Nevada Save Our Schools Initiative (2008)
|Not on Ballot|
| This measure did not or |
will not appear on a ballot
The Save Our Schools Initiative would have created a new monthly license fee on Nevada casinos, totaling three percent of all monthly revenues over $1 million. The proposal would have also dedicated the new revenues to K-12 education.
The three-percent fee would have been in addition to the 6.75% tax on all gaming revenues at the time. This measure was a citizen-initiated constitutional amendment. It failed to make the November 4, 2008 ballot.
The measure was sponsored by the Nevada State Education Association.
"The need for increased funding for K-12 public education becomes more and more critical every day," said NSEA President Lynn Warne. "Not only does Nevada rank at the bottom of the list in per pupil funding, but threats of budget cuts loom with a governor not willing to make any changes to preserve already-limited funds."
Warne said her union felt the $1 million threshold was fair, noting that the tax would raise $250-$400 million annually and citing a study commissioned by the 2005 Legislature that showed the state would have to boost funding of public education by $1 billion provide an adequate education in 2013-14.
"In our analysis, in looking at what the tax rates are around the country and around the world, we felt that $1 million was fair," said NSEA President Lynn Warne.
Opponents included the Nevada Resort Association, which filed a lawsuit challenging the initiative as violating the single-subject rule.
Gaming officials argued that to keep a competitive advantage and continue driving Nevada's economy, a lowest-in-the-nation gaming tax must continue.
MGM Mirage Chief Executive Terry Lanni told the media, "The predictability of taxes allows investors to invest and banks to lend. If the teachers union wants to bring this all to a screeching halt then God love them. But that would be a big mistake for this state and for our schools. It would drive investment out of Nevada."
Lanni said that higher taxes would encourage his company— currently building the $7.6 billion City Center project—to place other large projects elsewhere. "Not that we would go away," Lanni said, "but instead of doing a $7 billion project here, we'd do it someplace else."
Bill Bible, executive director of the Nevada Resort Association, said the proposed increase of the gaming tax would devastate gaming operations in rural and Northern Nevada. "Many of these places in rural and Northern Nevada, their margins are very small; and clearly, it would have a significant impact on how they operate," Bible said.
Bill Lerner, a senior gaming and lodging analyst for Deutsche Bank, agreed. "When you talk about these casinos, the margins are quite thin; and when you raise their tax by a factor of 44 percent, in the face of other economic issues moving against you, it would be a horrible situation to be in."
Reno gaming lawyer Michael Alonso said the teachers' initiative would impact at last 14 casinos in the Reno-Sparks area.
"Luckily, the industry down here [in Las Vegas]," Bible added, "while it is starting to struggle, is healthier than it is for the properties in Northern and rural Nevada. I don't think they (teachers union) realize that the $1 million threshold picks up a lot of properties in rural Nevada and virtually all of the properties in Carson City, Douglas County and Washoe County."
Bible said he wondered if Warne knew the difference between revenue and profits after reading an opinion column she wrote in January for the Reno Gazette-Journal, in which she wrote that "only the most successful of casinos, those whose profits exceed $1 million per month, would be required to pay this assessment."
The measure placed the $1 million threshold on before-profit revenues.
Opponents urge residents not to sign the petition
A group called Nevadans Against the Tax Grab formed against the measure. Former U.S. Rep. Barbara Vucanovich, a Republican, and former Nevada Assembly Speaker Joe Dini, a Democrat joined their effort to encourage Nevadans to oppose the measure. The efforts of Vucanovich and Dini focused on Nevada's rural counties, where they would have encouraged people not to sign the petition.
"We're calling the teachers' union proposal what it is—a tax grab," said Vucanovich. "It's designed by one special interest group to benefit its own members at the expense of rural communities and our state economy."
Dan Hart, a political consultant for the teachers, said the tactic of using petition blockers, which he called "desperate," was having a deterrent effect, but he still expressed confidence that they would make the ballot.
Dini, who served a record eight times as Assembly Speaker over his 34-year legislative career, called the initiative an "extreme proposal." He said the 44% increase in casino taxes would force some out of business and hurt rural Nevada. He said it sets up a formula for distributing the money that would give more per student to Clark County schools and less to rural schools than they now get under the Nevada Plan.
Superintendents stayed neutral
State school superintendents wouldn't endorse the proposal, according to Nevada's superintendent of schools.
"The general consensus is that there is a need for funding, but I don't think they want to stick their necks out on a limb just with the gaming tax," superintendent Keith Rheault said.
The superintendents would not oppose the initiative, according to Ken Buhrmann, an officer on the NSEA board and one of two state directors on the National Education Association board. "For the most part, the (state) superintendents' association is going to stay out of it and just stay neutral. I don't know of anyone who is going to go out there and oppose it."
Negotiated deal between supporters and opponents
An agreement was made May 19, 2008—just one day before signatures needed to be filed to qualify the measure for the ballot—between the Nevada State Education Association and Harrah's, Station Casinos, and Wynn Resorts to kept the initiative off the November ballot.
