3 PERCENTAGE POINTS: Gaming tax boost popular - News

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Oct. 10, 2007
Copyright © Las Vegas Review-Journal

CORRECTION ON 10/11/07 -- A story in Wednesday's Review-Journal on proposed gaming tax increases should have said that Las Vegas lawyer Kermitt Waters wants to use the proceeds from an 18 percent to 20 percent tax not only to fund state government but to remove all property taxes on residential homes.

3 PERCENTAGE POINTS: Gaming tax boost popular

Union leader says 70 percent of voters would back increase

By ED VOGEL
REVIEW-JOURNAL CAPITAL BUREAU

• Nevada School Funding Initiative draft

CARSON CITY -- More than 70 percent of Nevadans will support a petition to raise the gaming tax by 3 percentage points and raise an estimated $400 million a year to fund higher teacher pay and school improvements, a union president predicted Tuesday.

Lynn Warne, president of the Nevada State Education Association, said their polls show overwhelming support for the union's petition to amend the state constitution and increase the gaming tax to 9.75 percent.

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Large casinos now pay a tax of 6.75 percent. The higher tax rate would apply only to casinos with more than $1 million a month in gaming revenue.

"We certainly don't want to strap the casinos," Warne said. "We think 9.75 percent is fair when they are paying a 53 percent gaming tax in Pennsylvania. When you look at the national average tax for casinos, it's about 20 percent."

Under the petition, 40 percent of the additional revenue would be earmarked for higher pay for teachers and other school personnel, 20 percent for teacher incentive pay and to compensate them for out-of-pocket costs and 40 percent to add instructional days, reduce classroom overcrowding and for teacher training programs.

The petition stipulates none of the additional revenue would be used to give school administrators pay increases.

Since the petition would amend the state constitution, voters must approve it during the 2008 and 2010 elections. The higher tax would not be charged until 2011.

Before going on the ballot, the teachers union must secure 58,628 signatures on its petitions by May 20.

With 28,000 members in the state, Warne said she feels the goal can be met "very easily."

Five years ago, former Sen. Joe Neal, D-North Las Vegas, didn't secure enough signatures in his efforts to put a similar petition before voters.

Neal fought in vain during several legislative sessions in the 1990s to persuade legislators to raise the gaming tax. Typically he was the only legislator to support higher gaming taxes.

Warne noted the language in the petition still is in draft stages and could be amended. She expects to begin circulating petitions through paid circulators in about a month.

But she did not rule out the possibility that the gaming industry voluntarily would support a tax increase and nullify the need for the petition.

Warne said she does not know how much teacher pay would increase if the petition passes, but the rule of thumb during legislative sessions has been that a 1 percent increase costs $50 million.

Although legislators approved a record two-year tax increase of $833 million in 2003, teacher pay increases have ranged since then from 2 percent to 4 percent a year.

The Nevada School Funding Initiative is written in a way to prevent legislators from reducing current funding for public schools if the tax increase is approved by voters.

Under its provisions, legislators still must fund public education at the 2008 fiscal year total, plus annual increases to cover inflation and changes in school enrollment.

State government allocates about $1.1 billion a year in general fund revenues to support public schools.

The teachers association will launch its petition drive without a usual ally, the state AFL-CIO.

Danny Thompson, the AFL-CIO state director, said he hasn't polled his board yet, but typically his union has opposed gaming tax increases.

"We generally oppose tax increases on one industry," Thompson said. "We opposed gaming taxes every time Neal backed them. We think more diversified taxes are better."

Las Vegas lawyer Kermit Waters was surprised by the teachers' petition. Waters said he had talks with Warne and thought the NSEA would support his petition to increase the gaming tax to 18 percent to 20 percent. He wants to use proceeds to remove all property taxes on residential homes and fun state programs.

Waters expects to begin circulating his petition in a month.

"I don't know why they have come out with this idea. If it is anything less than 15 percent, it is not genuine. They can't let the Legislature do it. The gaming industry owns the Legislature."

Neal, now retired, laughed when he heard about the teachers' association petition. He said the NSEA flatly rejected his request for help when he tried to get a gaming tax increase before voters in 2002.

"We didn't get any support," he said. "If we had the support of the Nevada State Education Association, then it would have been on the ballot."

An NSEA news release projected the tax increase would raise about $250 million a year.

But Warne said that was a rough estimate. Currently each percentage point of the gaming taxes brings in about $135 million a year, according to state budget reports. A 3 point increase, therefore, would fetch more than $400 million a year.

But Neal estimated the tax increase will provide more than $500 million a year by the time it goes into effect in 2011. By then, another 40,000 rooms will have opened in Las Vegas.

Joyce Haldeman, executive director of community and government affairs with the school district, said the NSEA initiative won't affect the district's bond program, which will be brought to voters in November 2008.

Haldeman said decisions about how many schools will be built and how much they will cost have not been made. If the NSEA proposal passes, the bond program, if it's approved, will already be funding new schools.

But Haldeman said she finds it worrisome that more than one education issue might be brought to voters. "The more questions you have ... the more it may confuse the voters."

