Economic consequences


When a souring economy tops the electorate's list of concerns, as it does today, it's generally a foregone conclusion that voters want things to get better, not worse. Certainly, no candidate or ballot initiative expects to win an election by promising to wipe out thousands of jobs.

But Nevada voters accomplished as much in 2006 when they gave their approval to ballot questions that raised the state's minimum wage and abolished smoking in many places of business. And they might get a chance to do more economic damage come November if an advisory question seeking higher hotel room tax rates is placed on the general election ballot.

Not too long ago, Nevada had one of the country's highest rates of job growth. Last July, the state's unemployment rate was 4.9 percent. Today, it's a much different story, with Nevada's unemployment rate at 6.6 percent. Locally, the rate is 6.8 percent, more than a full percentage point higher than the national average.

Yes, significantly higher energy and food prices have cut into the bottom line of most households and businesses and hit the tourism industry especially hard. But there's no doubt the minimum wage boost, which piggybacks federal increases, and a smoking prohibition inside convenience stores, supermarkets and restaurants that serve food, began the increasing tide of pink slips.

Many eateries, given the choice of retaining their smoking customers or ending food service, laid off their cooks and wait staff to stay afloat. Slot route operators, however, didn't have that choice. For more than a year and a half, they've watched as the voter-approved smoking restrictions have chased their best patrons into larger casinos, which are exempt from the law.

The Review-Journal's Howard Stutz reported Thursday that Las Vegas-based Herbst Gaming has a little more than a month to figure out how to restructure about $1.2 billion in debt. Among other circumstances that have contributed to its losses, Mr. Stutz reported that "a statewide smoking ban in restaurants and taverns has decimated the company's slot machine route operation. Revenues are down almost 12 percent in 2008 following a 20 percent decline in 2007."

Likewise, a higher room tax rate inevitably will have unintended economic consequences.

Such considerations were scarcely debated two years ago, and the minimum wage and anti-smoking ballot questions passed as a result.

Voters should keep that lesson in mind, should a room tax question -- even a nonbinding, advisory one -- land on November's ballot.

 

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