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Friday, September 17, 1999
Copyright © Las Vegas Review-Journal
Applause lacking for proposals to raise tax
A crowd of business and gaming interests reacts coolly to ideas for more education funding.
By Jane Ann Morrison
Review-Journal
Two men who want to raise the state's taxes, primarily for education needs, received a frigid reception Thursday from a business and gaming crowd which clearly didn't like the idea of their two initiatives.
State Sen. Joe Neal, D-North Las Vegas, laid out his reasoning for advocating raising gross gaming taxes on the richest 107 casinos from 6 1/4 percent to 11 1/4 percent. There was no applause.
And Ken Lange, executive director of the Nevada State Education Association, laid out his reasoning for why there's a need for a 5 percent tax on business profits. And there was no applause -- not even the polite kind -- from the 125 people in the audience.
But afterward, they were both praised for having the courage to defend their proposals before a breakfast forum sponsored by the Nevada Taxpayers Association, a group that Neal called "a vigilant watchdog in guarding the public purse."
Armed with statistics and charts, Neal said he believes the gaming industry has used its political power in the Legislature to protect its own tax base at the expense of higher taxes on others.
He also had harsh words for the industry itself: "Gaming is a backward, low-wage, low-skilled industry. It is an industry of yesterday, not of tomorrow."
One-third of Nevada's jobs are in gaming and Neal said these people work hard, but have little to show for it. He said some end up as social burdens on the state.
Both he and the teachers union are circumventing the Legislature by taking their initiative petitions directly to the voters, where many believe their message of "tax the other guy not me" will resonate.
Gov. Kenny Guinn has already come out strongly against the initiatives, saying they are trying to do what is rightfully the job of the governor and the legislators and that this is starting down the road towards the "government by initiative" that has hit California.
His opposition to the initiatives, combined with his commitment to limit government spending, has already chased one initiative proponent out.
Randi Thompson, head of a group which considered an initiative for a property tax cap, said its members have decided not to circulate a petition but wait and see if the Legislature addresses their concerns.
Despite the cool reception Neal and Lange received with the business and gaming crowd, polls show their ideas are popular with voters.
Even Mike Sloan, chairman of the Nevada Resort Association, said polling shows voters support a slight gaming tax increase more than one Neal proposes, which they view as punitive, and that the business tax is viewed favorably by about two-thirds of those polled statewide. He declined to share the specifics of the polling, or the exact wording of the questions.
Lange, whose organization represents 22,000 of the state's teachers and public school support personnel, spoke about the need to improve teachers' pay and said it would take $84 million a year to give teachers a modest 2 percent pay increase.
Neal disagreed with Lange's initiative because it's at odds with his view that gaming doesn't pay enough.
By taxing businesses other than gaming as the teachers union initiative proposes, gaming still won't be paying enough, Neal said.
"I have no disagreement with the teachers on the end results, just the means," said Neal, who added that private citizens and small businesses have been paying proportionately larger shares.
Neal proposed an 8 1/4 percent tax increase on the most profitable casinos during the 1999 Legislature, but the proposal went nowhere.
He armed himself with a chart that showed that the gross gaming tax has gone from paying 17 percent of the total state budget in 1987 to 10 percent in 1999, but was unable to say how much sales tax the gaming industry pays.
Gaming is so powerful in the Legislature that it controls the laws about its own taxation, he said.
"They make decisions based on their own interests rather than the interests of the state as a whole," he said. "The public is now looking for gaming to ante up."
The Resort Association's Sloan and Jim Mulhall both said Neal used his statistics selectively and that his charts failed to show the sales tax generated by the gaming industry.
"We pay far more than our fair share of taxes," Mulhall said.
But while the Resort Association clearly opposed Neal, it has taken no position on the business profits tax which, if it ultimately exempts gaming profits, would spread the burden out further to other businesses.
Sloan took a sharper edge than Mulhall when asked about Neal's polished presentation. "It's nice to be unencumbered by the facts," he said. "His presentation was selective in the facts it chose to rely on."
The fact that Nevada has no personal or corporate income tax also needs to be taken into the mix, Sloan said. Neal is trying to punish gaming for not contributing to the senator's failed run for governor in 1998, Sloan said.
Sen. Ann O'Connell, R-Las Vegas, credited Neal and Lange for making good presentations, but she agreed with Guinn that it's the Legislature's job to sort out the complex information about who is paying taxes and who is paying their fair share.
O'Connell, chairwoman of the Senate Taxation Committee, said she could take the same information presented Thursday and conclude there is no need for either initiative.
"The one problem I have with both of them is that they're asking people to vote on issues that tax someone else (gaming or business), so a high percentage of them are going to say 'great," ' she said.
Tax increase initiatives
Review-Journal
GAMING TAX PROPOSAL: Create a higher tax rate of 11 1/4 percent for casinos which earn more than $1 million a month in gross revenues. Expected to affect 107 of the richest casinos, which now pay 6 1/4 percent. State Sen. Joe Neal, primary advocate of higher gaming taxes, estimated it would raise an extra $388 million a year. He's suggesting that 45 percent go to education, 38 percent to reduce motor vehicle taxes, 8 percent to the Nevada Highway Patrol so patrolmen would be paid as much as the Las Vegas police are, 7 percent to economic development, and 2 percent to gambling addiction programs.
BUSINESS PROFITS TAX PROPOSAL: Create a new tax of 5 percent on all business profits, with the possible exception on gaming profits, since they are already taxed. The first $25,000 of profits would be exempted from the tax. The Nevada State Education Association promotes this initiative and estimates it could raise $250 million a year. All businesses would be taxed with the exception of mining, where the tax level has been capped. All the money would be designated for education, where teachers' salaries are the largest single expense.
THE INITIATIVE PETITION PROCEDURE: For either proposal to become law, 10 percent of the voters must sign the petitions. If a proposal is declared valid, then it would be delivered to the Legislature the first day of the session -- Feb. 5, 2001. If lawmakers and the governor approve the initiative, it would become law. If they reject it or ignore it, the voters would be asked to vote on it in 2002 and it could become law that way. The soonest the petitions could start being circulated would be Jan. 3, 2000. They must be delivered to each county clerk by Nov. 14, 2000.
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Sen. Joe Neal, D-North Las Vegas
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