Stabbing the taxpayer on the Ides of March

Expanded from the 3-17-1999 Daily Sparks (Nev.) Tribune

CARSON CITY - On Monday, the Ides of March, I joined the faithful in journeying to the hallowed place where senators gather. Like Julius Caesar before us, we got stabbed.

The measure at hand was Senate Bill 255 and the leadoff witness was Sen. Bill Raggio, R-Reno, gaming licensee, ex-DA and the baddest of the badasses in Carson City.

SB 255 was supposed to be such a slam dunk that the media stayed away in droves. Understandable. The entire Washoe County delegation has sponsored the bill and lawmakers will always defer to their colleagues on a local-interest measure. Several Reno-Sparks lawmakers have muttered about being strongarmed to sign on, risking the death of all their bills if they did not.

Besides, as Badwater Bill told Assemblyman Doug Bache, D-Las Vegas and the rest of the Assembly Committee on Government Affairs, SB 255 is no more than a housekeeping measure. Raggio even proposed making it more benign, requesting a change to "amend the title of the bill by deleting 'revising' and inserting 'clarifying.'"

Why, it's not really a bill at all. It doesn't even revise. It just clarifies. Clarifying seems to be big among the big boys of the gambling-industrial complex. Las Vegas egomaximo Steve Wynn has asked for a measure to clarify his 1997 tax loophole. Such clarification would cost Nevada school children millions a year to subsidize Wynn's casino art collection, a pittance toward improving the cultural climate of a high class grind joint.

Georges Orwell and Carlin would both salute such linguistic shuck and jive, largely because nothing could be further from the truth. As with melted butter, the casino kind of clarifying greases the skids to rip off the great unwashed to the benefit of our betters.

Sen. Maurice Washington, R-Sparks, was particularly miffed when the editors of the Daily Sparks Tribune disclosed that he broke a major campaign promise by supporting SB 255.

"The bill is needed — and our alleged defender of the people's pocketbooks is sponsoring it — because a lawsuit is currently waiting to be heard at the Nevada Supreme Court that threatens to topple an illegal sales tax rammed through the Washoe County Board of Commissioners at the behest of downtown casinos that run the City of Reno," stated the Tribune editorial of March 7.

"The tax is corporate welfare at its worst and it's dirty to boot, the Tribune asserted.

"According to the 1997 law that made this tax possible, more than half of the funds for the (Union Pacific downtown Reno railroad) trench had to come from non-tax sources. The City of Reno shuffled its books to make it look like it had the needed non-tax funding, but the lawsuit pending at the Supreme Court threatens to reveal Reno's deception and force the repeal of the tax," the Tribune said.

"SB 255 changes the 1997 law so that Reno no longer needs to get half its funding from non-tax sources. By sponsoring this bill, our alleged no-tax senator is cramming an unpopular tax down the people's throats even as area citizens and businesses make positive steps toward repealing it.

"Washington's hypocrisy is appalling. Only a few weeks ago, the senator used the Taxpayer Protection Pledge to justify his opposition to North Las Vegas Sen. Joe Neal's proposal to raise taxes on the state's most profitable casinos...but Washington tells a different story when it comes to a sales tax on the people of Washoe County. In his mind, apparently, it is the people's responsibility to pay for a casino welfare project," the Tribune concluded.

I pointed out to the committee that Washington was not alone in breaking the no-tax pledge.

"Senate Bill 255 is a retroactive rubber-stamping of whatever action, legal or illegal, which City of Reno and Washoe County officials took last year to ram through a sales tax increase without a vote of the people," I said.

"Every member of the Washoe delegation who signed onto this thing should re-evaluate that support, especially those who signed the Taxpayer Protection Pledge and promised 'to oppose and vote against any and all efforts to increase taxes.'"

Signers of that pledge may be found at the Americans for Tax Reform website at That page lists the following as signatory: Rep. Jim Gibbons, R-Nev., State Controller Kathy Augustine (R), state senators Washington, and Rawson, R-Las Vegas; assemblymembers Goldwater, D-Las Vegas, Neighbors, D-Central Nevada, Berman, R-Las Vegas, Gustavson, R-Sun Valley, and Von Tobel, R-Las Vegas.

