Princess Cassandra, crystal balls and bankers


Jesus of Nazareth once said that a prophet goes without honor in his own country. He proved quite right and paid the prophecy price. So did his cousin, John the Baptist, and their soul sister, Princess Cassandra of Troy.

The old First National Bank of Nevada used to publish an annual forecast every January 1, but stopped in the early 1970s. One New Year's weekend, the Reno Evening Gazette ran the predictions under an ominous headline: "Banker Predicts Slump".


The text of the report was much milder than the title, but the damage was done. Local chamber of commerce types apparently starting sharpening the guillotine blade for a little Cassandra party. The bank axed future reports.

It took two decades for someone else courageous enough to step forward and risk the slings and arrows of outrageous critics.

With all due respect for such ambitious Caesars of soothsaying, I come to both praise and bury one Robert N. Barone, CEO of Comstock Bank.

Each quarter, he publishes an economic review and forecast, the most recent of which made the news last week.

"We have argued that the advantageously low tax environment in Nevada is due to the gaming and tourism industry," the gentleman opens, leading with his chin.

Low taxes for whom? In Mr. Barone's previous quarterly report, he stated "Nevada's low tax environment is northern Nevada's primary economic attraction for business and people to relocate."

Given Nevada's regressive tax structure, that only holds true for companies and upper-income individuals. As with the federal government, our state and local entities enrich the corporately wealthy at the expense of us, the great unwashed.

In the past two Nevada legislative sessions, the gambling-industrial complex has facilitated tax increases on everyone but itself.

Last February, former Daily Sparks, Nev., Tribune columnist Ralph Heller and his fellow travelers at the conservative Nevada Policy Research Institute published a compilation of state tax rankings.

"Nevada's high 'per capita tax burden' — seventh highest among the states for federal taxes and sixth highest when it comes to state and local taxes — comes as little surprise to those who are familiar with comparative taxes," Heller wrote.

"Nevada's state sales tax, state gasoline tax, insurance premiums tax, automobile registration fees and more are all substantially higher than comparable taxes and fees in most states. And Nevada then adds to the tax burden by being one of only 23 states to levy county sales taxes on top of its state sales tax, one of only 13 states to levy county gasoline taxes on top of its state gasoline tax, and one of only six states to tax insurance premiums," Heller noted.

Where should we fall if we really fit Mr. Barone's low-tax assertion? Down around 46th, Alaska's position. The 49th state has its own version of the gambling industry, BigOil. Royalties from petroleum exploration have been so lucrative that citizens have enjoyed an annual check from the state.

"In 1980, the (Alaska) Legislature abolished the income tax. And two years later, the state began paying each qualified Alaskan (an) annual dividend from the permanent fund -- $1,540 this year," the Associated Press reported on Dec. 27, 1998. Nevada has never had an income tax.

Of the 10 lowest-tax states, seven plus on-the-cusp Oklahoma are from the south. Alaska and Wyoming (no. 44) round out the list.

What's the difference between the Cowboy State and the Silver State? I submit that Wyoming has not suffered as we have from corporate casinos politically shifting the growth burden onto lower- and middle-income families.

Only New York, Connecticut, New Jersey, Minnesota and Hawaii outranked Nevada in per capita state and local taxes for 1997, according to the Tax Foundation. We even stood higher than notoriously (grrr...) liberal Taxachusetts, which ranked eighth. Jesse Ventura became Minnesota governor pledging no new taxes and now talks tax cuts.

As Sen. Joe Neal (D-North Las Vegas), pointed out last year, Nevada casinos really don't pay any taxes at all. They not only enjoy the lowest rates in the nation, but anything paid to state or local government is fully deductible on a federal income tax return.

"Our position is simple," writes banker Barone, "we believe that public policy should be used to promote the growth of those industries that pay the taxes, namely gaming and tourism."

Mr. Barone has apparently missed it, but Nevada public policy has long been thus abused. By shunting property taxes toward corporate welfare projects like downtown redevelopment districts, Reno and Las Vegas have gone tap city. As a ploy to keep a faltering project afloat, Gomorrah South declared the downtown LV Fremont Street Experience a public park.

Mr. Barone himself rightly criticizes Reno's riverfront movie theater program as "(sapping) the region's cash cow while contributing little towards encouraging continued or new patronage from tourists."

Long before the city-subsidized project got underway, Reno Mayor Jeff Griffin admitted that the Truckee Meadows was overbuilt with movie houses.

The City of Reno put all its chips on the downtown theater project and has no more property tax revenue to spend. The Reno-Sparks Convention and Visitors Authority went insolvent under former boss Jay Milligan and now regularly includes borrowing for operating expenses in its budget. Reno and Las Vegas suffer woefully deficient park systems because room tax money has been diverted to gambling and tourism advertising and promotion.

Mr. Barone blasts a proposal to increase room taxes for expansion of the south Reno convention center because it does not consider a new downtown facility. He also slaps the ongoing skimming of room taxes by the Sparks-Reno and Las Vegas convention authorities. He has harsh words for the recent sales tax increase to lower downtown Reno's railroad tracks.

"In the absence of seriously addressing major issues confronting its business future, Reno's growth prospects remain clouded...we also see no substantive public sector commitment to (downtown economic redevelopment)," he concludes.

I'd like to have that lack of commitment in my pocket. Taxpayer-funded corporate welfare to subsidize gambling and tourism already amounts to several hundred million dollars every year.

To borrow Mr. Barone's phrase, we should apply "fundamental principles of maximizing return on investment." I agree, but in order to do that, the public must first take back control of its own money.

Mr. Barone erroneously calls gaming taxes "the state's primary general fund revenue source." His own report notes that 1997 gambling-related tax revenues totaled less than a third of the money brought in by other levies such as sales, excise, gasoline, and sin taxes. The gross gaming tax actually fell to fourth among state revenue sources last year.

"In the end, we place the blame for the lagging of the tourism industry in downtown Reno squarely on the shoulders of the major casino properties and their owners, government leaders and redevelopment managers, and an apathetic public," he asserts.

That merely documents the obvious. When someone's willing to cut a few steaks off the sacred cow, I applaud. But how about some cooking instructions? What does Mr. Barone suggest? Other than a downtown convention center, he seems to favor approval of the Beverly Hillbillies/Park Lane hotel project and that's about it.

I've long had a better idea on the record: zero-based taxing. It will complement incoming Gov. Kenny Guinn's promise of zero-based budgeting.

Nevada needs to fold its wasteful earmarked empires like downtown redevelopment agencies, convention, airport and transportation authorities. All such moneys should revert to county general funds for disbursement based on currently justified needs - zero-based taxing followed by zero-based budgeting. This enhanced accountability will free plenty of money for both tourism promotion and community improvement.

I highly recommend that you call the bank for a copy of Mr. Barone's report (prepared in collaboration with Gary Horton. You may phone Ms. Shelly Bay at the bank's executive offices, (775) 824-7292 or (800) 828-0377. You may also retrieve the document here.

Read their work along with back issues of this column and you will have a fair idea of the new, progressive direction in which Nevada must proceed - although, as I noted last Sunday, it will probably take an initiative petition to make zero-based taxing happen.

Happy New Year.

Be well. Raise hell.


© Andrew Barbano

Andrew Barbano is a member of CWA Local 9413. He is a Reno-based syndicated columnist, a 30-year Nevadan, editor of U-News and was campaign manager for Democratic candidate for Governor, State Senator Joe Neal.
Barbwire by Barbano has appeared in the Sparks Tribune since 1988 and parts of this column were originally published 1/3/99.

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