Warne said the NSEA chose to circulate a petition to amend the constitution to avoid a state law that limits spending increases to the rate of inflation and population growth. That law likely will go into effect in 2009.

She pointed out a constitutional amendment increasing gaming taxes would supersede any law capping state spending. Also, a constitutional amendment could not be voided without an affirmative vote of voters.

If the tax were added through a petition drive to change the state gaming tax law, then the Legislature could repeal it within three years.

Neal thinks the gaming industry has met its match in the NSEA.

"Gaming is going to go up against a well-financed group that is going to be able to get this sucker on the ballot," Neal said. "I think gaming is going to negotiate with them. They would rather have 3 percent than 18 percent."

Review-Journal writer Antonio Planas contributed to this report.

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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. Do what's good for you, wrote on October 17, 2007 05:10 AM: Screw the Casinos. They don't care about you. Tax them higher so your taxes become lower. That's a comp I'll like to get. douglas wrote on October 10, 2007 03:53 PM: representation without taxation.... kinda has a nice ring to it. perhaps best would be to 86 the property tax to nevada citizens [read, legal], for their primary residence. commercial would remain the same, secondary/income property would remain the same. no doubt someone has put a number on that tax. assigning any gaming tax increase beforehand to some single aspect of the state's education budget [read, only teachers' salaries/bonuses] is less than honest. i can think of a half dozen current "emergency" needs beyond teachers' salaries. just read the paper... prison overcrowding [so that the same felons can be let loose to again prey on the public], not enough cops to identify/process homeward illegals, homeless, highway expansion/maintenance, county hospital mostly bankrupt, etc. patte wrote on October 10, 2007 02:57 PM: I would bet money that this initiative is in direct response to the one that eliminates our property taxes. The teachers union wants ALL the money. I'm signing the one that gives me property tax relief. My prediction, the casinos are in cahoots with the Educrats to get a lower rate negotiated. I could care less about these crybabies getting a raise! Money For Students, Not Salaries wrote on October 10, 2007 01:35 PM: Their petition better have a cap for those salaries. Possibly tied to a median income of their respective counties or something. Next thing you'll know those teachers will be making more than the average person with a college education in Clark County. Being near the bottom for school funding nationally, those dollars need to reach the STUDENTS not the pockets of teachers. Jimmy wrote on October 10, 2007 11:47 AM: Well, if we're intent on raising taxes, why don't we fire up a personal income tax? Won't that raise lots of funds for education in Nevada? Casinos pay higher taxes in other states right? Isn't that one of the "reasons" for wanting to raise Nevada taxes? Well, try this on for size. People who live in other states pay state income tax, so why don't people in Nevada pay state income taxes? If it's so important, Nevada residents will understand, right? joe wrote on October 10, 2007 10:21 AM: This is payback for the big casinos supporting the non-smoking initiative. What goes around comes around. Where can I help to gather signatures for the measure? DaveR wrote on October 10, 2007 09:59 AM: douglas, If taxation without representation is unfair, how is representation without taxation, i.e. being a stakeholder, wotkable? douglas wrote on October 10, 2007 08:07 AM: what does "democracy" have to do with teachers' salaries ? same as when the state budget surplus was divvied up a couple of years back. remember all the "new" programs [later to be unfunded], that were suggested to immediately suck up that surplus ? tax relief albeit at the expense of the gaming industry must be returned to those who pay taxes in the first place. if the "democracy" issue is appropriate, then a referendum, perhaps with choices, might be the direction. choices on the referendum could be: - those teachers' salaries - highway maintenance/improvement - police/fire staffing - nursing/medical school [mebbe on what remains of the railyard land that the lv mayor hasn't as yet frittered away]. if you can't buy something you need, then you should make it. - the black hole, aka, the general fund - another boondoggle like the millennium scholarship - direct relief to those nevada residents, including renters, who have primary residence in nevada. and that reduction in property tax would directly benefit those teachers who find neveda housing [still] overpriced. the perpetual real estate tax has in the long run, far more negative financial impact on home owners than the initial cost of the house. DaveR wrote on October 10, 2007 07:45 AM: Both initiatives have an Archilles heel. The teachers' initiative (which in yesterday's RJ would reportadly raise $250m/yr, now today, will raise $400m/yr, a whopping 62.5% increase), seems to be directed 100% at teacher salary and benefits. Water's initiative eliminates all property tax obligations from residential property owners, which I think many will believe is unfair and unworthy in a democracy. douglas wrote on October 10, 2007 06:46 AM: "some" upward adjustment in the gaming tax is appropriate. too aggressive and the goose will be crippled. the more important issue is the where those new funds might be sent. instead of only "teachers' salaries", better might be a direct relief to nevada residents' primary residence, real estate tax. imagine the boost in nevada, residential real estate values were those real estate taxes to be slashed. otherwise, likely several other, worthy shortfalls might be addressed. that'd include highway and infrastructure improvement. though to address that, i'd investigate some tinkering with ensign's engineered law that dedicated blm land sale proceeds to be used for nevada "projects".