Caesars Entertainment will take arena proposal to the people

By David McGrath Schwartz

Thursday, March 10, 2011 | 2 a.m.

Caesars Entertainment is giving up on trying to win legislators’ support for a resort-corridor sales tax to finance its proposed arena on the Strip, and instead will hope for voters’ approval in 2012.

It’s a sign of the anti-tax times in Nevada, when any lawmaker who supports a tax increase can expect political fire.

Backed by construction industry and union allies, Democrats have pushed several proposals this session that would create jobs, from school construction to transportation projects. But Democratic lawmakers, Caesars and the construction trades have no appetite for tackling the 18,000-seat arena in 2011, given that it has pitted two of the state’s most influential casino companies against each other. Instead, Caesars, as well as the AFL-CIO, which sits on the advocacy group’s board, will look to the November 2012 ballot for public support.

“We know the reality of the political times we’re living in,” said Marybel Batjer, a vice president of Caesars Entertainment, speaking on behalf of the nonprofit group advocating for the ballot measure. “Taxes are a very difficult thing for a legislator, in many, many states right now to vote for. We’re going right to a vote of the people. We’re on the ballot in 2012.”

Under the Nevada Constitution, lawmakers have 40 days to act on an initiative petition. Caesars Entertainment said it will take the measure to voters instead of trying to find two-thirds of lawmakers to pass the tax increase.

Caesars, formerly Harrah’s Entertainment, collected 200,000 signatures last year to qualify the proposed sales tax increase for an arena. Under the law, the Legislature has three options:

• Pass the proposal in the first 40 days of the Legislature. That’s a deadline of March 18.

• Reject it or don’t pass it, and the measure would go on the ballot in the next general election.

• Pass a competing question for voters to consider alongside the original initiative petition.

There are several Las Vegas arena proposals, including one envisioned at UNLV and another downtown. Advocates say such a facility is needed to remain competitive as a tourist destination.

No arena has been built in the past decade without taxpayers subsidizing it.

But taxes, which require approval by a two-thirds majority of lawmakers, are never easy to pass, and even more so this year after November’s election sent a batch of conservative lawmakers to Carson City.

MGM Resorts International, the state’s largest private employer, has actively opposed the petition.

Gov. Brian Sandoval said before the session began that he would oppose the petition because it involves a tax increase.

It faces skeptical lawmakers from both parties.

“My questions and concerns are at a time when we’re looking at cutting the budget nearly $3 billion, particularly for education, how is it that we are going to fund a proposal to build an arena? Are those the priorities we need in Nevada?” Senate Majority Leader Steven Horsford said on “To the Point” with Sun reporter Anjeanette Damon.

Still, Democratic lawmakers have been pushing for more money for infrastructure projects to stimulate the suffering construction industry, and some argue an arena would fit the bill. Additionally, Caesars has tried to frame this as a “tax on tourists,” because the 0.9 percent sales tax increase, generating $30 million a year, would be collected on the Strip.

Lawmakers in 2009 passed an initiative petition that raised the room tax in Clark and Washoe counties, reasoning it would largely be out-of-towners paying the bill.

But that initiative, sponsored by the Nevada State Education Association, had two things going for it that Caesars’ arena does not:

For the first two years, the money went to the state’s general fund, which offset taxes or cuts the Legislature would otherwise have had to make that session.

And, Clark and Washoe voters approved an advisory ballot question approving the matter. Lawmakers always appreciate political cover.