Casino Connection Nevada

Tax dropped

Teachers agree to drop ballot initiative

by Staff

A small coalition of gaming companies negotiating with the Nevada State Education Association was able to stave off what casino insiders said could have been a disaster for the industry.

The day the NSEA was to turn in signatures it had collected to get its initiative to raise gaming taxes from 6.75 percent to 9.75 percent on the 2008 and 2010 ballots, it announced it was moving in a different direction.

With support from Caesars Entertainment, Wynn Resorts and Station Casinos, the NSEA will be looking instead to increase the hotel room tax by 2 percent to 3 percent, and funnel that money into education programs.

It is certainly good news for the industry, as all indications were that the NSEA had the support needed to get the initiative on the ballot, and voters supported it by a nearly 2-to-1 margin. But it is still somewhat bizarre in its timing.

What makes the move strange from both parties is that it seems somewhat premature. The union, if it had the requisite number of signatures, could pull the initiative at a later date if it was so inclined. And the casino interested could have easily waited to see if the union did, in fact, have the number of signatures necessary to move the initiative forward, and also waited for a July ruling from the Nevada Supreme Court on the union’s proposal before dealing.

As it stands, the NSEA now has three major casino operators supporting plans to raise the hotel room tax rate to a maximum of 13 percent. The tax raise would appear on the ballot as an advisory question before seeking legislative approval in 2009.

By keeping the NSEA from filing the signatures, the gaming industry certainly recorded an initial win, but it is difficult to see exactly where this will go.

The problem of the union’s initial initiative remains with the new compromise: It ties education funding to a single industry that can be susceptible to occasional hiccups. The only advantage is instead of taking the money from the casino operators, it takes it from the tourists before they have a chance to give it to the casino operators.

While no one believes the current economic troubles will last forever, no one can predict when they will end, either. Visitors to Las Vegas are already spending less money on dining, gambling, retail and recreation than they did before because they have less discretional income. Increasing the room tax they have to pay when they get here is only going to further reduce the amount of money they have to spend.

And the short-term outlook on room taxes in Las Vegas is pretty bleak, according to the Las Vegas Convention and Visitors Authority. Compared to last year, the organization is predicting an $8 million drop to $219 million.