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The Fight to get Nevada casinos to pay a fair share

Dear Reader:

Here is my testimony from March 9, 1999, in support of Sen. Joe Neal's measure to raise the gross gaming tax. The North Las Vegas Democrat has said that if the bill is killed, he will take the issue to the voters, only with a higher ante. Senate Bill 88 calls for a two percent hike on the state's most obscenely profitable casinos. The initiative will mandate three percent or perhaps more. SB 88 proposes to add a new top tier to an already progressive tax schedule, holding harmless all casinos grossing less than $1 million per month.

A recent poll showed growing support for the gross gaming tax increase. Favorability now stands at 80 percent, its highest level ever in Clark County/Las Vegas, up from 71 percent in the fourth quarter of 1998. (Go to "Poll renews focus on gaming's share of tax load," by Jeff German, Las Vegas Sun, 3-18-99.) The annual University of Nevada poll has shown consistent support at about 69 percent statewide. (See "Payback time for the gambling-industrial complex.")

I found it ironic that the day this measure was heard coincided with the 158th anniversary of the U.S. Supreme Court decision which freed the African prisoners who arrived in this country on the Spanish slave ship Amistad.

March 9, 1999

Testimony of Andrew Barbano before the Nevada State Senate Committee on Taxation regarding Senate Bill 88

My name is Andrew Barbano. I reside in Reno and have lived in Nevada for 30 years. I represent Casinos Out of Politics, or COP.

[The following section is a reconstruction from my notes of what I said in rebuttal to the gambling industry's presentation before I read my prepared remarks into the record.]

Near as I can tell, the poor gaming industry can't even afford carpet unless we cut your taxes. [NOTE: This comment came in response to a Nevada Resort Association assertion that a tax hike would severely limit available capital for reinvestment in such things as new carpeting.]

I have a couple of interesting headlines with me today. The first is Jon Ralston's column from the February 8, 1999, Reno Gazette-Journal entitled "Neal's tax bills going unnoticed." Looking around the room today, I would venture to say that that is no longer the case.

The other headline I want to call to your attention is this full color front page entitled "Tax Revolt" from the Reno Gazette-Journal of Sunday, December 8, 1998.

"Rising property tax assessments may be whipping Washoe County citizens into a tax revolt," it says. This had direct bearing on my recent presentation to the Senate Committee on Government Affairs in support of SB 86 (the Casinos Out of Politics bill) and weighs heavily upon what I will say in just a moment.

Before I get into my prepared remarks, please allow me to correct some of the statements brought before this committee by the Nevada Resort Association.

First, the Nevada Resort Association is correct that Native American casinos are not subject to the National Labor Relations Act, although some California tribes are now negotiating contracts with my union, the Communications Workers of America.

It is certainly nice to see Mr. Trounday (Roger Trounday, former chair of the Nevada Gaming Control Board) and his colleagues warmly embrace the National Labor Relations Act when the members of the Nevada Resort Association have long been among the most flagrant violators of that very law when it comes to their own workers.

I have worked on union organizing campaigns at the two Hilton properties in Reno. In 1995, the Reno Hilton was found guilty of 66 violations of the National Labor Relations Act by the National Labor Relations Board. The Reno Flamingo Hilton was found guilty of illegally firing its laundry and bakery workers as part of a union-busting campaign.

Earlier this decade, John Ascuaga's Nugget in Sparks, Mr. Trounday's own employer, had to post the "I will go and sin no more" notice on its bulletin board for illegally violating employee rights. Circus-Circus in Reno has busted out its union security guards. Last September, the Reno Hilton was found guilty of illegally firing its security guards. They were ordered to rehire the workers and give them full back pay and benefits. They are still paying lawyers major money instead of paying what they owe their illegally fired employees.

And I don't need to start telling stories about the Venetian, the Santa Fe and Frontier in Las Vegas.

Next, you need to know that page 14 of the Nevada Resort Association presentation was used by Circus-Circus Vice-President Mike Sloan when he addressed the joint judiciary committee hearing in this building a couple of weeks ago. The page entitled "gaming's return on equity vs. other industries" cites as its source the December 28, 1998, edition of BusinessWeek.

The first three lines are correct and can be found in that periodical. Telecommunications enjoyed a 1993-1997 earnings growth of 18.6% and a 25.1 % return on equity. Banks and "discount and fashion retail" are shown, respectively, at 15.1%/15.5% and 18.4%/13.4%.

However, the category of gaming appears nowhere in the article. I can find no place which gives "gaming" a five-year earnings growth of 10.2% and a mere 3.3% rate of return on equity.

There is a category called "leisure time industries" showing 11.2%/25.2%. A category called "entertainment" includes three or four Nevada resorts and other companies such as Walt Disney and Viacom. It shows 16.1% and 4.3%. "Hotel & motel" contains only two companies, Hilton Hotels and Marriott International, for a combined 15.2%/10.7%. The only other segment of the category is "other leisure" with firms from Eastman Kodak and cruise lines to Harley Davidson and Polaroid. It shows a five-year earnings growth of 3.3% and a whopping rate of return of 43.1%. But I could find nowhere in that edition of Business Week any numbers close to those presented by the NRA before this body.

I did not think I would be using this material today and did not bring enough copies for the entire committee, but I have given a copy of the pertinent pages to the commitee secretary.


Senate Bill 88 represents modest and long overdue relief for the taxpayers and homeowners who have long been subsidizing the gambling industry.

