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Gaming Guru

Howard Stutz

Casinos, teachers discuss tax plan

8 May 2008

and Howard Stutz

LAS VEGAS, Nevada -- The state teachers union is in talks with gaming companies about a possible agreement to call off an initiative petition that would raise gaming taxes.

Under the proposed deal being discussed, the tax on hotel rooms would be increased instead, and the new revenue collected put toward schools.

The ballot initiative being circulated by the Nevada State Education Association would increase taxes on gross gaming receipts and put the money toward education needs.

Dan Hart, a spokesman for the teachers union, confirmed the negotiations Wednesday but declined to go into specifics, saying the details are tentative and subject to change.

"There are discussions about alternatives to raising the gaming tax going on between prominent members of the gaming community and representatives of the teachers union," he said. "There is a real possibility that something might be worked out here. The preliminary stages have been encouraging."

The talks are between union and gaming officials; lawmakers would have to pass any such measure by a two-thirds margin in both the state Senate and Assembly because it involves increasing taxes.

Gov. Jim Gibbons, who has pledged not to raise taxes, would veto the plan, said his spokesman, Ben Kieckhefer.

"This is a tax levied directly on the people, not an industry fee," he said. "With that in mind, the governor would oppose raising taxes on the people of Nevada."

He noted, however, that a two-thirds vote of both houses is also what it takes to override a gubernatorial veto.

"If the Legislature is able to find two-thirds support in both chambers to approve it, they could also try to override the governor's veto with the same two-thirds," Kieckhefer said. "If the veto gets overridden, that shows broad support on the part of the Legislature, which was the intent (of the two-thirds requirement to raise taxes) in the first place."

Sources speaking on condition of anonymity said casino executives approached the union looking to make a deal to head off the petition, which the union says is ahead of schedule to gather the needed signatures and which both sides expect would have a good shot at passage by voters.

Wynn Resorts Chairman Steve Wynn is the driving force behind the talks, sources said. Wynn didn't return calls seeking comment Wednesday.

The petition would raise the highest tax rate on gaming receipts by 3 percentage points, from 6.75 percent to 9.75 percent.

The proposed deal, on the other hand, would raise the tax on hotel rooms by 2 percentage points but leave gaming receipts alone, sources said, giving teachers an ample amount of new revenue but not cutting into the companies' profits, since the tax is paid directly by visitors.

Sources said some existing room tax money, which is currently divided among roads, schools, and the Las Vegas Convention and Visitors Authority, also could be diverted to education under the plan.

The gaming companies declined to talk about the proposal on Wednesday. A Station Casinos representative was unavailable for comment, while a Boyd Gaming spokesman declined to comment on the issue.

Harrah's Senior Vice President Jan Jones would say only, "I've always believed communication is essential to positive outcomes."

MGM Mirage spokesman Alan Feldman professed no knowledge of the matter. "As we have seen no details, no plan and no specifics, it is kind of hard to comment," he said. "We still stand opposed to the union's initiative."

Assembly Speaker Barbara Buckley, D-Las Vegas, also said she would need to see the details to know whether she would support proposed legislation. She said she did not support the ballot question.

"I think raising taxes through the initiative process is a bad idea," she said. "In general, I don't support that. That's why the Legislature exists. Sometimes it's frustrating, but it's a better process."

Senate Majority Leader Bill Raggio, R-Reno, also said Wednesday that he was not familiar with the terms of the potential deal.

To put the initiative before voters statewide in November, teachers must collect 58,628 valid signatures by May 20. A legal challenge to the petition brought by the Nevada Resort Association is pending appeal to the state Supreme Court.

The initiative would amend the Nevada Constitution. It would have to pass twice, in 2008 and 2010, to take effect.