Petition: Triple gaming taxes

Two petitions filed Wednesday would nearly triple Nevada's 6.75 percent gaming tax and allocate the $2 billion generated to construct roads, end residential property taxes and fund a host of other public improvements.

As Las Vegas lawyer Kermitt Waters filed his petitions at the secretary of state's office in Las Vegas, he said he knows what is coming next: a stiff legal fight and well-funded opposition from the gaming industry.

"I feel like Abe Lincoln -- they want to run me out of town on a rail," he said in a Texas drawl.

According to the Gaming Control Board, the entire gaming industry in Nevada generated $2.1 billion in net income in 2006 on $24 billion in total revenue from gaming, rooms, food, beverages and other attractions.

That is almost the amount of money that Waters says his tax increase would generate.

Waters has stated repeatedly that the gaming industry runs the Legislature and that citizens will never get the public improvements they deserve unless they sign petitions to amend the state constitution and vote for higher gaming taxes.

He said he's not a "tax-and-spend Democrat," and actually believes that government is inefficient. But he added that something must be done to support basic resources in a state where "nobody ever does anything."

Nevada's gaming tax rate is now the lowest in the nation and his petitions would raise it to the average rate charged in the 10 other states with casino gaming -- 20.2 percent.

The petitions specify that the Nevada tax rate would be modified each year to reflect any changes in the average of the rates assessed in other casino gaming states.

Robert Uithoven, a consultant for Las Vegas Sands Inc., made it clear Wednesday that the gaming industry will challenge Waters' petitions in court.

He predicted Waters will run into the same problem as the Nevada State Education Association, which two weeks ago filed a petition to increase the gaming tax rate to 9.75 percent.

Uithoven said all three gaming tax petitions violate a state law that specifies they must deal with only one issue.

In 2006 the state Supreme Court removed several paragraphs in an eminent domain petition filed by Waters because they violated that one-issue law.

"One issue is raising the taxes and another issue is putting spending requirements in place," Uithoven said. "That will present a tremendous challenge to him."

Teachers union President Lynn Warne welcomed Waters' petitions -- which mandate 25 percent of revenue would be earmarked for increasing salaries of public school teachers.

"Either way, education comes out ahead," she said. "We have met with him. We are supportive of each other."

Under the teachers union petition, revenue would be earmarked only for teacher pay and educational improvements.

Warne said she recognizes that Nevada needs improvements in other areas as well.

If all three petitions are approved by voters, then the state constitution stipulates the one "with the larger favorable vote" becomes law.

Waters also considered dedicating some of the additional tax revenue for the Nevada System of Higher Education, whose top administrator has been sparring with Gov. Jim Gibbons over his consideration of at least 8 percent in spending cuts.

University system Chancellor Jim Rogers never returned his call, according to Waters.

Rogers said Waters never contacted him. But he added that he would not have supported Waters' petitions anyway.

"I don't believe fundamentally in what he's doing," Rogers said.

Waters will circulate two slightly different "It's Time for Gaming's Fair Share" petitions.

On one, about $1 billion of the tax revenue would be used to eliminate property taxes on the primary residence of every homeowner in the state. County governments would be given the extra casino tax money to offset what they would lose with the elimination of residential property taxes.

Under the other petition, instead of property tax relief, more money would allocated for highway improvements, teacher pay increases, water projects, Millennium Scholarships, and solar and geothermal energy development.

Waters decided to circulate two different petitions to give voters a choice.

If voters want to end residential property taxes, then he said they should realize that less will be available for roads, teacher pay and other improvements.

A Review-Journal poll in October found only 39 percent of respondents backed Waters' 20.2 percent tax, while 50 percent opposed it and the rest were undecided.

In contrast, two Review-Journal polls and one by Reno Gazette-Journal found better than 2-to-1 support for the teachers union petition.

Pollster Brad Coker of Mason-Dixon Polling & Research Inc. said people opposed Waters' tax plan because they felt it was too steep of an increase.

Waters disputed poll results and predicted most people will back his proposal once they understand Nevada's gaming tax rate is the lowest in the nation. On his petitions, he includes a state-by-state chart that shows the rates assessed in other casino gaming states.

Waters first must collect 58,628 valid signatures for each petition by May. 20 to place them on the ballot.

Because the petition would amend the state constitution, voters must approve it during the 2008 and 2010 elections before it could go into effect in 2011.

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