Donut Hole Death Spirals
Expanded from the 3-5-2006 Daily Sparks (Nev.) Tribune
UPDATED 4-30-2006

Several decades ago, I got a guy elected to a city council seat when he was never supposed to get there. We were outspent about seven dollars to one.

Within a year, one of my guy's citizen-supporters icily told me that she was "very disappointed with YOUR councilman."

Her gripe was about a vote proposing a parking requirement with the construction of future downtown hotel rooms. All the buzz ahead of the vote said it was going to pass unanimously. Advocates of good planning were elated.

The council unanimously killed the requirement. How could something with such popular support lose?

The awful truth: "Everybody who pays for political campaigns was in the audience," the councilcritter told me.

Not many years after the parking place vote, the City of Reno followed the City of Sparks in establishing downtown redevelopment districts.

They took the most expensive property in town and earmarked all future tax increases to be spent downtown. Sounds reasonable, right?


As the communities grew, streets, parks and schools became increasingly starved for revenue because the hole in the middle of the redevelopment donut was leaking cash down the Truckee.

I howled last week when the Reno Kazoo-Journal called the Biggest Little City's downtown redevelopment a success. Their chamber of commerce boosterism conveniently blinds them to the facts. Sparks and Reno have skimmed about a quarter-billion dollars from the general tax base and used it to subsidize the gambling industry for very marginal results.

Even His Toxicity, former Reno Mayor Jeff Griffin, admitted that when viewed in business terms, redevelopment makes absolutely no sense.

Reno has had to "loan" (har, har) general fund tax money to itself to keep its redevelopment district solvent.

The reason lies in the cockamamie way that the gambling industry has rigged property tax law. Where residences are taxed on comparable sales, casinos are taxed on cash flow. When that dips, they can apply to get their taxes lowered. This wouldn't hurt as bad if the downtown redevelopment districts hadn't used their cash flow to go into debt for which each city is on the hook.

Read more about it

The gambling industry's big tax breaks
Reno Gazette-Journal 3-2-2006

A brief history of the shell game
BARBWIRE 4-30-2006

For proof that the current casino taxing system is a shuck, look no further than values based on actual sales. The Golden Phoenix has quadrupled in value in just one year and the Reno Hilton has almost doubled.

Why aren't those sales used to reassess the rest of the big clubs which have succeeded in having their values, and thus their taxes, substantially cut?

The answer: No one has pressured government to do so.

Nobody has raised the issue until this column today.

I don’t expect this revelation to be treated with more than the usual indifference by the respective city halls and their embattled county assessor.

The Nevada Legislature further muddied the waters last year by pandering to pissed off property owners by passing a tax cap, which means that the grotesquely undervalued casinos, even if reappraised, can't have their taxes raised by more than eight percent.

On top of this are two tax limiting petitions being circulated by taxophobic right wing nuts — Sen. Robert T. Beers, R-Gomorrah South, and Assemblymember Sharron Angle, R-Reno.

So parks, schools, roads and social services will continue starve here in Mississippi West while Gov. Dudley Do-Right and our no guts legislature do things like last year's return of $300 million to some of the state's automobile owners — most of whom immediately gambled it away to the corporate welfare queens who caused the problems in the first place.

How deep is the gambling industry's contempt for the great unwashed? Last week came a big announcement of the state's first-ever gambling addiction clinic. After 75 years of pretending no problem exists, the legislature finally appropriated a piddling $250,000 for a Band-Aid to place on a gunshot wound.

As I noted last week, a bad moon is on the rise and you need look no further than your local classified ads. My own calculation showed real estate ads outpacing employment ads by a factor of more than five to one. Population growth is feeding expansion of shopping and services, but where lies the leadership to take us beyond burger flipping once construction cools?

Real estate is likewise cooling, making the bubble brittle. When it breaks, we will have little backup. Gambling is stagnant and outcompeted by the Red Man's Revenge in California.

When the next crunch comes, it's gonna bite hard and we don't seem to be preparing for it at all.

DEATH SPIRAL, PART DEUX. Last week, the Nevada Supreme Court knocked a major hole in Nevada's already porous prevailing wage law. The decision would make it harder to require that publicly subsidized projects (such as the Sparks Syufy Theatre) pay area standard wages. Sparks building trades unions finally won a decision from the Nevada labor commissioner that the Syufy job should have paid locally acceptable wages, but it came years after the place opened. Union workers on the job were compensated properly, but those employed by fly-by-night out of state contractors got stiffed.

The Supremes, with Justice Bill Maupin dissenting, ruled that even though Carson-Tahoe Hospital benefited from favorable financing by the city, it did not have to pay area-standard wages on its new palace.

In any region, the wages of the skilled trades provide the benchmark for everyone's pay. This latest in a long list of erosions of the prevailing wage law makes Nevada's lousy wages worse, another Silver State death spiral just like downtown redevelopment.

Those interested can go to a special web edition of this column wherein Justice Barbano has identified a glaring flaw in the learned majority opinion.

Why did six judges do a thing so goofy that unlearned little ole me can poke a hole in it? Please re-read the story of the parking places, above.

ON THE AIR. Join me, Sam Shad and the usual suspects at 12:30 p.m. tomorrow for Nevada Newsmakers on KRNV TV-4. Those afflicted with Charter cable can view the repeat at 9:30 p.m. on Washoe-Carson-Douglas channel 12. See the Internet edition for the complete statewide radio-TV rerun schedule.

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Copyright © 2006 Andrew Barbano

Andrew Barbano is a 37-year Nevadan and editor of Barbwire by Barbano has originated in the Daily Sparks (Nev.) Tribune since 1988.


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