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Gibbons road plan: The fallout
posted by Steve Sebelius
Thursday, May. 10, 2007 at 3:26 PM

Reactions to Gov. Jim Gibbons‘ "plan" to pay for roads in Nevada — "Kids, grab your piggybanks! — is simply pouring in to our office in a nondescript building in an industrial area near McCarran International Airport. And by "pouring" we mean "trickling." As in, we got a couple of e-mails. But they’re worth sharing.

First up is Sue Lowden, who replaced the fun-filled Paul Willis as chairwoman of the Nevada Republican Party. Lowden is so totally boring compared to Willis, who would have both endorsed and denounced the plan by now. Instead, Lowden puts out one, simple consistent (and wrong) statement of support. Let’s take a look. As always, our comments follow:

"Today, Governor Jim Gibbons proposed a transportation plan for Nevada that provides record levels of highway funding while adhering to his promise to the voters not to raise taxes.

"Governor Gibbons promised the voters of this state that he would prioritize funding in our state budget just like all taxpayers have to do with their family budgets. Transportation has become a high priority in our state, and it is time we redirect portions of future revenue towards [sic] our Nevada’s [sic] future needs.

"Gibbons also promised Nevada citizens that he would not increase taxes. His plan keeps that promise, and the taxpayers agree with him overwhelmingly. In a recent independent statewide poll published in the Las Vegas Review-Journal, over 70 percent of Nevadans reject tax increases, while over 70 percent support diverting portions of future room tax revenue towards [sic] our traffic needs.

"While other plans in the Nevada State Legislature seek to significantly raise taxes on our citizens, the Nevada Republican Party is pleased that our governor has put forward a plan that will meet our transportation needs, without taking more money out of the paychecks of Nevada’s workers."

There are, of course, several things wrong here. First, Lowden brings up family budgets, a favorite Republican line, as if the federal government is just like your family, only with a bigger budget and more crazy aunts and uncles. But if we were to be honest about her analogy, it would be thus: Because you were stupid, or greedy, or both, you got a low-interest mortgage 10 years ago, with a big balloon payment coming up. You need to find $10,000 in your budget to pay the mortgage. Do you ask for a raise from your boss? Take out another loan? Raise the price of goods at your business?

Nope. You "reallocate" money from your various other household accounts, robbing the utility fund, the food fund, the vacation fund and the entertainment fund. Presto! Problem solved, Republican-style.

What’s that? What are you going to do when the power company turns off the lights? Or the phone company shuts off the telephones? What are you going to eat? Where are you going to spend the summer? What are you going to do for fun? Oh, those are just nagging liberal questions for another day. The problem is solved, remember?

Second, Lowden refers to the Review-Journal’s poll on paying for roads. She correctly cites the stats: 78 percent are against a gas tax, which is the best, most fair and most stable way to pay for road-building. Conversely, 72 percent support diverting room tax money to roads, 69 percent favor raising the gambling tax, and 64 percent favor using existing sales taxes from the purchase and repair of cars.

Our response: No shit, Sue. The only surprise here is that the numbers were so low.

Of course people don’t want to pay taxes! That’s just human nature, and documenting the obvious with polls is an R-J hobby. Of course they want other people to pay: the gamers, the Las Vegas Convention and Visitors Authority, people who buy cars or get them fixed. Hell, if you could find a way to tax the French, they’d be all over it.

And you know why? Because the people who run Lowden’s party have been screaming for more than 40 years that we shouldn’t have to pay such high taxes, without ever stopping to tell their enraged followers that, as a consequence, they’d have to give up new and better roads, new and better schools, more police and firefighters, etc. Consequently, people expect to pay low taxes AND get good services, an impossibility that doesn’t stand up to five seconds of intellectual scrutiny. But before that five seconds can elapse, the speechmaker has moved on to something else, or the crawling graphic on Fox News has warned people about the next big terror threat.

That’s why we need leaders who are willing to do the opposite of what the Republicans have been doing for the last four decades at least: Tell the truth. We need a governor, state lawmakers and others to tell voters that they cannot have better roads without paying for them, and that it is unfair and irresponsible to force other people to pay for something they use every day.

We wonder how big the response would be if the R-J ever thought to ask voters if they should be entitled to free doughnuts at Krispy Kreme, or free Slurpees at 7-Eleven, or free meals at In-N-Out. This being America, we suspect the number might be high. But we also suspect that some adult would happen upon the scene and tell the screaming kiddies that stuff like that doesn’t come for free, and if you want a Double-Double, you’ve got to pay for it, not stick the sucker behind you in the drive-through lane with the tab.

