Las Vegas Sun

April 24, 2014

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STATE GOVERNMENT:

M Resort complaint pressures Legislature to examine legality of special session money raid

Barbara Buckley

Barbara Buckley

The M Resort is not the only entity that is considering suing the state over the $62 million the Legislature took from Clark County’s Clean Water Coalition.

And legislators are sounding worried that this may be a fight they could lose.

Assembly Speaker Barbara Buckley, D-Las Vegas, has asked the Legislative Counsel Bureau to thoroughly examine the legality of the state’s special session money grab, and she is already warning of more cuts in education funding if the state can’t spend the coalition money — even though the dispute over whether the state had the authority to take the money hasn’t made it into court yet.

M Resort is to decide early this week whether it will sue to seek a refund of more than $700,000 in water connection fees it paid the Clean Water Coalition for a project that was canceled. The $62 million was an accumulation of special fees for a project that wound up being nixed.

“When you pay into a particular fund, do you have the right to rely on the fact that the funds will be used for that reason?” M Resort’s lawyer Chris Kaempfer said. “I would think that if you extract taxes for a special purpose, you cannot use it otherwise.”

Southern Nevada Home Builders Association members paid a lot of those fees too, so its leaders are to discuss the money grab later this month.

“We have concerns about the taking of that money because there is no nexus between what it was intended for and what the Legislature will use it for,” Executive Director Irene Porter said.

Most of the largest single payers are in the gaming industry. On Friday, several told the Sun they weren’t as riled up about the money as M Resort or the homebuilders are, but they also didn’t flatly rule out going after the state.

South Point owner Michael Gaughan, whose property paid $395,000 over the past four years, said: “If the industry doesn’t want to fight it, I will not fight it either.”

M Resort, a nearby competitor, doesn’t speak for the industry, Gaughan noted.

Gaming giant MGM Mirage paid $362,000 in connection fees to the coalition for CityCenter over the past four years. The company’s spokesman, Alan Feldman. said: “Our initial reading from our attorneys is that the state has a right to do this. We’re certainly going to keep an eye on this since we have a lot of money in it.”

A spokeswoman for Wynn Resorts, whose Encore paid $647,000 into the fund, said: “We are evaluating the fees we paid and how they were applied. We have not arrived at any conclusion.”

Hard Rock Hotel spokeswoman Dorian Cantrell, whose resort has paid $892,000 in special connection fees, said: “We are not going to engage in any suit at this time.”

The gaming industry is all too aware that the Legislature broached but backed off increasing the gaming tax as a way to help cover the state’s budget deficit.

But instead of raising the specter of returning to a gaming tax proposal as the fallback if the state has to give back the $62 million, Buckley is warning it is the state’s public schools that will pay the price.

The loss of $62 million would lead to another 3.5 percent reduction of $44.4 million for K-12 education, and $17.6 million for the state’s higher education system, she said.

That shouldn’t be an issue if the Legislature have solid legal authority to take the Clean Water Coalition’s money, though.

Legislative Counsel Bureau Director Lorne Malkiewich also said “we’re looking into it.”

Malkiewich said his bureau gave legislative leaders the green light to take the money. “Our opinion is that they could do this.”

But Malkiewich, citing attorney-client privilege, declined to discuss whether any specific laws were cited that give lawmakers the authority to use that money.

Edie Cartwright, spokeswoman for the attorney general, said that office couldn’t talk about the matter because “this action by the Legislature may result in litigation against the state, at which time we would be involved in that litigation.”

Clean Water Coalition Executive Director Chip Maxfield, a former Clark County commissioner, says his agency’s lawyers are also investigating whether the Legislature has the legal authority to take the money.

“We don’t believe that even though the state has a budget deficit that it should hold our money hostage,” Maxfield said. “We’re not happy about it.”

Buckley said neither are legislators.

“These are really desperate times as we manage through this fiscal crisis,” she said. “If we weren’t facing economic disasters, the Legislature wouldn’t have taken this money.”

Dan Burns, spokesman for Gov. Jim Gibbons, said the governor’s office had understood from the Legislative Counsel Bureau that the money was offered by the coalition “because the money wasn’t being used.”

Burns said the governor’s office likewise would be perplexed if the gaming industry pursued litigation over this issue after Gibbons “had bent over backward” to ensure there wouldn’t be increases in gaming, sales or payroll taxes.

Maxfield, though, said the coalition never offered its money to the state. In fact, he complained he was never given an opportunity to testify about the effect the taking of this money would have on his group.

The coalition is even considering seeking relief from the state treasurer’s office, he added, because the money taken represents “98 percent of our operating budget.”

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