Assembly passes room tax hike

With fully half the Republican caucus joining the majority, the Nevada Assembly on Tuesday passed the initiative petition increasing the room tax rate by 3 percent. The vote was 35-7.

The voter-approved petition would raise room tax rates up to 3 percent in Clark and Washoe Counties and, for the next two years, put the cash in the state General Fund. After that, the money would go to a supplemental fund to augment the K-12 education budget.

Ways and Means Chairman Morse Arberry, D-Las Vegas, praised the bipartisan cooperation in handling the issue, saying lawmakers have to make hard decisions and "today is one of those days."

"I don't like this bill at all," said Republican Tom Grady of Yerington. But he said he is trying to save three mental health clinics in his district.

"If we don't fill this hole, we will lose those clinics," he said.

"My constituents voted for this and I represent them," said Boulder City Republican Joe Hardy.

Lynn Stewart, also a Southern Nevada Republican, echoed Hardy's comments.

But James Settelmeyer of Gardnerville said he too was voting the way his district wanted him too. That district includes north shore Tahoe communities including Incline Village which voted " narrowly " against the initiative.

He was joined by fellow Republicans Ed Goedhart of Amargosa Valley, Ty Cobb and Don Gustavson of Reno, John Hambrick, Richard McArthur and Chad Christensen of Las Vegas.

Minority Leader Heidi Gansert of Reno pointed out that the proposed room tax was supported not only by voters in the two counties that will pay it but "by a very conservative governor."

Gibbons included the estimated revenue from the room tax increase in his proposed executive budget.

Gansert said sitting on the Ways and Means Committee has also convinced her the money is essential.

"After going through these budgets, I don't know where we're going to find another $292 million," she said.

That is the amount the Budget Office projects the tax increase would generate over the biennium.

But legislative fiscal experts said they fear the actual revenue raised will be significantly less. LCB Economist Russell Guindon told the Assembly his estimate is $233 million " a $58 million difference " and the consulting firm of Applied analysis projects about $2 million below that.

The reason, he testified, is that the initiative cannot raise room tax rates above 13 percent. That means Reno and Sparks will generate no added revenue because their rate is already 13.5 percent and unincorporated areas of Washoe County are at 12 percent. In addition, Las Vegas hotels with more than 75 rooms are already at 11 percent, leaving them just 2 percent under that cap.

Because Washoe is already pretty much at that cap, all but a couple of million raised by the initiative will come from Clark County " nearly all of it from the Las Vegas Strip.

Gansert said after the vote that Republicans worked with Democrats on the petition issue because "our constituents expect us to be at the table."

Stewart added that the bipartisan vote should help ensure that and possibly, "give us a bargaining chip" in future tax and revenue discussions.

The petition goes to the Senate which has until March 13 under the constitution to act on the measure. To pass it by a two-thirds majority, Democrats there must attract at least two Republicans supporters.

- Contact reporter Geoff Dornan at gdornan@nevadaappeal.com or 687-8750.