MUTH’S TRUTHS

Although busy visiting my good friend Dan Burdish and having our son baptized here in Tampa, I’ve been following the brouhaha over the governor’s proposal to reallocate some future room tax revenue from the Las Vegas Convention and Visitors Authority (LVCVA) to much-needed highway construction projects in Clark County rather than raise taxes. Here are 25 observations from 2,500 miles away.

1.) First, this proposal isn’t anything new, nor should it have come as any surprise. The governor’s transition team on gaming and tourism proposed diverting some of LVCVA’s money to offset the projected deficit.

And WAY back on February 20, 2007, we invited Rossi Ralenkotter, the head of the publicly-subsidized LVCVA, to participate in a public forum with Bill Weidner of the privately-operated Las Vegas Sands Convention Center to discuss whether or not the LVCVA actually needs $200 million a year for advertising, or whether “some or all of the money (could) be better spent on critically needed infrastructure improvements in Clark County, especially road construction along the I-15 corridor connecting Las Vegas to southern California tourists.”

You may also recall that Ralenkotter chickened out and declined our invitation, saying the only place such a discussion should be held was the Legislature - where his high-priced lobbyists would be in a better position to twist arms, as well as the truth.

And surprise, surprise, surprise. Despite saying that any discussion of LVCVA’s room tax subsidy should only be held in the Legislature and not in public, guess who appeared on Jon Ralston’s very public “Face-to-Face” program to discuss “plans to ease traffic congestion” Wednesday night? Yup. Rossi Ralenkotter. How do you spell “hypocrite” again?

Some other notes.

2.) The governor’s proposal takes only 19 cents out of every dollar going toward the LVCVA subsidy for the next seven years. Between now and 2015, LVCVA would still receive over $2 BILLION in room tax revenue to air those “What happens in Las Vegas stays in Las Vegas” ads.

3.) Using LVCVA money for roads isn’t a new concept. In fact, as our good friend Steve Sebelius over at CityLife notes, a small portion of LVCVA’s room tax subsidy ALREADY goes to roads. The governor is simply proposing to divert a larger proportion on this higher priority. Not exactly an earth-shattering or groundbreaking suggestion, is it?

4.) Defenders of continuing to allow LVCVA to use the bulk of its money for advertising rather than infrastructure projects maintain that without LVCVA advertising Las Vegas, no one will know about Las Vegas and the number of people coming to Las Vegas will decline. Puh-lease. Vegas is one of the best-known, most-popular resort towns in the entire world. People will continue to flock here whether LVCVA’s subsidy is $2 billion or “just” $1.5 billion.

5.) Every major Las Vegas casino/resort also spends MILLIONS of dollars every year advertising their individual Las Vegas properties to the world. Some might even suggest that LVCVA’s advertising is simply duplicative and not necessary whatsoever. Those folks just might have a point.

6.) LVCVA is whining that if a portion of its subsidy is diverted to road construction, then LVCVA won’t be able to spend $890 million to expand their taxpayer-subsidized convention center - which would bring more traffic and more gridlock to the streets of Las Vegas. Hmmmm..

7.) If LVCVA wants to raise more money to fund expansion, they could easily raise their convention rates to market levels. As it is, their taxpayer subsidy allows the public convention center to price itself below private competitors at individual resorts such as the Sands, MGM and Mandalay Bay. The time to level this playing field is long overdue.

8.) An argument is made that residents, not tourists, are clogging our roads…and that’s a valid argument. But how many of the “newbies” in our state came here FIRST as tourists? Exactly. Tourism drives our growth. People visit Nevada…fall in love…and move here. And as long as tourism remains our state’s #1 industry, using tax revenue from tourism to fund needed infrastructure projects is perfectly appropriate. Especially if the alternative is higher taxes on gasoline or higher fees for a driver’s license.

9.) Speaking of growth, why should Gov. Gibbons raise taxes on all Nevada residents to pay for the irresponsibility of local county commissions which continually approve new housing developments without consideration of the traffic congestion such developments create? Why should the folks in Ely, Elko and Hawthorne have to pay higher gas taxes to relieve gridlock in Las Vegas? Maybe if Clark County wasn’t paying so many local government workers over $100,000 a year they could afford a few new roads.

10.) Another knock on the governor’s proposal to make better priority-use of the room tax is that it’s supported by Venetian Resort owner Sheldon Adelson, whose Sands Convention Center competes with LVCVA without the benefit of $200 million-plus a year in taxpayer subsidies. But just because Adelson supports an idea doesn’t make it bad. Indeed, Mr. Adelson is one of the richest men in the world. Maybe, just maybe, the guy knows what he’s talking about. Instead of dismissing Mr. Adelson’s ideas out-of-hand, perhaps a better idea would be to embrace them openly and warmly. It’s hard to knock his success.

11.) The consensus seems to be that all the major Strip gaming entities, other than the Venetian, oppose diverting this small portion of room tax revenue to road construction. Here’s a thought that maybe Big Gaming hasn’t thought about yet: If LVCVA’s subsidy is being used to do the casinos’ job of advertising Las Vegas, then perhaps the casinos should be paying higher taxes themselves for road construction with the money they’re saving by having the LVCVA doing the heavy lifting advertising-wise. Not an argument that I’d make…but others certainly will.

12.) Some continue to beat the drum of diversifying and equalizing the tax equation in Nevada by raising taxes on the state’s non-gaming businesses. Whenever you hear that non-gaming businesses aren’t paying their fair share and that we need some kind of “broad-based” gross receipts tax, remember this: Businesses don’t pay taxes; businesses collect taxes. If you raise taxes on McDonalds, McDonalds will simply raise the cost of a Big Mac. YOU pay any new “business” tax. Period.

