Gibbons going it alone

Gov. Jim Gibbons’ most ambitious trial balloon has floated like a lead zeppelin among the powerful members of the business community.

The governor’s proposal to divert room tax revenue from the Las Vegas Convention and Visitors Authority to road construction has drawn ire from a spectrum of interests.

The Las Vegas Chamber of Commerce opposes the idea, as does the Nevada Resort Association. Most of the major resort companies — MGM Mirage, Station Casinos, Harrah’s and Boyd Gaming — can’t stomach the idea.

On Gibbons’ side is Las Vegas Sands Corp.

Gibbons and his defenders say he’s defying the special interests to solve problems while trimming government bloat without raising taxes. Lobbying to kill the proposal is proceeding furiously behind the scenes.

At issue is the Las Vegas Convention and Visitors Authority, which promotes Las Vegas as a destination and runs the Las Vegas Convention Center.

"I’m not here to tell you that the Las Vegas Visitors Convention Authority is doing a bad job," said Gibbons, who got the authority’s name backward multiple times last week. "They’re doing a great job. I am not going to allow for them to be dismantled. We want to make sure that they continue and they continue doing the great job that they’re doing. But we have a responsibility to address the crisis of transportation, and we’re going to do that without raising taxes."

Gibbons proposes taking a gradually increasing percentage of the room tax that goes to the authority, starting with 4 percent in the 2007-08 fiscal year and increasing to 32 percent in the 2014-15 fiscal year.

The room tax revenue would be combined with money diverted from vehicle sales taxes and the live entertainment tax to issue bonds that Gibbons says would amount to $2.5 billion, although others dispute that figure.

The state’s most urgent highway construction needs face a shortfall that a state panel put at $3.8 billion over the next eight years, but the Transportation Department says inflation has bumped the number to $5 billion.

Under Gibbons’ proposal, $107 million would be going to roads rather than the convention authority by 2014. The authority’s annual budget, currently $212 million, would be $227 million rather than $334 million in 2014.

The authority’s backers say that’s unacceptable. They say the authority must continue to grow in order to continue to carry out its mission.

According to a recent survey, Las Vegas is the No. 2 brand in America, second only to Google. The valley’s 133,000 hotel rooms enjoy occupancy rates that average 90 percent. The 9 percent tax levied on each room is projected to raise $426 million in the coming fiscal year, 47 percent of which goes to the authority, with the rest going to the state, local governments and the Clark County School District.

In coming years, 38,000 more rooms are scheduled to be built. To Gibbons, that means a boom in room taxes that could pay for transportation.

But the authority says that revenue won’t pour in unless the rooms are filled, and the rooms won’t fill up if the authority isn’t redoubling its promotional efforts. The Las Vegas Chamber of Commerce agreed with that idea.

"The significant growth of room inventory that’s going to be occurring over the next years puts really severe pressure on the authority to maintain the high occupancy rate we’ve been able to enjoy for more than a decade," Chamber President Kara Kelley said.

Las Vegas Mayor Oscar Goodman, the authority’s chairman, said skimming revenue from the authority would force it to call off its $890 million plan to renovate and expand the convention center.

"This could mean the loss of $20 billion of business tentatively scheduled at the convention center through 2024," Goodman said in a statement. "While this might leave Chicago, New York and Orlando celebrating the chance to gain our business, it would be to the valley’s overall detriment."

Lawyers for the authority say the proposed diversion of future revenue already committed to pay off $680 million in bonds would be a violation of the state constitution and state statute.

The seed for the room tax diversion proposal was planted by the governor’s transition team on gaming and tourism. Directed by Las Vegas Sands President Bill Weidner, it issued a report that suggested re-evaluating the convention authority’s funding. Las Vegas Sands Chairman Sheldon Adelson has long advocated getting rid of the authority.

Andy Abboud, Las Vegas Sands vice president of government affairs, said even if one accepts the premise that the authority’s work is necessary, it’s way too big. He pointed to an analysis by the Chicago Convention and Tourism Bureau that found that the authority’s 2005 budget was the largest of any convention and visitor bureau in the nation.

The Las Vegas authority’s budget of about $228 million far outpaced its next competitor, Orlando, with its $41 million budget. In fact, the Las Vegas authority’s budget was as much as the next 11 competitors put together.

Abboud also argued that government shouldn’t be operating a convention center that competes with privately owned convention centers. He said those who most oppose trimming the authority are just protecting their own turf.

"It’s the people that make the money off the LVCVA that are protesting the most," he said.

One direct beneficiary of the authority is the advertising and lobbying firm R&R Partners, which created the "What happens here, stays here" campaign to promote Las Vegas and also serves as the authority’s lobbyist.

Partners Billy Vassiliadis and Pete Ernaut have been working furiously in Carson City to kill the room tax diversion proposal. Both declined to comment for this article.

Bill Bible, president of the resort association, said in a statement: "The LVCVA is one of the most successful private-public organizations in the nation, and its promotional activities have substantially contributed to the economic development of Southern Nevada. With a large number of rooms coming on line (in) the future, we strongly feel that future room tax money should not be diverted."

The gaming companies want the Legislature to look at other industries instead.

"We’d like to see a more broad-based solution, one that has a more clear nexus with the users of roads," said Lesley Pittman of Station Casinos. "We have tourists building our roads, tourists building our schools. Maybe as a community we need to look at a host of folks participating to face our community’s greatest challenges."

The gamers say lawmakers too often see their industry as a bottomless well, while ignoring other industries that are getting off easy in a state with no corporate income tax.

"It really would be nice for there to be a recognition that the state of Nevada is no longer in 1967 and can no longer afford to rely almost singularly on taxes generated by the gaming and tourism industry," said Alan Feldman, spokesman for MGM Mirage. "It’s so easy to say, ‘Let’s just let them pay for it.’ When are retailers going to pay for anything in this state?"

Gibbons’ former campaign manager, Robert Uithoven, is at the center of the proposal’s support. He left Gibbons’ side, but now is a lobbyist for Las Vegas Sands and a consultant to the Nevada Republican Party, whose new chairwoman, Sue Lowden, issued a statement supporting the governor’s proposal.

Uithoven said Gibbons isn’t afraid to go against the entrenched powers that be in the Legislature.

"His brand is low taxes, and that causes a lot of discomfort in Carson City," Uithoven said. "Over two years of the campaign, I said it over and over: No one’s ever supported Gibbons except the voters."