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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.
[PREPARED REMARKS AS READ INTO THE RECORD]
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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