Teachers give up gaming tax bid in deal

Offer of money from hike in room tax sways union

Tue, May 20, 2008 (2 a.m.)

Teachers made a Las Vegas deal Monday night, trading the chance at a big score for a quicker, more modest gain with backing from at least some of Nevada’s biggest gaming houses.

Less than 24 hours before the deadline to submit its petitions, the Nevada State Education Association announced Monday it is dropping its effort to raise the gaming tax by 3 percentage points.

In exchange, Wynn Resorts, Harrah’s Entertainment and Station Casinos have agreed to back an advisory question on the November ballot and legislative action in 2009 that would increase the room tax rate by 3 percentage points.

In a joint release sent late Monday evening, executives from Wynn, Harrah’s and Station, as well as the president of the teacher’s union, Lynn Warne, announced the agreement. All the gaming executives said they are “proud” to be supporting education in Nevada. It’s clear that they hope MGM Mirage and Boyd Gaming will eventually back the agreement.

Despite entreaties by Assembly Speaker Barbara Buckley, those companies have not signed off on the deal, and Las Vegas Sands is forging ahead with its own initiatives to divert room tax money from the Las Vegas Convention and Visitors Authority.

The deal is the result of last-minute negotiations that revealed a fractured community of gaming companies and perhaps a more powerful role for the teachers in Nevada politics.

The teachers’ tax proposal had forced an old-fashioned stare-down. Gaming companies pushed hard to prevent teachers from gathering the tens of thousands of signatures needed by today’s deadline. In particular, the gaming companies focused on rural areas, where collecting registered voters’ signatures is more difficult.

Some gaming companies believed the teachers did not have sufficient signatures. And even if the teachers crossed that threshold, gaming leaders believed, the teachers’ initiative could be thrown off the ballot by the Nevada Supreme Court.

Other gaming companies, however, believed the gamble was not worth it, in large measure because the teachers’ proposal to raise the gaming tax from 6.75 percent to 9.75 percent consistently drew 60 percent-plus favorable ratings in polls.

But the teachers also gave in. They now are dependent, at least in the short term, on the Legislature, where their clout has waned.

Even if the Legislature approves the deal, education would get less money than the gaming tax hike would have generated. The room tax increase would raise an estimated $180 million annually, well below the estimated $250 million to $400 million a year the gaming tax increase would have produced.

But the gaming tax would have been a constitutional amendment requiring approvals by voters in 2008 and in 2010, meaning it could not have gone into effect until 2011.

Under Monday’s agreement, money could start coming in after the 2009 Legislature passes it. That scenario, though, is far from certain.

The money generated would, in the first biennium, go to the state’s general fund to offset budget shortfalls estimated at $400 million a year, according to sources familiar with the deal.

In subsequent years, money would be earmarked for education initiatives, including teacher pay raises.

A number of “what ifs” remain, starting with the fact that the teachers union and its current gaming allies will have to persuade 17 county commissions to put an advisory question on the ballot. Gov. Jim Gibbons and Senate Majority Leader Bill Raggio, R-Reno, have said that would be necessary to approve raising the room tax, generally considered the most palatable increase because it is paid primarily by out-of-towners.

But even if Gibbons promises to sign the bill, two-thirds of both houses would have to pass the tax increase. If only seven state senators can be persuaded by MGM Mirage, Boyd, Las Vegas Sands and the more militant anti-tax wing of the party to vote no, there is a problem.

As a political safety net in the event the matter does not win legislative approval next year, the teachers union and the three casino companies onboard agreed to collect signatures for a separate statutory amendment to be placed before voters later in 2009.

For that initiative to raise the room tax to take effect, voters would need to approve it only once.

The room tax increase would be capped at 13 percent statewide. On the Las Vegas Strip, the room tax currently is 9 percent.

Discussion: 8 comments so far…

By ZeddyBear

5/20/08 at 6:08 a.m.

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Teachers get snookered again. This tax hike will NEVER see the light of day... and even if it gets through the various committees, the hike will be less than its initial proposal."What fools these mortals be."
By kennekra

5/20/08 at 7:02 a.m.

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Again, another example of trying to use the initiatve process to make public policy. The only reason this is even being considered is because it plays well in public and because the perception is that it will be paid for by tourists. This flies in the face of reason because when we depend on a cyclical industry to fund our public services we end up with budget deficits during the down periods. Oh. Wait. That's where we are now...

It's time that we elect Legislators (and 2010 a Governor) that will show some true leadership.
By RPJ

5/20/08 at 8:23 a.m.

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Nevada (and Las Vegas) did extremely well depending on taxing our primary industry rather than our residents for six-plus decades ... until our population exploded. We need to reduce valley population by about 30-percent so we can get back to the balanced standard of living Las Vegans enjoyed previously.
By gqbossing

5/20/08 at 10:46 a.m.

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Shallow mindedness are some to think that the casino tax would ever have come to fruition. This is a comprimise I believe they were looking for all along.

We cannot put a strangle hold on the single reason clark county isn't a complete desert and is a thriving metropolis. without the casinos 90% of the population wouldn't live here, and to try to harm that engine isn't the solution. The solution is for all of us to pay for our education, not to keep increasing taxes on one industry.

This comprimise isn't the long term solution either, all citizens and businesses of nevada need to share the burden of educating our people instead of looking for ways to get it paid for us.
By avatar

5/20/08 at 1:13 p.m.

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Nevada citizens, businesses, and corporations believe that taxes will be paid by someone else, not them. Read post above this one.

ALL CITIZENS OF NEVADA NEED TO SHARE THE BURDEN OF EDUCATION, PRISONS, ROADS, BRIDGES, UNIVERSITIES, MEDICAL INSURANCE, ETC.

We need to take responsibility for what we need versus what some special interests believe we deserve.
By BigStack

5/20/08 at 3:52 p.m.

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^
If you want to pay high taxes, move here to NY, we got all the taxes you could possibly want and more.

The services, schools, and infrastructure aren't any better.

If the people of Nevada are wise, they'll keep a tight stranglehold on the money flowing into the government.
By danadutcher

5/22/08 at 4:46 a.m.

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You can solve this problem with one law. Enforce illegal immigration laws!!! There will be more money for schools than they could ever spend. When will you people wake up to the fact that Illegals are causing nearly every problem we have in this country. School over crowding, Traffic, bad neighborhoods, gangs, ect, ect, ect. You can't hide in gated communities forever. Get off you lazy white rear end and wash your own car, mow your own lawn and lose some weight while you do it. Have you sat outside a school when it lets out for the day lately? I suggest you do it just once and then tell me we have no problem.