In addition to Lowden, the Nevada Resort Association’s Bill Bible weighed in with a statement of his own. Here’s what he had to say:

"As a former budget director for the state, I am concerned about the impact this plan would have on future budget decisions.

"As far as the room tax proposal, I will restate what I and my members, who own and operate the vast majority of rooms in Southern Nevada, have expressed to Governor Gibbons in recent conversations.

"We are resolutely opposed to raising or reallocating room taxes to pay for transportation improvements in Clark County as proposed by the governor today. We recognize that these needs must be addressed, but this is not the kind of broad-based approach necessary to correct this problem.

"The LVCVA is one of the most successful private-public organizations in the nation and its promotional activities have substantially contributed to the economic development of Southern Nevada. With a large number of rooms coming on line in the future, we strongly feel that future room tax money should not be diverted and instead used to promote Las Vegas as an international destination and to keep Las Vegas competitive and our economy healthy."

You know, when Bible used that term "broad-based," we couldn’t help but think of 2003, when a "broad-based" business tax was on the table. (Hey, voters should have liked that one; it doesn’t affect them. Somebody call the R-J and Sue Lowden!) The proposal would have imposed a tax on businesses, which currently pay nothing — as in 0.0 percent — on their gross incomes. Gambling, by the way, pays as much as 6.75 percent on its gross income, not to mention sales, property, payroll and other taxes.

How different things might be today if that tax had passed, no? But it didn’t. Because some guy named Jim Gibbons — who at the time was mounting an ultimately doomed bid for the governorship — once circulated an initiative that said you’ve got to get a two-thirds supermajority to raise taxes in the Legislature. And that same guy, who ultimately did get himself elected governor, is now trying desperately to hang on the sliver of political support he’s got left.

That means that the mutually reinforcing statements of Lowden and Gibbons can be seen in another light: A dying attempt to keep the people from seeing the big picture, and leaving them thinking they can get a free lunch. They shouldn’t be allowed to get away with it.


No magic beans, but…
posted by Steve Sebelius
Thursday, May. 10, 2007 at 1:18 PM

Gov. Jim Gibbons has made his big announcement, and no, there was not a single mention of using higher sales taxes on magic beans to pay for road building. But the actual proposal was not too far off from the whole magic beans thing. Let’s take a look at the governor’s news release, and then come back and analyze it. (And by "analyze," of course we mean "mock ruthlessly.")

GOVERNOR GIBBONS UNVEILS TRANSPORTATION FUNDING PLAN

Carson City — Today, Governor Jim Gibbons unveiled an innovative solution to address Nevada’s growing transportation problem. His proposal reallocates a percentage of projected growth within existing taxes, such as the reallocation of room tax, reallocation of vehicle sales tax, and reallocation of live entertainment tax.

Additionally, the plan encourages a study to evaluate the feasibility of public-private partnerships, a cost-benefit analysis of road projects before they begin and the transfer of maintenance responsibilities from the state to local jurisdictions.

"I firmly believe that in order to address our transportation problems, growth must pay for growth," said Governor Gibbons. "People who live here should not have to shoulder the financial burden for those who are visiting our state. Without a sound solution, we will face gridlock and economic stagnation. Congestion will discourage tourism, seriously damaging the economy of our entire state."

The governor will reallocate approximately:

– $424,000,000 from Clark County room tax for use in Clark County road construction over the next eight years.

– $360,000,000 from statewide vehicle sales tax and live entertainment tax for use in statewide road projects over the next eight years.

Through the use of bonds, this will provide approximately $2,500,000,000 for road projects that will begin at various times over the next eight years.

From 2005-2006, eleven people moved to Clark County every hour, 24 hours per day, seven days a week, 52 weeks a year. In one year alone, nearly 97,000 people moved to Southern Nevada. Within the next ten years, Clark County anticipates the construction of 45,000 to 75,000 new hotel rooms. This translates to more than 100,000 additional vehicles on already clogged freeways, according to a study conducted by the Regional Transportation Commission.

And there you have it, folks: Let other people pay. Let schoolchildren (who get some of that room tax money that Gibbons is talk about "reallocating") pay. Let local road projects (which ironically will be out some cash thanks to this "reallocation") suffer. Let local governments (which will lose money thanks to this "reallocation") get a double whammy: They will get less cash, and pick up responsibility for maintaining state roads! Let "public-private partnerships" end up charging people tolls, a regressive tax yet the only one Gibbons is willing to support, since it will be done by somebody else. (Editor’s note: See update No. 2 below.)

But the worst thing about Gibbons’ Big Plan is that it’s not "innovative" in any sense of the word. It’s quite the opposite, in fact. He’s done nothing creative, new or even interesting: He’s simply moved money from different pots into another pot, something any common monkey could do, assuming he had pots, money and had taken a no-new-taxes pledge. (You know where those monkeys fall on the evolutionary scale, after all. They’re wont to do dumb things.)