Assemblywoman Sharron Angle, R-Reno, interviewed in the June 8, 1998, Daily Sparks Tribune, advocated voter approval of all state tax increases.

Rebutting the Tribune editorial, Sen. Washington wrote that SB 255 "clarifies the original intent of the measures passed in the 1997 Session. I voted against the quarter-cent sales tax increase but it passed without my approval. (I hate it when that happens!)."

But apparently not enough to fix it when the opportunity presents itself.

Only two reporters attended the Ides of March hearing, Tribune writers Willie Albright and Dennis Myers, who was present on behalf of KOLO TV-8. (Mr. Myers writes a weekly freelance column for the Tribune, as do Sen. Washington and myself.)

"Sen. Bill Raggio, the primary sponsor of Senate Bill 255, told the committee the bill is merely intended to clarify that one percent of the room tax collected in downtown Reno is part of the funding package required of the city under previous legislation. But critics of the bill called it an effort to head off a lawsuit pending in the Nevada Supreme Court. That suit, on appeal after being dismissed by a Washoe County judge, contends that $60 million in land and support offered by Union Pacific Railroad to Reno contains wildly inflated land values that don't meet the required non-tax funding for the trench," Albright wrote.

"If the financial requirements of Reno have not been met, the lawsuit argues, the sales tax increase enacted by the Washoe County Commission is invalid and should be revoked. SB255, however, says Reno's promise that it has the needed funds adequately fulfills the city's financial requirement. The bill also makes it impossible to repeal the tax increase until any bonds are paid off," Albright, a longtime reporter for American Public Radio, noted.

"Attorney Glade Hall, who has brought the lawsuit's appeal to the Nevada Supreme Court, said the bill seeks to invalidate the appeal, so SB255's defeat would have an important impact on the sales tax," Albright reported.

"'If the Nevada Supreme Court does not agree that a bald commitment by the City of Reno meets the intent of the original legislation, the question goes back to the county commissioners for a new vote,'" Hall told the committee.

Representatives of the City of Reno, downtown business organizations and casinos all said the project is desperately needed to save Reno's central core.

"We're afraid we're going to lose a couple more casinos if we don't do this," said attorney Harvey Whittemore, the gambling industry's chief lobbyist who also represents Steve Wynn's attempt to clarify the art tax loophole.

"This must happen!" said Greater Reno-Sparks Chamber of Commerce representative and former Reno council member David Howard.

"The threats are well documented. Northern Nevada is in trouble. This will help get it out." Howard added.

"This bill simply clarifies how that money is going to be spent," he noted.

At that point, Assemblywoman Sandra Tiffany, D-Las Vegas, got to the heart of the matter.

"Are you satisfied that the project is well thought out and will not disrupt business?" Tiffany asked.

"We must revive business in the downtown core. This is our last chance," Howard replied.

Tiffany noted how construction to re-establish the Los Angeles Transit System had torn up streets and damaged small operators. "Are you confident this will help small business people?" she asked Howard.

"Yes, I am," he responded.

Reno Mayor Jeff Griffin said the bill only makes "technical changes" and would "save citizens of Washoe County millions of dollars."

Jack Fetters of the United Transportation Union expressed support for the project.

"We see it as a safety issue. Anytime you take the public away from the tracks, it's a good idea," he noted. The UTU represents 300 Nevada locomotive engineers, conductors and trainmen.

Retired Army Brigadier Gen. Frank Partlow, who represents several large Reno business interests and writes a column for the Reno Gazette-Journal, echoed Fetters on safety issues. He told the committee that "there won't be any accidents, deaths or delays" if sufficient funding is put in place for the railroad track depression.

When my turn came, I brought forth points from a speech given last year by Mark DeMuth, Reno's consultant on the project, who was present.

Union Pacific intends to triple the number of trains through Reno-Sparks at double the current speed. The 2.1 mile trench represents a mild safety precaution to contain a toxic or nuclear spill which everyone agrees will one day happen.

