Tuesday, September 20, 2005
Copyright © Las Vegas Review-Journal

Monorail to retain tax status

No grounds given for revocation of sales-tax exemption

CARSON CITY -- A move by state Tax Commissioner George Kelesis to revoke the tax-exempt status of the Las Vegas Monorail was derailed Monday when the monorail's lawyer pointed out the company legally must be given grounds for a revocation.

Commissioners then ordered the state Department of Taxation to investigate the circumstances under which the monorail company was given a sales-tax exemption from the state in 2003. Members asked the department to complete that investigation by their November meeting. Then they could hold a subsequent meeting to consider pulling the tax exemption.

Kelesis railed against the tax-exempt status during a two-hour meeting in which state Taxation Director Chuck Chinnock and Deputy Attorney General Greg Zunino defended their recommendations two years ago to give the monorail a tax break.

Last month Kelesis objected to the tax-exempt status during a hearing in which he noted the company does not make any charitable contributions, but has been freed from paying sales taxes because it has been classified as a religious, charitable or educational organization.

"I am going to ask about what happened in 2003," said Kelesis, the only commissioner to speak out strongly against the monorail. "I want to know the salaries they paid in 2003, in 2002 and 2001."

He noted that Gov. Kenny Guinn stated all business of the company, including salaries of executives, would be public information when the state Board of Finance approved a tax-exempt $650 million industrial revenue bond for monorail construction.

The recommendation by Chinnock and Zunino to give a tax break to the company that predominately carries tourists to Strip hotels was approved by the Tax Commission without opposition in May 2003 as part of a mass approval of companies seeking exemptions.

On Monday, Kelesis made three different unsuccessful motions to schedule a hearing in October to revoke the monorail's tax-exempt status. He also wanted vendors of the company to be put on notice because the tax exemption might end abruptly.

But Commission Chairwoman Barbara Smith Campbell and others told Kelesis that the tax exemption remains in effect and it was inappropriate to suggest otherwise.

"We haven't revoked it and we never may revoke it," Commissioner David Turner said.

Commissioner David Sheets also objected when Kelesis proposed that the Las Vegas Monorail be required to pay past sales taxes if the exempt status is pulled. With little support for that proposal, Kelesis then moved to have the company pay sales taxes only from the point of when the tax exemption is lifted.

But that plan, too, was derailed when Las Vegas Monorail attorney Jim Wadhams noted the law requires the company be given specific reasons for a revocation so it may challenge them.

"I am very, very concerned," Wadhams said about Kelesis' moves, adding he might challenge the revocation in district court. "We have to be appraised of the basis of revocation. First the Department of Taxation must investigate."

Earlier in the hearing, both Chinnock and Zunino said their review of documents supports the tax exemption.

Chinnock added the law gives the exemption to organizations that provide services, such as mass transportation, that normally are provided by a local government, or the state or federal governments.

"In my opinion that does not mean they must provide services to the poor or elderly," Zunino added.

But a close reading of the law shows the exemption should be given only if a local government, or the state or federal government was "required" to provide the services offered by the company.