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Howard Stutz

Hotel tax ballot backers say lawsuit illegal

4 April 2008

LAS VEGAS, Nevada -- Proponents of two ballot initiatives that ask voters to reallocate hotel room tax dollars away from the Las Vegas Convention and Authority said municipalities challenging the proposals are violating Nevada law by doing so.

The School Funding Solutions Ballot Advocacy Group, which is headed by former state Treasurer Bob Seale, responded Wednesday afternoon to a lawsuit filed by the convention authority and every municipality in Clark County to stop the ballot questions.

In a filing in Carson City District Court, Seale's group said Nevada law prohibits government entities from using taxpayer dollars to support or oppose a ballot question.

The convention authority, joined by the cities of Las Vegas, North Las Vegas, Henderson, Boulder City, Mesquite and Clark County, filed a lawsuit in Carson City District Court to block the petition. The municipalities all have representatives on the convention authority's board.

"Commencing a lawsuit to disseminate their position to the public or to prevent a question from being placed on the ballot in the first place does not fall under the limited exception provided for in (the statute)," said the filing. "As a result, the plaintiffs are violating the clear expenditure prohibition stated in the statute."

District Judge Bill Maddox has scheduled a hearing on the lawsuit for April 18 at 10 a.m. in Carson City.

Seale is circulating two petitions he filed with the secretary of state's office on Feb. 29 that he is hoping will qualify as initiatives for the November ballot. If approved, the initiatives would transfer room taxes from tourism support to help fund either public education or public safety improvements.

Seale said the money would pay for needed improvements without raising taxes.

Representatives from most of the major casino corporations have voiced opposition to the plan.

Gaming leaders said they don't want to divert money used to market Las Vegas at a time when massive expansion is taking place on the Strip and a national economic downturn is curtailing U.S. tourism.

Las Vegas Mayor Oscar Goodman, who serves as chairman of the convention authority board, said he supported the lawsuit because the initiatives would divert hotel room tax dollars away from local governments as well as the tourism organization.

The lawsuit claims the two initiatives would violate a 2005 state law that requires petitions to deal with a single subject. That argument was used recently by the Nevada Resort Association to prevent circulation of petitions calling for an increase in the state gaming tax.

In the response, Seale's group said the initiative on education embraces one subject and matters germane only to that subject. The issue differs from the argument used by the resort association in its case against a proposed gaming tax increase.

"The plaintiffs challenge the initiatives by twisting the plain language of the initiatives and their respective descriptions of effect to create a widely speculative array of arguments that are solely based on possible and unsubstantiated effects," according to the response.

The lawsuit claims Seale is acting on behalf of the Las Vegas Sands Corp., whose executives have had a long-running feud with the convention authority and its operation of the Las Vegas Convention Center. Seale said he wanted to become involved in the petition drive after hearing the idea proposed in a speech by Las Vegas Sands President Bill Weidner.

"Plaintiffs, falling back on their paranoid illusions of conspiracy against the LVCVA, believe the initiatives will only ever apply to the LVCVA and Clark County. This belief is simply wrong," the response said.

During the 2007 legislative session, Las Vegas Sands executives, with the backing of Gov. Jim Gibbons, lobbied to have room taxes taken away from the convention authority and be used to fund transportation improvements.

In the end, a compromise was reached in which the convention authority agreed to give up $20 million a year over the next 30 years to fund road improvements to Interstate 15 through the resort corridor.

MGM Mirage, Station Casinos, Harrah's Entertainment, Wynn Resorts and Boyd Gaming Corp. have representatives on the convention authority's board.

Room tax rates now average 9 percent in Clark County. According to the convention authority, room taxes collected in fiscal year 2007 were more than $397.7 million. Of that total, the convention authority used 47 percent of the total, or $191.9 million, while 53 percent, or $205.8 million, went into total community support, including $72.6 million that was distributed to the Southern Nevada municipalities.

The convention authority has projected room taxes will reach $456.3 million in fiscal 2009 and $571.8 million by 2012.