Gov. Jim Gibbons on Thursday produced a plan to use revenue from hotel room taxes and entertainment levies to finance two-thirds of the state's $3.8 billion shortfall in highway construction funds - and immediately ran into strong opposition.
The governor, who is opposed to raising taxes, proposed taking only additional, growth-driven revenue generated by existing room taxes. Included in the plan are diversions of part of local government room tax collections and vehicle sales tax collections.
"No one is going to be happy about having to give up a little portion of their revenue increases, but I think that's what makes this an acceptable plan," Gibbons said, adding that there's still enough time left in the legislative session to pass it. Lawmakers must adjourn by June 4.
The governor's plan would reallocate about $424 million a year from Las Vegas-area room taxes for use on road projects in that area over the next eight years. Another $360 million a year would come from statewide vehicle sales taxes and live entertainment taxes for statewide road projects.
The money would be used to finance about $2.5 billion in bond revenues to cover costs of the highway projects. The plan also calls for a cost-benefit analysis on each project.
Critics of the plan included Las Vegas Mayor Oscar Goodman, who
said Gibbons' proposal "appears to be driven by politics since it is not based on sound fiscal policy."
"To change a successful formula without addressing the ramifications of change is irresponsible," Goodman added.
Bill Bible, head of the Nevada Resort Association which represents most major hotel-casinos, said his group is "resolutely opposed to raising or reallocating room taxes to pay for transportation improvements ... as proposed by the governor today."
Rossi Ralenkotter, head of the Las Vegas Convention and Visitors Authority, also opposed the tax revenue shift, saying the current distribution of the room taxes allows the authority and its resort partners to "aggressively market" the Las Vegas area.
Redistributing the room taxes would "negatively impact our entire southern Nevada economy," according to a resolution approved by the authority's directors.
Rob Stillwell of Boyd Gaming termed Gibbons' plan to divert funds from the visitors authority "a shortsighted maneuver that will jeopardize our community's long-term growth."
Paul Enos of the Nevada Motor Transport Association, representing truckers, praised the plan's inclusion of a cost-benefit analysis for road projects. Enos has criticized other proposals such as a weight-distance tax of 15 cents per mile for all rigs weighing more than 55,000 pounds.
Don Vetter of the Nevada Highway Users Coalition, said he hoped there was enough time to consider Gibbons' plan but added, "Realistically, I think there might not be enough time."
Vetter also said Gibbons' plan is still $1 billion short of what's needed. He added that a blue-ribbon task force has numerous other proposals for generating the needed road-building funds. Those proposals are included in SB324.
Assembly Majority Leader John Oceguera, D-Las Vegas, criticized
Gibbons for the "us versus them" argument the governor used in
promoting his proposal, and also questioned the idea of reallocating taxes that now directly benefit the gambling industry.
"Everyone should have a little part, but to direct this directly at the economic engine of our state doesn't make a whole lot of sense," Oceguera said.
Legislative leaders had been meeting behind closed doors with the governor and his aides in an effort to come up with a solution to the transportation funding shortfall.
But Oceguera said that when Gibbons decided to unveil his proposal "we weren't invited to this party. It's pretty hard to come up with a consensus plan when you don't invite the other side."
(Copyright 2007 by The Associated Press. All Rights Reserved.)