Reid fears stimulus restrictions could hurt Nevada nonprofits

WASHINGTON — Sen. Harry Reid urged the White House today to clarify restrictions on spending federal stimulus money on casinos, saying the rules are vague and “overly broad,” and are causing confusion in Nevada.

Reid said some potential beneficiaries in the state are being discouraged from applying for stimulus grants for fear of running afoul of the law.

“The overly broad language hurts nonprofits in Nevada, especially,” Reid said.

In small communities, often there are few choices but for service agencies to hold workshops and events at hotel-casinos, Reid said. Yet stimulus guidelines issued by the Obama administration appear to make that a no-no.

“Nevada has a long history of community integration with hotel-casino complexes,” Reid noted in a letter addressed to President Barack Obama.

The concerns stem from a provision in the sweeping economic stimulus bill passed by Congress in February that prevents stimulus spending “for any casino or other gaming establishment.”

The gaming industry expressed some concern when the section was placed in the bill, first in the House, and then through an amendment by Sen. Tom Coburn, R-Okla. But industry officials and supportive lawmakers like Rep. Shelley Berkley, D-Nev., said they believed the impact would be limited.

Their interpretation was that no stimulus funding could be spent on casino construction or operations. Since no gaming companies had expressed interest in applying, the concern was muted.

But new guidelines the Obama administration has issued to advise local organizations on how to apply and spend stimulus grants are causing some worry.

Some Nevada organizations fear the rules could forbid them from using stimulus funds to hold meetings or book rooms at hotels with casino attachments because it could be seen as an indirect benefit to gaming.

Reid said groups that help domestic violence victims in rural Nevada could be prevented from sheltering battered women if the only available hotel rooms are in casinos.

Jon Summers, a Reid spokesman, said the senator stepped in after he was contacted by the Reno-based Nevada Network Against Domestic Violence. Sue Meuschke, the group’s executive director, was traveling Friday and could not be reached for comment.

In his letter, Reid urged Obama to direct his underlings to “issue a clarifying statement as soon as possible” that beneficiaries of stimulus funds are not restricted in where they can conduct activities.

Coburn might urge Obama to hold fast to the stricter rules, aide John Hart said today. Coburn believes Reid is trying to “strong-arm” the president, Hart said.

“The Reid letter is a thinly veiled attempt to intimidate the White House to use stimulus funds to help bail out the Las Vegas casinos,” Hart said.

“The only clarification the majority leader is entitled to is the 73-24 vote in favor of Coburn’s amendment,” Hart said. “Being majority leader doesn’t give Reid the right to shuffle the deck when he doesn’t like the cards he is dealt.”

During Senate debate, Coburn argued his amendment was necessary to prevent stimulus grants from being spent on questionable projects.

One such project he decried was the organized crime museum that Las Vegas Mayor Oscar Goodman had floated for federal aid.

Sen. John Ensign, R-Nev., voted for the amendment at the time. Reid voted against it.

Contact reporter Steve Tetreault at stetreault@reviewjournal.com or 202-783-1760.