternative to Gov. Jim Gibbons’ plan to slash spending.

D. Taylor, a close ally of Horsford as head of the Culinary, had publicly questioned whether Democrats had any principles. The teachers union bought $200,000 in TV time to force Democrats to stand up for public services during the special session.

Legislative leaders divvied up responsibility for getting more revenue, with Assembly Majority Leader John Oceguera, D-Las Vegas, approaching the mining industry, while Horsford went to gaming.

According to sources familiar with the dialogue between Horsford and Vassiliadis, the conversation was not easy for either of them. With gaming balking, and Horsford badly in need of revenue, conflict was inevitable.

“Billy was disappointed he had to tell (Horsford) no. And when he said no, Steven was legitimately angry,” another gaming lobbyist said.

Then came the floor speech late last week.

“If anything I was surprised by the floor speech,” Vassiliadis said.

But he said he didn’t take it personally.

Horsford “was under a lot of pressure, looking at making painful cuts, and eventually he did make painful cuts,” Vassiliadis said. “I don’t think there’s any hard feelings.”

Vassiliadis, whose firm has tentacles across the state including as the creator of the “What happens here” ad campaign, knew going in to the session that legislative leaders would lean on the industry, and he knew what his response would be: “I told Sen. Horsford we had a problem given that we contributed three of the past four sessions,” he said, referring to the education funds last year, money for transportation in 2007 and a gaming tax hike in 2003. For the most part, other industries had skated.

Ultimately, and with the backing of a threatened veto by Gibbons, gaming won this time and walked away without having to pay extra fees, except for new licensees.

For his part, Horsford is not backing down.

“I made my wishes known before the session that gaming as well as other business interests should be there,” he said. “We let our intent be known that we need to protect education and vital services. And I was very upset the industry didn’t try to work with me to come to a solution. They did what they needed to do. I felt like I did what I needed to do.”

He added that his floor speech wasn’t just about gaming — and this is where 2011 comes in again: “It’s imperative everyone recognize that next session we will be faced with 50 percent less revenue. So I’m not waiting until next session to get people around the table to figure out how to have a more fair, equitable and broad tax base to fund our schools properly.”

Indeed, Horsford used the special session to hammer the point home. In widely discussed committee testimony, Horsford hauled in lobbyists for manufacturing, banking, retail, trucking and the like. All of them have long-standing enemies in Carson City for their consistent refusal to pay more in taxes; none would make much money selling tchotkes on late night TV. Members of both parties gave them the third degree, with feeble resistance in return.

In the end, both Vassiliadis and Horsford won. Gaming walked away not having to pay much more and made a statement about 2011. Horsford won populist bona fides with the Democratic base and drove home his point that the state needs a better tax system that will deliver more money for education and other services.

The episode wasn’t without some damaging long-term consequences, however. Gaming, already a favorite target of voters, publicly shunned the Legislature as it tried to prevent cuts to K-12 education, the universities and social services. As a result, voters will likely continue to give the Legislature permission to go after the industry.

Horsford, meanwhile, infuriated industry leaders with what they consider to be his grandstanding.

For now at least, by outward appearances, Horsford and Vassiliadis remain allies.

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