Oh, and by the way, we didn’t notice Gibbons talking about how the agencies affected by this "reallocation" are going to make up for that lost revenue. How is the school district, the Las Vegas Convention and Visitors Authority, the local governments here in Southern Nevada and the agencies that formerly were getting car-related sales taxes going make up for the new shortfalls the governor wants to create? But why should Gibbons care? As long as there’s no new taxes, Gibbons can make somebody else pay. And by keeping his pledge, he reasons, he can still preserve the option of a second term. (Memo to Gibbons: All the money right now is bet on various lines speculating whether you’ll even finish your current term, so we’d recommend not worrying too much about four more years.)

It’s the flaw in Republican economics, since Day One: The needs don’t go away just because you’ve done some fancy math. They just get ignored until they, too, become real problems. Unfortunately, those real problems are catching up with Nevada, in terms of dropout rates, teen pregnancy, suicide, bankruptcies, poor educational achievement, lagging social services, poor health care and an economy that’s still dependent on a single industry for its lifeblood. (Oh, and by the way, with the exception of one particularly prickly member, most people in even that one industry are advocating for a plan other than Gibbons’ to build roads.)

What a disappointment. But not all hope is lost. According to my colleague Jon Ralston, the following Republicans attended Gibbons’ news conference: State Sens. Bob Beers, Barbara Cegavske, Joe Heck, Warren Hardy and Mike McGinness, and Assembly members James Settelmeyer, Bob Beers, John Marvel, Francis Allen, Heidi Gansert, Joe Hardy, Ty Cobb, Pete Goicochea, Tom Grady, John Carpenter and Ed Goedhart.

Which Republicans weren’t there, Ralston asked in his FLASH newsletter. A good question. We didn’t notice the name of Senate Majority Leader Bill Raggio on that list. We didn’t see top upper-house lieutenants like Randolph Townsend, Mark Amodei or even Dennis Nolan, who chairs the Senate’s Transportation and Homeland Security Committee.

Perhaps even more telling was this: We didn’t see the name of Assembly Minority Leader Garn Mabey, even though most of his caucus — including the leadership — was there. Mabey has not sworn off tax increases related to transportation, as we recall. Interesting.

Let’s do the math: In the Senate, it takes 14 votes to get to the two-thirds majority necessary to pass a tax or override a gubernatorial veto. Take away Beers, Cegavske, Heck, Hardy and McGinness and you’ve still got … 16 people. In the Assembly, you need 28 votes to get to the magic two-thirds. Take away all the Republicans who showed up at Gibbons event and you’ve still got … 31.

We think there still might be hope for a responsible solution to the road-building problem, after all. But one thing’s for sure: It’s not going to come from the governor’s mansion.

UPDATE: Not one but two Carson City spies have reported that, contrary to our earlier report, Assembly Minority Leader Garn Mabey WAS present at Gibbons’ news conference announcing his road-building plan. Oh, Garn. We had such high hopes for you! In addition, state Sen. Dean Rhodes was present. We regret the errors, which are entirely our fault, and thank our two readers for their diligence.

UPDATE NO. 2: The governor’s plan calls for taking room tax dollars only from the 48 percent of room tax that supports the convention authority, not from the portion that goes to support schools, local governments and local road-building. However, general fund dollars in the form of sales taxes and live entertainment taxes are used to support schools.


Room taxing?
posted by Steve Sebelius
Thursday, May. 10, 2007 at 10:42 AM

From what we hear, Carson City is simply abuzz with talk of pilfering money from the increase in room taxes over the next few years and using them to build roads. The idea is apparently the brainchild of Venetian owner Sheldon Adelson, who has long despised the primary beneficiary of room tax dollars, the Las Vegas Convention and Visitors Authority. And Adelson has found a prime sponsor in Gov. Jim Gibbons, who is stuck in the quicksand of his vow to not raise taxes or fees.

(Of course, Gibbons has raised fees — but only after his beloved benefactors in the mining industry told him it was OK. Nothing beats principle like principal. You know, as in "money." We thought that one was pretty clever in our morning brainstorming session. Hey, we’ve been wrong before.)

Anyway, according to our colleague Jon Ralston’s FLASHes, Gibbons is preparing to announce his road-building plan at noon today. Let’s hope it’s better than the time that he said there was liquid gold under the state’s freeways, but it turned out that there was only enough money to cover 2.6 percent of the at least $3.8 billion backlog in the state’s highway fund. What’s next, a sales tax increment on the purchase of magic beans? (Apologies to the hardworking Jeremy Aguero over at Applied Analysis if he gets a call later today asking him to check that out.)

