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Best of Liz Benston

Gaming Guru

Liz Benston

Taxes, Problem Gambling Likely '05 Lobbying Focus

29 December 2004

LAS VEGAS -- A month away from the 2005 Legislative session, some Las Vegas casino companies are gearing up for what may become the most challenging political and economic issue to face the state in years.

Skyrocketing property tax values, a top concern for homeowners and other business owners across Clark County, has emerged as a primary issue for the industry this session.

The Nevada Resort Association, which represents major resorts, will focus on property taxes as one of several issues facing the gaming industry next year. Another priority for the association will be to seek government funding for the treatment of compulsive gamblers, a measure which failed to pass in the past two legislative sessions.

Casino companies are bracing for a heated debate over property taxes, though industry experts say there's no easy solution and finding a consensus -- even among peers -- will likely be difficult.

"Put the flak jackets on. We're ready to go," said Gina Polovina, vice president of government and community affairs for Boyd Gaming Corp.

The tax debate in the 2003 session, which resulted in a package of new taxes on nongaming businesses, pitted major casinos against other large nongaming businesses like banks and retailers that pay fewer state taxes. But the property tax issue, because it involves so many businesses and homeowners in Clark County, doesn't have such delineated points of view. Casinos have largely remained silent about some recent proposals to limit or cap property taxes, waiting until other plans emerge and analyzing the increases from multiple points of view.

Casino representatives say they are concerned about higher property taxes paid by employees who own homes, making their homes less affordable. On the other hand, the industry also fears that efforts to slow property tax generation could hurt state revenue, forcing government agencies to depend even more heavily on the gaming industry to maintain services and keep up with explosive growth in Clark County.

Those points of view are different but aren't necessarily in conflict, MGM Mirage spokesman Alan Feldman said.

"We thrive when our employees thrive," he said. "We have to have some stability and predictability in property tax rates."

A property tax freeze, such as that created by Proposition 13 in California, could mean disaster for schools and other basic services, however, Feldman said.

"That's the last thing we need to do here," he said.

"We can't afford to get to the point where (employees) are not able to afford their homes," Polovina added. Yet California's Proposition 13 was a "catalyst for many of their financial woes over the years."

"We're all kind of in this together and the way we address it has to be across the board," she said. "Whatever the (proposals) are we want to sit at the table and not have (the solution) be detrimental to any one segment of the population."

As the state's largest employer, the gaming industry has an obligation to address homeowner concerns, Nevada Resort Association President Bill Bible said. With gaming taxes contributing about 35 percent of the state's general fund and about half through indirect avenues, the state must also consider a more stable, long-term revenue stream, he said.

"I don't know if they are competing (concerns) or equal -- we really haven't gotten to that point yet," Bible said.

The association hasn't advocated or supported any one view because it hasn't analyzed the issue completely with members, he said.

Station Casinos Inc. -- whose customers are largely locals -- is primarily concerned with limiting residential property taxes.

"Some action needs to be taken that does not hamstring our local governments to provide services," spokeswoman Lesley Pittman said.

The company -- in the midst of planning future locals casinos in Clark County -- also will watch for policies on growth and advocate for funds to treat problem gamblers, she said.

The Nevada Resort Association's role in lobbying for the industry has shrunk with the exit of MGM Mirage, which pulled out of the group after the industry-backed tax package failed to pass the Legislature. MGM Mirage expects to complete its acquisition of Mandalay Resort Group by the end of March, creating the largest gaming empire in Las Vegas.

Feldman said the company is open to working with the resort association if the group if the company "agrees on the position they take."

"There is consensus that the property tax situation is a problem," he said. "But I don't know if there's ever been this monolithic thinking in the gaming industry."

The company's interaction with state legislators has increased significantly since it broke with the association and took a more active lobbying role, Feldman said. The company recently hosted a reception for incoming legislators to meet with executives and has held one-on-one meetings with lawmakers, he said.

Pittman said the industry is likely to remain united on the property tax issue and that the major companies maintain open lines of communication. Station Casinos, whose president, Lorenzo Fertitta, is chairman of the Nevada Resort Association, communicates regularly with MGM Mirage about state and federal issues, for example.

"We need to take a careful and balanced approach to this," she said.

"This is the worst kind of issue to be dealt with in a political forum because it's very complex and requires a lot of thought and balance," added Feldman. "We have to be careful not to create a long-term problem with a short term solution."