Businesses skeptical of room tax proposal

By Dave Frank

Appeal Staff Writer

Carson City businesses and officials are skeptical of a proposed 3 percent room tax increase that would raise money for the state education department.

More details of the plan brought by the Nevada State Education Association will come out soon, said Lynn Warne, president of the union, but the union would not ask to raise room tax rates higher than 13 percent.

Carson City's room tax rate is 10 percent, so it would go up the full 3 percent under the proposal. Washoe County's general rate is 12 percent, so it would go up 1 percentage point. Downtown Reno's room tax rate is already over 13 percent, so it would not be changed.

But room taxes have been traditionally used to promote tourism, said Carson City Visitors' Bureau Executive Director Candy Duncan, so this proposal might not be the best for Carson City.

The money the visitors' bureau raises through the room tax now goes to the general convention fund, state tourism, the V&T Railway and parks projects. In fiscal year 2006, it raised about $1.5 million from the 1,700 rooms in the city. The additional 3 percent education tax would raise about $450,000.

David Friedrich, owner of the 85-room Hampton Inn in Carson City, said he's disappointed the teacher's union is singling out hotels.

The union had considered pushing for a tax on casinos, but reached an agreement with some Las Vegas casinos to support the room tax plan.

But hotels like the Hampton Inn won't be able to absorb the cost, Friedrich said, so they're going to have to pass it on to customers. It would cost travelers a few dollars extra per night, but it will add up and people will notice "they're getting nothing in return" for the extra charge, he said.

Brian Smith, general manager of the Carson Nugget, agreed that costs would be passed onto the hotel's customers.

If the plan is approved, there needs to be accountability for how the money is spent.

Lynne Keller, general manager of the Gold Dust West, said she's happy the union dropped its plan to raise gaming taxes, but isn't sure what the effect will be on her casino's 146-room hotel.

The rate also might hurt the chances of the visitors' bureau to raise rates in the future that would support tourism in the city, she said.

That state needs to be careful with this plan, said Van Heffner, president of the Nevada Hotel & Lodging Association, because it shouldn't take support away from the industry.

"Tourism is the engine of Nevada and we need to keep it healthy," he said.

The union plans to put the proposal on all counties' ballots as an advisory question in November. After that, it would go to the Legislature for approval.

• Contact reporter Dave Frank at dfrank@nevadaappeal.com or 881-1212.