Of course, the Las Vegas Convention and Visitors Authority is against any plan to siphon off room tax dollars to pay for roads. (Truth be told, some of that money already goes to roads.) The LVCVA passed a unanimous resolution Tuesday opposing the move. But before you dismiss the convention authority as a wholly owned subsidiary of the gambling industry, consider a few of the key points, obtained by us at Various Things & Stuff when somebody faxed them to our office:

  • The LVCVA’s budget for the 2008 fiscal year is $279.5 million, much of which is spent on advertising, sales and special events. In no small part as a result of the LVCVA’s efforts, there were 44 million Nevada visitors in 2006, who dropped a whopping $41 billion. If the advertising budget is cut, and fewer visitors come to town, not only will there be less money in terms of room taxes (thus defeating the purpose of taking some of that money to build roads) but there will be fewer gambling and sales taxes as well. And as we all know, gambling and sales taxes make up a goodly portion of the state’s general fund.
  • The LVCVA doesn’t keep all the room tax. In fact, it doesn’t even keep half: 52 percent of those funds go to the Clark County School District (projected to get $76 million in the next fiscal year); road projects in Clark County ($47 million); local governments ($80 million) and the Nevada Commission on Tourism ($18 million.) The upshot: If you take room tax dollars, you’re taking from local governments, schools and — most ironically — roads. So how is this a good idea for road-building again? (Editor’s note: See update below.)
  • The LVCVA is about to spend $890 million to expand a spruce up its convention center, the one that Adelson hates so much since it competes with his private Sands Convention Center. But that’s necessary, says LVCVA President and CEO Rossi Ralenkotter, because other cities are gunning for our tourists. "Competition is fiercer today than ever before," Ralenkotter said in a letter to Gibbons. "A long-term, flat marketing budget will mean lost market share and brand awareness." Now, as hard as it is to understand why somebody would rather go to, say, the great city of Los Angeles rather than Las Vegas, apparently, some people do. The LVCVA fights to get those people to come here instead. (May we suggest an L.A.-themed casino? We’ve already got the smog!)
  • While Adelson might be anti-LVCVA, some other prime Las Vegas business types are not. "To modify the model by redistributing room tax elsewhere, or to discourage visitation by increasing the room tax, creates substantial risk to tourism unnecessarily," says Glenn Christenson of Station Casinos. Adds Keith Smith, president of Boyd Gaming: "We do operate in an extremely competitive environment, and now is not the time to be monkeying with [a] model that has worked so well for us in the past."
  • We do have to wonder, however, if many of the folks behind Station and Boyd casinos supported Gibbons in his quest for office. We know that Kara Kelley of the Las Vegas Chamber of Commerce did. (Her organization said Gibbons would be good for business.) Now she’s forced to toss a quote into a bunch of LVCVA documents asking Gibbons not to hurt business. Oh, sweet irony.
  • Here’s a fun fact: On the average day, residents account for 84 percent of the traffic on I-15 between the I-215 Beltway and Spring Mountain Road (i.e. almost all of the freeway that you’d use to get to places on the Strip). Those annoying big-rig trucks who are always hogging the No. 1 lane account for 10 percent. Visitors? A tiny 6 percent people. In fact, there are 1.2 million vehicles registered in Clark County, and just 78,000 (6.5 percent) brought or rented here by tourists. The point: Tourists are not exactly the driving force behind our congestion.

We at Various Things & Stuff have said it for a long time: Instead of rooting through Nevada’s couch cushions, car ashtrays and pants pockets for loose change to pay the bills, why not do the responsible thing (recommended by not one but two groups that have studied the issue, including one appointed by Gibbons himself) and index the gas tax to inflation? It’s the ultimate user fee: The more you drive, the more you pay, but everybody who drives pays something. And that money goes to the exact thing that you’re using, which is roads.

Alas, we probably won’t do that, due in large part to Gibbons’ silly and senseless pledge not to raise taxes, which allows him to shift the burden to other people and other programs. Gibbons took a vow so schoolchildren should suffer because the radical, wide-open, and unchecked growth of Las Vegas is bringing tons of people to town, all of whom hear the governor and the government say "let the other guy pay"? It’s goddamn irresponsible, if you ask us.

There’s no free lunch, and there’s no free roads. We can’t wait to see what Gibbons says in a few minutes. But we’re bracing ourselves for something about magic beans.

UPDATE: The governor’s plan calls for taking room tax dollars only from the 48 percent of room tax that supports the convention authority, not from the portion that goes to support schools, local governments and local road-building. However, general fund dollars in the form of sales taxes and live entertainment taxes are used to support schools.

 

 

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