I think the trench is merely the latest ill-advised monetary hemorrhage aimed at curing the deficiencies of an inbred, infighting private sector. This year's Band-Aid is the new downtown Reno Regal Theater complex, a heavily subsidized project which even Mayor Griffin has admitted cannot make money. (See "How to steal a movie and a theater to show it.")

Five years ago, the cure-all was the National Bowling Stadium. Poorly designed and managed, it went 100 percent over budget and remains unfinished.

The tenpin temple was rushed to completion under a "design-build" construction program. Basically, that means plan it on the fly. On Sept. 20, 1992, I exclusively published a design-build warning issued by the Northern Nevada Chapter of the American Institute of Architects. They proved painfully predictive.

The bowling stadium cost went from $27 million all the way to $57 million-plus and still counting. Apparently, we're supposed to have forgotten that one.

Design-build is not only costly, but also apparently illegal, something no one knew till now.

Senate Bill 437 was quietly introduced on the Ides of March. No one noticed it in the crush of last-minute filings. It's a long measure, retrievable at the legislative website. It legalizes design-build construction on public works jobs.

The most significant provision appears on the very last page detailing the law which it repeals. Nevada Revised Statues 341.171 (2)(c) now mandates that "the bidding and awarding of contracts for the design and construction of projects (shall be) based on a final cost of the project which the contractor guarantees will not be exceeded."

Translation: Pass SB 437 and the sky's the limit on the railroad track depression, especially since it's only the taxpayers who will get stabbed for the tab. The actual sticker price won't be known until 2001 at the earliest. That's when environmental costs will be factored in, according to former Reno Councilwoman Candice Pearce (Reno Gazette-Journal 12-8-98).

Railroad construction consultant Bill Dickerson told the committee that the current plan "grossly underestimates the costs."

The project is supposed to fold if it exceeds the current $192 million projection. Dickerson conservatively estimated that the price tag will total between $300 million and $400 million and perhaps much more. He noted serious unresolved issues involving land condemnation, resultant lawsuits, property reverting to either Union Pacific or the federal government and congressional action needed to remedy some of the problems.

"If work on the trench is not started in four years, all the property put in escrow for the city by Union Pacific Railroad will be forfeited, leaving the taxpayers to make up the $60 million difference, Dickerson said," according to the Tribune report.

Once again, Assemblywoman Tiffany's words may prove prescient. The construction zone may indeed become a graveyard for many businesses and lobbyist Whittemore's prophecy may become self-fulfilling. The Reno Flamingo-Hilton is not running at a profit. The thin margins of the trackside Sands Regency and Fitzgerald's hotels are well-known. A multi-year construction nightmare could doom such marginal operations for a project which, when completed, won't make downtown Reno any more attractive.

It will, however, give Union Pacific an extra layer of protection from lawsuits when the Big Spill finally occurs. Which is the whole idea.

We really shouldn't blow all this public money covering for a corporation which counts its profits in billions.

Washoe County lawmakers who support SB 255 and SB 437 will find themselves facing a mad-as-hornets electorate next year. Not only are Reno-Sparks residents incensed over not being allowed to vote on the track tax increase, the design-it-on-the-fly bill (SB 437) carries a front-page warning of another potential tax hike.

Ironically, that's the one good thing that's happened. The tax increase contained in section 13 of the measure, although not readily apparent to the average reader, at least triggers the legal requirement necessitating a two-thirds majority of each house for passage. This diminishes SB437's chances of becoming law.

Just as the infamous 300 percent legislative pension increase prematurely ended a lot of careers in 1990, this boondoggle could provide instant replay.

Union Pacific has played Nevada for suckers. Grandchildren yet unborn will have to pick up the marker.

Be well. Raise hell.


Additional references:
Several speakers at the Ides of March hearing complained of poor media coverage of this issue. For further information, go to "Corporate Pinocchio" or "The Reno Gannett-Journal railroad job" | U-News
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Copyright © 1999, 2004, 2006 Andrew Barbano

Andrew Barbano is a member of CWA Local 9413. He is a 30-year Nevadan and editor of U-News. Barbwire by Barbano has originated in the Daily Sparks, Nev., Tribune, since 1988. As always, his opinions are strictly his own.

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