Teachers instead would seek a 3% increase in the hotel room tax rate, to a maximum of 13%. The room-tax increase would appear on the ballot as an advisory question before legislative approval was sought in 2009.
Under the deal reached with the help of legislative leaders, proceeds from the room tax increase would offset a looming budget shortfall for the 2009-2011 biennium. After that, it would be used for teacher salaries and student achievement.
The teachers union also would begin collecting signatures to force a change in state law to raise the room tax rate in 2011 in case they failed to convince county commissions to put the advisory question on the ballot, or the Legislature failed to act.
Lynn Warne, president of the Nevada State Education Association, confirmed May 7, 2008, that NSEA was "taking part in some discussions with members of the gaming community." Instead of the proposed increase in the gambling tax, the teachers and resort industry representatives reportedly discussed a slight increase in room taxes that would go to education.
Sources speaking on condition of anonymity said casino executives approached the union looking to make a deal to head off the petition, which the union says was ahead of schedule on signature-gathering and which both sides believed likely to be approved by voters. Wynn Resorts Chairman Steve Wynn was the driving force behind the talks, sources said.
An increase in the room tax—or any bill increasing taxes— would have to be approved by a two-thirds majority of the state legilsature. Gov. Jim Gibbons, who has pledged not to raise taxes, would veto the plan, according to his spokesman, Ben Kieckhefer. But the same two-thirds majority could override a veto.
Gov. Gibbons said he would support the tax increase if the voters approved an advisory measure that can be placed on the November ballot.
Proponents abandoned placing this measure on the ballot, having made a deal to seek an increase in the hotel room tax instead (see above).
Judge Miriam Shearing ruled in late January that the initiative went too far when it attempted to lay out how much of the money raised could go for teacher salaries and other educational functions. Rather than rejecting the initiative, the judge gave the Nevada State Education Association time to revise the initiative's wording. They submitted new language Feb. 5, 2008, with hopes of addressing Judge Shearing's objections. Opponents say the new language still violates the single-subject rule, creating a tax increase in the same proposal that commits the legislature to increase school funding annually.
In early April, a district judge gave the teachers union approval to circulate the petition. Warne said she expected the NRA to file an appeal at the Nevada Supreme Court within the 30-day window provided. To make the ballot, 58,628 valid signatures must have been submitted by May 20, 2008, to get on the ballot. Voters would have had to approve the measure in the 2008 and 2010 general elections in order for it to become law.
As expected, an appeal was filed by the Nevada Resort Association and Las Vegas Sands Corp. on April 11, 2008, asking the Nevada Supreme Court for a speedy handling of its appeal over Senior Judge Miriam Shearing's April 3 ruling that the petition was legal. Plaintiffs asked for a ruling before May 20, the deadline for the Nevada State Education Association to submit signatures.
However, the court set a hearing date of July 1, 2008.
The appeal argued that the petition contained more than one subject because it would raise taxes, earmark revenues for teacher salaries and "student achievement," and mandate the entire education budget be voided if legislators considered using the money for other purposes.
After initiative supporters agreed to withdraw the measure, the lawsuit was dismissed.
- Procedures for qualifying an initiative in Nevada
- Laws governing the initiative process in Nevada
- Campaign finance requirements for Nevada ballot measures
- Nevada 2008 ballot measures
- Petition drive deadlines in 2008
- Nevada signature requirements
- Full text of the initiative
- Nevada State Education Association
- Nevadans Against the Tax Grab web site
- Nevada Policy Research Institute: "Are delusional political beliefs really free?," May 22, 2008
- Nevada State Education Association
- Reno-Gazette-Journal: "Casinos challenge teachers' tax plan," April 7, 2008
- Las Vegas Sun: "In a bold move, teachers reach for gaming's pockets"
- Associated Press: "Casino tax opposed", April 17, 2008
- Nevada Appeal: "Dini, Vucanovich join to oppose gaming tax," April 18, 2008
- Las Vegas Sun: "Mischief-making blockers are signature gatherers’ bane," May 5, 2008
- Reno Gazette-Journal: "State's superintendents choose to stay neutral on teacher tax initiative," April 15, 2008
- Mercury News: "Ballot plan signatures filed," May 20, 2008
- Reuters: "Nevada teachers drop gaming tax bid, seek room tax," May 20, 2008
- San Francisco Chronicle: "Teachers negotiate tax plan," May 7, 2008
- Las Vegas Review-Journal: "Casinos, teachers discuss tax plan," May 8, 2008
- Associated Press: "Nev.: Casino Group Files Tax Challenge," Dec. 11, 2007
- Nevada Appeal: "Casinos appeal district court decision on teachers' tax petition," April 12, 2008
- KTVN-TV: "Nevada teachers' deal with casinos ends court case on room tax plan," June 16, 2008