NEVADA ECONOMY: Lanni: Free meal is history - Business

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Nov. 16, 2007
Copyright © Las Vegas Review-Journal

CORRECTION -- 11/17/07 -- A story in the Business section of Friday’s paper misspelled the name of the president and chief executive officer of the Nevada Development Authority. The correct spelling is Somer Hollingsworth.

NEVADA ECONOMY: Lanni: Free meal is history

Executive calls for solution to 'recurring chaos'

By HOWARD STUTZ
REVIEW-JOURNAL

MGM Mirage Chairman and CEO Terry Lanni on Thursday reinforces his call for a broad- based business tax.
Photo by Marlene Karas/Review-Journal

MGM Mirage Chairman and CEO Terry Lanni used the Nevada Development Authority's annual luncheon Thursday to say the free meal is over.

Lanni said Nevada's economy is in disarray because the tax structure, which relies heavily on gaming and sales taxes, is broken. And he repeated his recent call for Nevada to adopt a broad-based business tax.

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"We must fix the recurring chaos created by this flawed system," Lanni said to more than 800 people who were meeting at Bellagio.

"I see the only solution to the economic chaos we face coming from within the community itself. We must all face up to the reality of the needs of the state of Nevada in a new century and beyond.

"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.

The message wasn't overly well-received. Lanni was interrupted by applause just five times during his 30-minute speech, once each at the beginning and the end of the talk, and twice when he discussed the $33 billion MGM Mirage has invested or is planning to invest on the Strip.

Lanni was also applauded when he said he wouldn't allow Nevada to turn itself into Illinois, which is considered a high-tax state.

Last month, Lanni said Gov. Jim Gibbons should withdraw his campaign pledge not to raise taxes during his term in office and support a broad-based plan to fund state government. Gibbons has said projections show a potential revenue shortfall and he has asked several state agencies to cut 5 percent from their budgets. Meanwhile, two separate initiative proposals have been floated that could increase the state gaming tax above its current 6.75 percent on gross revenues.

On Thursday, Lanni asked the development authority to take a leadership role in discussing how to change the state's tax structure without relying solely on one industry.

"We have to accept the fact that a no-tax environment is a relic of a bygone era," Lanni said.

Development authority President and CEO Summer Hollingsworth said after the speech the organization welcomed being part of the discussion. While he did not come out and support a broad-based business tax, Hollingsworth said that option might be one of several proposed solutions to solve the state's budgetary problems.

"It's important that we all get together and be on the same page," Hollingsworth said. "I agree with Terry that we can't put all our eggs in one basket and we want to work with (gaming)."

Lanni used his speech to reject a proposal by the state's teachers union that would increase Nevada's gaming tax by 45 percent. MGM Mirage, which operates 10 Strip resorts and is building the $7.8 billion CityCenter development, would be heavily affected by the increase. However, he said gaming was not afraid to step up when called upon.

Lanni recited an historical timeline over the past two decades where the gaming industry took a lead role in solving the state's budget problems, especially in 2003, when the gaming tax was increased 0.5 percent while the major components of a new tax package were paid for primarily or solely by gaming.

"Each time we were faced with new needs, the gaming industry would come to the table along with the hope that the broader business community would recognize the need to participate in some small way as well," Lanni said. "Sadly, with virtually no exception, each time we have been disappointed."

After the speech, Lanni said he's had private discussions with other leaders in the gaming industry about the state's tax structure. He told he audience that the issue was not about gaming versus all other businesses in the state.

"For 75 years, gaming has done its part and more," Lanni said. "And we will continue to do so. It's time for other industries to do their part."

Contact reporter Howard Stutz at hstutz@reviewjournal.com or (702) 477-3871.

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Please enter your name Name: Please enter your email Email: Please enter a comment COMMENTS : (word count limit is 300) You have reached the maximum number of words allowed Current Word Count: Note: Comments made by reporters and editors of the Las Vegas Review-Journal are presented with a yellow background. Jeffery Justice wrote on November 17, 2007 08:39 PM: ...... Jeffery Justice wrote on November 17, 2007 07:59 PM: I care very deeply about education. I believe Nevada should have the best education system in the country. I believe funding for education should increase. However, funding increases should be done in a way that is best for our society. Students need good paying jobs when they graduate college. Because gaming is strong now does not necessarily mean that gaming will be as strong after such tax rate increase. We need to base our tax decisions on good information and research and not assumed causality or emotions about how we feel about a particular candidate. There will always be another election. Jack wrote on November 16, 2007 10:37 PM: The Vegas Strip is almost a complete monopoly now where the customer gets the the shaft. The lack of competition is why there are virtually no comps any more in Vegas. Why go there when I can gamble at an Indian Casino which tries a lot harder than these dictators in Vegas. Hey Terri, at least Illinois is not going to run out of water in 5 years. Good luck with your investment there. douglas wrote on November 16, 2007 04:39 PM: does he mean that he's willing to step up to the plate and voluntarily pay gaming taxes comparable to those his business pays in other states ? if the "free meal" is over, he must be talking about the tough to get comps in his joints. ustabe that the "suits" had the "power of the pen" to write a comp for a free barfet. his policies have mostly eliminated that for the guest/patron. that must be what he means about the "free lunch is over". he oughta know. dave wrote on November 16, 2007 04:15 PM: Gaming has done it's part,no doubt about it. It is responsible for the unfettered growth of Southern Nevada. The traffic jams, the over crowded schools ,the crime rate, the water crises, you name it. There would be no Las Vegas without Gambling! That said most of the problems that affect Las Vegas now are also because of the Gaming monolinth. These companies do not pay a fair share that equals the their growth and the stress it puts on the community. The quality of life in Southern Nevada should not be a trade off for the gaming industry. Any one who has lived long enough knows that they don't build new casinos on a whim. GOD wrote on November 16, 2007 03:58 PM: This city SOLELY creates the infrastructure for casinos and this is the thanks we get!?? Roads for casinos, teachers for casino workers' children, airport for tourist/conventioners. A HUGE percentage of new citizens come here to work as slaves (both legaly and illegaly) for this smuck, and the city caters to conventioners and tourists to drop all their hard earned money here. Terri should realize SHE has it pretty good here. Where else can you offer the prospect of throwing your money away and getting nothing but a kick in the pants in return? Lier wrote on November 16, 2007 02:43 PM: Lanni talks on both sides of his mouth. Casinos are still having a free meal in this state but want no one esle to have it. Fairness wrote on November 16, 2007 02:40 PM: TAX THE CASINOS. THEY MAKE WAY TOO MUCH MONEY AND DON'T PAY THEIR FARE SHARE. Cher wrote on November 16, 2007 12:54 PM: This guy needs to get his head out of the sand...the casino's use more resources as far as energy, water, police force, and other public service las vegas has to offer, and we the residence have to pay for it. They absolutely do not pay their fair share. These Resort Casinos are very greedy and don't even want to pay their employees the "going rate" for any of the jobs on their properties. These overpaid casino execs need a wake up call. duh wrote on November 16, 2007 12:47 PM: the people of nevada pay more sales tax then the casinos tax. Read All Comments