CARSON CITY — Gov. Jim Gibbons is expected to announce this week that he will support using revenue from hotel room taxes to finance at least part of the state’s $3.8 billion shortfall in highway construction funds, legislative sources said Wednesday.
The plan would not violate Gibbons’ pledge against raising taxes because the governor wants only to take additional revenue generated by room taxes in coming years. With 40,000 new hotel rooms under construction in Las Vegas, room tax revenue stands to grow substantially.
Gibbons’ communications director, Brent Boynton, would not confirm that the governor intends to propose using growth in room tax revenue as a solution to the highway construction shortfall. Nor would Boynton confirm that the governor intends to hold a news conference to announce a highway funding plan.
Senate Transportation Chairman Dennis Nolan, R-Las Vegas, and Assembly Transportation Chairman Kelvin Atkinson, D-North Las Vegas, said using room tax revenue has been one of the options under consideration by Gibbons.
"I’m not surprised," Nolan said of Gibbons’ proposal. "It was one of the options the governor had proposed. Everybody had it on their list as a possible option."
Added Atkinson: "Room taxes may be part of the solution. I don’t think it is the only solution."
Room tax is used to market Southern Nevada tourism through the Las Vegas Convention and Visitors Authority and the state’s tourism industry. In Clark County, a share is directed to the Clark County School District, county road projects and other uses depending on the location of the hotel.
A poll conducted for the Review-Journal last week found 72 percent of registered voters in Nevada favor dedicating at least some of the current hotel room tax for highway construction. No other tax proposal to fund roads received as much support in the poll.
Both transportation chairmen said legislative leaders have been meeting behind closed doors with the governor and his aides in an effort to come up with at least a partial solution to the transportation funding shortfall.
Gibbons also is considering using additional dollars generated by casino entertainment taxes to fund highway construction, according to a source.
Atkinson said the trucking industry has expressed a willingness to pay an increase in diesel fuel taxes and registration fees.
In January, Gibbons proposed the Nevada Department of Transportation sell water rights under state highways to raise the revenue needed to construct roads. He estimated at the time that money from water rights could be "pretty doggone close" to $3.8 billion. Checks with water officials, however, showed the value likely would be less than $100 million.
A transportation task force last year proposed a series of tax modifications and increases to cover 10 major highway projects, seven of them in Las Vegas. The projects would be built between 2008-15 at a cost of $3.8 billion. Topping the list were proposals to spend more than $2 billion on several widening projects for Interstate 15 through Las Vegas and south to the California border.
Financial analysts have concluded that by using bonds the state would need to raise about $170 million a year in additional tax revenue to cover the $3.8 billion cost. Bonds would allow the state to secure the money for construction now, then it would pay the bonds off over a 20- to 30-year period.
The room tax rate varies throughout the state. Clark County charges a 9 percent "transient lodging tax," while Henderson assesses 10 percent and the city of Las Vegas 11.5 percent. The state levies a 1 percent tax on lodging. Each percentage point generates about $20 million.
A source said Gibbons was persuaded to support using room tax revenue for roads through meetings with officials at The Venetian. Sheldon Adelson, the company’s chairman, has been critical of the convention authority, which is funded by the room tax.
Both Nolan and Atkinson are members of the governor’s Public-Private Partnership Advisory Council, a panel looking at involving private companies in paying for road building. The state would then repay the funds through tolls or user fees.
The group, which had its first meeting Wednesday, will meet over the next year and make recommendations to the state Transportation Board, chaired by Gibbons.
State law prohibits toll roads in Nevada and a bill by Assemblyman Joe Hardy, R-Boulder City, to allow them was killed last month in the Assembly.
Consultants for Carter-Burgess, a firm hired by the Nevada Department of Transportation to look at private road financing arrangements, said private interest in constructing roads for Nevada would be "very slim" without a law allowing toll roads.
Nolan suggested legislators pass a bill allowing toll roads before the Legislature’s scheduled June 4 adjournment.
But state Transportation Director Susan Martinovich said Wednesday that if a change in law is needed, the public-private partnership panel will make recommendations that then would go before the Legislature in 2009.
That did not satisfy Atkinson.
"It is a bit disappointing to come here with three and a half weeks remaining in the session, and we are trying to figure out ways to come up with $3.8 billion. This isn’t going to do anything to help us today. It is three, four years down the line.
"We need to do something today."2007 Nevada Legislature