13.) TASC-master State Sen. Bob Beers responded positively to the governor’s proposal in his e-newsletter last week, but seemed to voice support of indexing the gas tax - which means the tax you pay for every gallon at the pump would automatically go up every year with inflation.

For some reason, I don’t think putting tax hikes on auto-pilot without legislators being forced to vote on them is the fiscally-responsible thing to do. If Sen. Beers wants to raise the gas tax, he should propose it and see if he can get the support of his fellow legislators each and every time he wants to raise it. Gas taxes shouldn’t automatically go up every year without a vote like a congressman’s salary.

14.) Sen. Beers also laid some blame for the current highway funding problem on former Gov. Guinn. But Gov. Guinn didn’t spend the money; the Legislature, of which Sen. Beers is a member, did. Over the years, state legislators approved budget increase after budget increase, including during Gov. Guinn’s terms. When it comes to the source of bloated budgets and out-of-control spending, the buck stops at the Legislature, not the governor’s desk.

15.) On the other hand, Sen. Beers rightly points out that those who are running radio ads calling for higher taxes to solve our highway “crisis” are special interest construction companies who would get the money from the higher taxes. Hardly an objective, disinterested party.

Sen. Beers also rightly points out that almost half of the Blue Ribbon Commission which recommended raising taxes to pay for road construction “work for local governments in Nevada.” And yes, if they can persuade the governor to raise taxes, it will get them off the hook for the problems they themselves are largely responsible for creating (see #8 above).

16.) Assembly Majority Leader John Oceguera, D-Las Vegas, and Assembly Transportation Chairman Kelvin Atkinson, D-North Las Vegas, continue to whine about the governor’s plan, saying the governor didn’t include them in drafting it. Of course not! The Democrats drafted and released their OWN plan several weeks ago without involving the governor; a plan which includes a $2 billion tax hike. Why in the world would the governor include tax-hiking Democrats in a plan that doesn’t include tax hikes? That’s like inviting a vegetarian to an all-you-can-eat bull roast.

17.) Most Republicans showed up at the press conference last week to support the governor’s plan to reallocate some of LVCVA’s room tax subsidy for road construction, but as the Las Vegas Review Journal reported, “Assembly Minority Leader Garn Mabey stood with Gibbons on the podium, but in an interview he offered only tepid support for the plan.”

Apparently Mabey is still under the wicked spell of Democrat Speaker Barbara Buckley who he repeatedly refers to as “awesome.” Just another in a long and growing list of reasons for Republicans dumping Mabey as Minority Leader immediately after this session ends.

18.) For his part, Las Vegas Mayor Oscar Goodman said of the governor’s plan to reallocate LVCVA money, “If it ain’t broke, don’t fix it.” Only someone in a gin-induced stupor could think traffic in Las Vegas ain’t broke. And I mean that in a good, Christian way, of course.

19.) By the way, back to the amount of money LVCVA gets from its taxpayer subsidy. I’m told LVCVA enjoys the largest budget of any convention authority in the nation. In fact, I’m told, if you take the budgets of the Top Ten convention authorities in the country, eliminate #1 Las Vegas, and add the rest all together…COMBINED the other nine still don’t get as much money as LVCVA.

This Chicken Little routine that Las Vegas will dry up and blow away in the desert if LVCVA doesn’t continue to spend over $200 million a year without diverting some of it to road construction is pure BS.

20.) Back to the argument that it’s residents and not tourists who are clogging the roads, note that an awful lot of the folks clogging streets other than the Strip are residents driving to and from Strip resorts for work. It takes a lot of employees to cater to our tourist industry. Using tourist tax dollars to make it easier for those workers to get to work hardly seems inappropriate.

21.) For all those (dozens of) people in Nevada who continue to advocate for higher taxes to fund road construction, the governor should immediately create, by executive order, a “Tax Me More” fund bank account in which folks who don’t think they’re paying enough in taxes can voluntarily contribute their fair share directly to the highway fund.

22.) Also by executive order, the governor should require that the Department of Transportation list each and every expenditure it makes on a public website so that the public can see for itself exactly where every penny is going. I’m certain such transparency will allow the public to find a lot of low-priority spending in the existing budget which could easily be diverted to higher-priority projects.

Indeed, the LVCVA should be required to similarly post such transparency in its own budget. Exactly where and to whom is that $200 million-plus going each year?

23.) And let’s not forget, we can save 15-20 percent on the cost of road construction simply by suspending union-set prevailing wage requirements and project labor agreements and opening up the bidding to non-union construction companies. Why should Nevada taxpayers have to pay more at the pump just to continue subsidizing the lifestyles of rich-and-famous union bosses?

24.) Oh, and by the way. Within minutes of the governor’s press conference last week, the Nevada Republican Party, under new management, sent out a press release about a Nevada issue from Chairman Sue Lowden. And it was GOOD.

The four-paragraph statement from Lowden referred to Gibbons’ promise not to raise taxes four times. Talk about sticking to message! Oh, what a different legislative session this would have been if Lowden has been allowed to take over the party in early February instead of late April.

25.) Gov. Gibbons proposes funding road construction by better prioritizing existing tax revenues. Democrats (and a handful of Republicans) propose paying for road construction by raising taxes. The Legislature will likely pass a tax hike. The governor will veto it. The Legislature will probably over-ride the governor’s veto. The taxpayers lose.

But politically, the governor will win by “losing.” Which would you rather run on for re-election in 2010: “I kept my word and didn’t raise your taxes; the Democrats did,” or “I raised your taxes”?

Exactly.

Posted on May 17th, 2007 by Chuck Muth
Filed under: Nevada