We have heard just about anything used as an excuse as to why this poor, beleaguered enterprise can't afford a dime. In the 1970s, Atlantic City was to reduce them to hustling loose change under the boardwalk. In the mid-80's, Mississippi crocodiles were wet with tears shed over riverboats, many of which Nevada companies invested in.

The Reno Riverboat Hotel-Casino used the passage of Proposition 5 to ignore federal law requiring them to give employees 60 days notice of their closure. Their workers were fired on the spot just before Christmas. More than 100 have filed suit in federal court. (See "Riverboat Casino Pours Water on the Drowning".)

There's always a great excuse available. With El Nino gone, Native American tribal gambling provides the latest shield against equalizing the taxation of this plantation.

As the price of gold goes down and the price of gas goes up, can we blame that on tribal gambling, too?

The public is righteously indignant. More than $379 million has been taken out of the property tax base of Reno and Sparks for casino-promoting downtown redevelopment projects. More than $290 million has been likewise lifted from the Las Vegas tax base. (Source: "Nevada Dept. of Taxation, Fiscal Year 1998-99 Ad Valorem Tax Rates for Nevada Local Governments" aka "The Red Book")

[ADDED ORALLY AS AN ASIDE: Las Vegas may be ahead of us in many other ways, but in this category, Reno and Sparks are still number one.]

Convention and visitors authorities take in well over $100 million a year in room taxes. Those revenues have for decades been skimmed to casino promotion.

A history prepared by the Reno-Sparks Convention and Visitors Authority in 1997 summarized "community projects" funded by the entity from 1965. Of $114.78 million, the biggest single item---$48 million or 42% involved construction of a 100% cost overrun called the National Bowling Stadium, the worst casino subsidy ever foisted upon the taxpayers of Washoe County until the sales tax to depress the Union Pacific Railroad Tracks came along. Most of rest also went to industry promoting programs and buildings. The numbers are attached.

How much profit is enough? Whenever profits don't meet projections, Reno casinos petition to have their property taxes reduced. This is especially ironic given the impact of the gambling industry on property taxes.

As former Common Cause Nevada chair and Nevada Council of Senior Citizens Trustee Orland T. Outland has noted many times over the years, the taxpayer subsidies granted to the gambling industry act as a backdoor income tax on homeowners and renters. Mr. Outland could not be here today but has authorized me to quote his analysis in this presentation.

Downtown property taxes, for example, are used to stimulate downtown growth. But the impact of those new jobs is not paid for because ad valorem-based revenue increases stay downtown to promote casinos. Non-downtown taxpayers are thus left to subsidize parks, schools, roads, police and fire protection. As people live in homes commensurate with their incomes, their property tax hikes act as a backdoor, de facto income tax.

In the upcoming biennium, gambling taxes are projected at about $1.1 billion of a state budget totaling more $14 billion. That's less than eight percent. The gambling-industrial complex arrogates huge amounts of corporate welfare to itself simply because it can. Too much is never enough.

Now, thanks to the Gibbons Tax Restraint Initiative, it will take a two-thirds vote of each house to repeal the Steve Wynn art tax and casino lucky bucks tax loopholes passed in 1997.

It is thus quite understandable that a latter day version of California's Proposition 13 (AJR17) will be considered in this session.

Property owners, myself included, are dissatisfied with the answers given to the property tax spiral.

Municipalities are caught between the surging tide of growth and shunts in their revenue stream to accommodate that growth.

You will find these issues discussed in more depth in my newspaper column, attached herewith, entitled "The Zero-Based Tax Initiative."

To make up the difference in Nevada's corporate welfare programs, Nevadans pay higher and higher property taxes and hidden taxes on many necessities. That's why our gas prices are usually far higher than the rest of the country.

I have attached a compilation of tax and fee increases imposed since the 1981 Tax Shaft. It was developed by the ultra-conservative Nevada Policy Research Institute. [Heller, Ralph, "The Bryan Miller Legacy They'd Prefer You Forget," February, 1999, "Nevada Journal", page 9, Nevada Policy Research Institute.]

I have further attached a tax chart from a business-oriented think tank called the Tax Foundation. These are the people who publicize tax freedom day every year.

They openly admit that they "impute all taxes to individuals" in making their calculations. Even they could not jockey the truth to corporate advantage when it comes to Nevada.

Their chart, based on 1996 numbers, shows sales and use taxes generating 54.4% of Nevada state taxes; motor fuels generate 6.8% and "all other" responsible for 28%. "All other" would include the state's third largest general fund revenue contributor, the insurance premium tax, and many of the smaller items on the NPRI chart. It would also include the gross gaming tax.

Nevada's tax collections ebb and flow with the economy. Regressive sales and use taxes last year surpassed gaming taxes. Nevada's freshman governor and top gambling executives, echoed by an increasing chorus of news media, have called for a "more stable" tax base. The most often mentioned alternatives involve re-imposing the sales tax on groceries or hiking residential property taxes.

On May 25, 1989, Las Vegas Review-Journal columnist John L. Smith wrote of the three rules of Las Vegas life: (1) Growth is good, any growth, all growth. (2) Children are little and neither gamble nor vote. (3) Casinos don't cause problems, they solve them.

A decade later, the truth is obvious: casinos are the problem. If you move this bill to the floor, you've taken a small step toward uplifting us back toward statehood and away from our current status as a company town. If you don't, you've poured gasoline on the fire for reform fueled with forests of petitions in November Y2K.

I urge you to send this bill to floor so that it can be fully debated.

As the old oil filter commercial used to say, you have two choices: pay me now, or pay me later.

Please pay attention.

Thank you very much.

Be well. Raise hell.






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