Room tax hike OK proves elusive in long Senate hearing


CARSON CITY — The Nevada State Education Association’s seemingly smooth road to induce legislators to impose a 3 percentage point room tax increase ran into rough pavement today when senators peppered witnesses with questions and expressed opposition to the increase.

Sen. Barbara Cegavske, R-Las Vegas, questioned whether voters would have approved the proposal in an advisory question last November if they knew that 99 percent of the money would come from Clark County hotels and motels.

“Clark County will subsidize the entire state,” she said. “I don’t think voters understood that.”

Sen. Maurice Washington, R-Sparks, said the economy has declined appreciably since November and voters today might have rejected the increase.

Sen. Bob Coffin, D-Las Vegas, normally a backer of tax increases, said he was “teetering” on whether to back the tax increases. He said he did not like the idea of implementing tax increases through initiative petitions.

“It takes away the ability of the Legislature to act,” he said. “It is harmful to the legislative process.”

Senators are continuing to hear additional testimony this afternoon on the NSEA petition that would increase room taxes by as much as 3 percentage points in Clark and Washoe counties. Estimates are the increase would raise $233 million over the next two years.

Under the proposal, however, rooms would be assessed the higher rate only if their current tax rate is 10 percent or less. Most rooms in Washoe County already are taxed at rates greater than 13 percent.

Just two weeks ago, the Assembly backed the increase on a 35-7 vote with all 28 Democrats and 7 of 14 Republicans voting in favor.

Gov. Jim Gibbons, normally a tax increase opponent, has said he would sign the bill establishing the tax increase because it has the support of voters in the affected counties.

In a November advisory question, 66 percent of voters in Clark County and 57 percent in Washoe County supported the increase.

During a long hearing before the entire Senate today, Kim Sinatra, Wynn Resorts general counsel, Station Casinos and Harrah’s continued to back the increase despite the deterioration of the gaming industry.

“We are long-term thinkers,” she said. “We have confidence our industry will recover.”

Sinatra admitted her company agreed to back the NSEA room tax petition in exchange for the teachers’ union decision to drop a petition to increase the gaming tax by 3 percentage points.

Even with the increase, she said the room tax rate in Las Vegas will be below rates charged in New York, Chicago, New Orleans, San Francisco and most other convention cities.

She said President Barack Obama’s comment warning conventioneers to avoid Las Vegas has had “very, very severe ramifications” that cannot be overcome immediately.

Under the petition -- which legislators have until Friday to adopt or reject -- money from the room tax could be used during the next two years on general budget shortfalls. Then starting in July 2011, the money must be used to raise teacher salaries or improve the performance of students.

“The single most important matrix in the classroom is the teacher,” Sinatra said.

While money isn’t everything, she said it is a factor in retaining and securing quality teachers.

Sinatra added that business leaders in Las Vegas are frustrated because people applying for jobs often are “unprepared” because of the lack of a good education.

If senators do not back the increase by Friday, then the tax plan will be placed before voters as a question on the ballot in November 2011.

Senate Majority Leader Steven Horsford, D-Las Vegas, would not say whether he will hold a vote on the tax proposal tonight, or wait until later in the week.

 

Contact Capital Bureau Chief Ed Vogel at evogel@reviewjournal.com or 775-687-3901.