Bosses unite over gaming tax

The most powerful resort chieftains in Las Vegas are bracing for tight times in 2008 and aren't interested in sharing more of their gambling haul with Nevada's schools.

That was the gist of a public powwow between the leaders of Las Vegas Sands Corp., Boyd Gaming Corp. and MGM Mirage -- three companies in the midst of spending more than $14 billion on three new Strip resorts.

The talk was part of a conference on Nevada tourism and meant to probe the thoughts of gambling executives on the continued resort development boom in Las Vegas.

It turned into the executives using the forum to slam a proposal by the state's biggest teachers union to raise gambling taxes to 9.75 percent in 2011, up from 6.75 percent.

Teachers say the money would help move Nevada schools from the back of the pack nationally by raising about $250 million annually for higher teacher pay, class-size reductions and anti-dropout programs.

The gambling executives characterize the proposal as a 44 percent tax increase that would put the chill on the kind of resort building boom that has raised Nevada's profile from cowboy gambling outpost to a global resort destination that attracted more than 52 million visitors last year.

"It will ruin this state," said Bill Weidner, president and chief operating officer of Las Vegas Sands Corp., the company that owns The Venetian and the Sands Expo and Convention Center and is putting the finishing touches on the $1.8 billion Palazzo. "We have to fight back, not pretend like we want to compromise."

The casino bosses complimented Gov. Jim Gibbons, who has pledged to avert a projected $285 million state budget shortfall without raising taxes. But Terry Lanni, chairman and CEO of MGM Mirage, acknowledged disagreements with the governor yet pledged continued loyalty should Gibbons seek another term in office.

Gibbons, who sat in the front row in the Caesars Palace ballroom where the talk was held, clapped when Weidner said casinos would invest less in Nevada if taxes went up.

Lanni and Keith Smith, president and chief operating officer of Boyd Gaming, differed from Weidner on how the state should raise revenue for things such as schools, roads and government services.

Weidner said he supported Gibbons adherence to his no-tax pledge. Lanni and Smith, to varying degrees, were open to the notion of a broad-based business or corporate tax.

Smith said the lack of a business tax lures enterprise to Nevada but, "that doesn't help fund the impacts that are created by those businesses."

Smith and Lanni also differed from Weidner on whether to wrest control of the Las Vegas Convention Center from the publicly run Las Vegas Convention and Visitors Authority and sell it to private interests.

Weidner supports the plan partly because he believes the convention center could wring more money from visiting events by charging rates similar to the Sands Expo and Convention Center or Mandalay Bay Convention Center, two large private local convention centers.

Weidner said privatizing the convention center would allow the state to redirect about $120 million in room taxes annually from operations to averting a budget shortfall.

Lanni and Smith disagreed. They said the success of the publicly run center helped their companies grow into multibillion-dollar behemoths capable of hosting their own conventions. But the center is still important to attracting business that goes to smaller hotels and remains effective at putting heads in beds throughout Las Vegas.

"The convention authority has been a large part of the success of Las Vegas over the years," Smith said. "We've all taken advantage of that."

Lanni did say, however, that if budget belt-tightening is required, the convention authority and convention center shouldn't be immune to cuts.

"I think, probably, that is well worth looking into," Lanni said.

He also said he suspects MGM Mirage, with 10 hotel-casinos on the Strip, will be doing some belt-tightening of its own in 2008. Lanni expects that the residential real estate slump, tumultuous global credit markets and rising oil prices could sap enthusiasm -- and disposable cash -- people and companies need to visit Las Vegas.

"We are not going to add positions," Lanni said during an interview after the talk. "We have departments with 'x' number of people, we are going to leave them at that."

As for the outcome of the tax debate, that's up to the voters. In addition to the teacher proposal, there is another proposal to raise taxes on gambling revenue to more than 20 percent.

Both are expected to wind up on ballots in November. So far, polls suggest voters favor raising taxes on casinos for the benefit of schools.

Lynn Warne, president of the Nevada State Education Association, the teachers union behind the more modest tax petition, said voters are more than willing to move money from craps to classrooms.

"The gamers are enjoying the lowest tax rate not only in the country but the world, and our schools are suffering," Warne said.

Contact reporter Benjamin Spillman at bspillman@reviewjournal.com or (702) 477-3861.