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Antonio Planas

Nevada initiative to raise gaming tax filed

20 November 2007

and Ed Vogel

NEVADA -- Nevada's largest teachers union has launched its initiative targeting the state's gaming industry in an effort to get more funding for public schools.

The Nevada State Education Association submitted its petition to the secretary of state Monday. The proposal would raise the gaming tax on Nevada's largest casinos to 9.75 percent, from 6.75 percent. The union estimates that an additional $250 million per year, although others contend $400 million is more accurate, could be used for public schools and teacher raises.

The higher tax would apply only to casinos that make more than $1 million a month in gaming revenue.

Lynn Warne, president of NSEA, said the tax hike would go toward raises for teachers and efforts to improve the education of Nevada's K-12 students, such as additional days of instruction. She said at a news conference Monday morning that educators throughout Nevada are tired of getting by in a state that consistently ranks near the bottom for the amount of money it spends on educating students.

"We can no longer wait for better raises or smaller class sizes or better learning conditions for our kids," Warne said. "We've had enough of the empty promises, and we're ready to make things happen on our own."

The union's next step is to gather 58,628 signatures by May. 20. Warne wouldn't specify how the union will go about gathering the signatures or how much the campaign, called Save our Schools with Additional Funding, will cost. But she said the union will use its 28,000 members to achieve its goal.

Because the petition would amend the state constitution, voters must approve it during the 2008 and 2010 elections. If passed in both elections, the higher tax would go into effect in 2011.

MGM Mirage spokesman Gordon Absher said the gaming industry position on the initiative was outlined Thursday in a speech company Chairman Terry Lanni made to the Nevada Development Authority.

Lanni acknowledged the need for additional money for public education but said it should come in the form of a tax paid by many different types of businesses, not just a single industry.

"The time came long ago for the establishment of a business tax paid by every large business that benefits from operating in this state," he said.

Lanni outlined how the gaming tax increase sought by the union would lead to reduced investment in gaming properties in Nevada and could hurt future development.

"We've made this enormous investment here in Nevada, not in New York or Chicago, not in London or Hong Kong, not in Atlantic City or Macau, but right here in Las Vegas," Lanni said.

Although Warne said research shows the 3 percentage point increase would bring in "conservatively" $250 million a year, the current tax contributes more than $900 million a year.

At that rate, a 3 percentage point hike would reap more than $400 million a year. The return would be even higher when the tax first would be collected in 2011 because casinos are adding 40,000 additional rooms in Las Vegas.

The NSEA petition says 40 percent of the tax hike will be used to add more school days, reduce overcrowding and provide additional training for teachers. Another 40 percent will be used to pay for the salaries and benefits of school employees, excluding administrators. The remaining 20 percent will be used for an incentive pay program for teachers.

Warne wouldn't specify how that teacher incentive program would work, how much teachers would receive in salary increases and how many additional school days would be added.

The petition says the Nevada Gaming Commission would impose the tax hike on casinos on a monthly basis. The commission would then transfer the tax proceeds to the state treasurer. The treasurer would then deposit the proceeds into a fund overseen by Nevada's superintendent.

Nevada's superintendent would distribute funds to the state's school districts and its charter schools, the petition says.

Jim Penrose, NSEA's legal counsel, expects the gaming industry or an organization on its behalf to file a legal challenge to the petition. He said challenges to the petition's language must be filed by Dec. 12.

Gloria Dopf, the state's deputy superintendent of public instruction, said the Nevada Department of Education hasn't taken a position on the NSEA initiative yet.

Clark County School District Superintendent Walt Rulffes is opposed to the proposal. Rulffes said he doesn't think one industry should shoulder tax hikes.

"Taxes should be spread in a fair and equitable way to all those who benefit from them," he said.

Rulffes said he's also concerned that the initiative, if it qualifies for the 2008 ballot, might confuse voters and dissuade them from voting for the district's school construction bond measure. The district passed a 10-year bond in 1998 worth $3.5 billion to complete 88 new schools, although it is expected to complete 100 new schools.

Rulffes said many other ballot initiatives might also be placed before voters in 2008.

"This could be a very confusing election," he said.