Senate takes testimony on room tax plan

The Nevada Senate heard more than five hours of testimony on Monday on the voter-supported increase in Washoe and Clark county room tax rates.

In the end, they took no action on the proposal, dissolving the Committee of the Whole and adjourning for the night just after 6:30 p.m.

It was a much more detailed examination than Initiative Petition 1 received in the Assembly, where the whole process took less than an hour.

Under the initiative process set in the Nevada Constitution, the Legislature must act on the petition within 40 days of the session's start. That deadline is Friday.

Senate Minority Leader Bill Raggio, R-Reno, warned that if the senators didn't approve the plan, they would have another $292 million hole in the budget to fill.

The initiative was backed by the Nevada State Education Association and casino corporations Harrah's, Wynn and Stations. It would raise the room tax 3 percent to a maximum of 13 percent in Washoe and Clark counties and direct the money to the state.

For the first two years, the money would go to the General Fund. After that, it would be put into an account to enhance K-12 public education budgets.

Legislative Counsel Brenda Erdoes outlined the three narrowly defined options senators, meeting as a Committee of the Whole, had.

She said they could pass the petition before Friday's constitutional deadline, in which case the revenue would start coming in July 1. They could reject it, in which case it would go on the November 2010 ballot, or they could put up a competing room tax plan and ask voters to pick one.

By rejecting or challenging the plan with their own, however, no cash would be generated for the state until at least January 2011.

"If we don't enact this, then we have already a $292 million hole that we have to find a way to deal with," said Raggio "if we don't make the cuts, we have another choice and that's revenue enhancements."

He was joined by Sen. Randolph Townsend, R-Reno, who said: "If we don't pass it, no revenue is generated."

Wynn Resorts General Counsel Kim Sinatra told lawmakers the casino operators agreed to work with the teachers basically to head off the union's proposed gaming tax increase. She said gaming has been the target when the state needed revenue in the past.

"There's a lot of arguing about who's going to pay, with gaming usually the one that gets pushed out in front of the curtain," she said.

But she said Steve Wynn and the operators of Harrahs' and Stations also strongly support improving Nevada's educational system. And despite the economy, she said, they are sticking with their support for the proposal.

"We decided while this might not be the perfect platform, it's time somebody raised their hand," she said.

Sinatra said gaming would strongly object to a tax increase aimed at them.

"We need to figure out a way that is stable and fair and not industry specific," she said.

Lynn Warne of the teachers association said that group has long backed a broad-based tax to help fix the state's financial situation. She said more than 130,000 Nevadans voted for the room tax increase " two thirds of Clark voters and 57 percent in Washoe.

"They have sent a message that enough is enough; that it's time to begin a process of making public education a priority," she said.

But some senators weren't happy with the situation.

Senate Taxation Chairman Bob Coffin, D-Las Vegas, objected to the petition, saying it ties lawmakers' hands, preventing them from making any improvements because they can't amend the petition proposal, only pass or reject it.

Sen. John Lee, D-Las Vegas, objected to the fact only Washoe and Clark will see the room tax increase. He said the other counties " such as Stateline at south shore " should also be included.

The Senate is expected to act before Friday.

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