The great public authority swindle: Part II

Why governance in Southern Nevada is so oddly opaque.

By Steven Miller
  • Friday, August 10, 2007

This is the second of a two-part series examining the undemocratic, corruptive and profligate nature of public authorities, in Nevada and around the nation.

It was set up in the 1950s, when the Mob controlled Vegas.

The scheme used government to force independent hotel and casino owners into funding a Mob-blessed convention-promotion cartel run by Outfit-approved casino bosses and complicit local politicians.

Today the Mob — we’re told — is gone.

But still sitting atop Southern Nevada is that same cartel marketing apparatus, now richer and more powerful than ever.

You know it as the Las Vegas Convention and Visitors Authority, or LVCVA.

Technically, the LVCVA is a hybrid government-business corporation of a type that spread throughout the U.S. from the 1920s onward, called a “public authority.” This particular authority’s official mission is to take public room-tax dollars and spend them for the support of one private industry, the resort industry, under the rationale that the state economy benefits when the tourism business thrives.

Of course, economies benefit when any private industry thrives, so perhaps the official rationale is not the whole story. Perhaps, as in the 1950s, politically connected old-line casino companies simply like using government to take a cut of their upstart competitors’ revenues and then spend it as they themselves wish — through an “authority” controlled by their anointed politicians and themselves. And perhaps the state law specifying the make-up of the LVCVA board offers another clue. By statute, it must be composed of eight politicians and six others — selected by the politicians.

Thus, it is a highly political board that, every year, gets to spend hundreds of millions of dollars harvested from all Southern Nevada resorts — including those convinced that they themselves could spend their revenues more productively than the LVCVA politicians and their allied ad agency, the deeply politicized R & R Partners.

All this money is spent as the board, and the board alone, sees fit. It is the same with the hundreds of millions of dollars in public debt that the board incurs. Although it is the people’s constitutional taxing power that permits the room tax, state law explicitly exempts the LVCVA board’s billion-dollar debt and spending schemes from any oversight any other public body or second-guessing from voters.

This is the “big advantage” of public authorities, according to former New York Governor Mario Cuomo: “They are “free from the control the people have.” The “big disadvantage,” he continued, is the same: that public authorities are “free from the control the people have.”

A fundamental American precept is at risk here, in that public resources are increasingly being commandeered away from the public’s control. Ever since Americans fought a Revolutionary War over the principle of “No taxation without representation,” the public’s control over its own public debt has been fundamental to the American system. For most of U.S. history it would have been unthinkable for government agencies to borrow and spend funds without voter or legislative approval. Even less would it have been permissible for such agencies to be crafting these actions behind closed doors.

But all of that is precisely what public authorities are formed to do — and, in the case of the LVCVA, do very vigorously.

The consequences are serious. As reported in part one of this article, America’s state and local politicians regularly during the last two centuries precipitated public financial crises by channeling public dollars into politically selected industries. Yet Nevada today has multiple county visitor authorities dedicated to doing just that.

It is no accident that virtually all state constitutions forbid such activities. Voters demanded stricter barriers after the wholesale bankruptcies, recessions and corruption scandals of the 19th Century. Yet public authorities are merely the latest iteration of that same, apparently everlasting, appetite of elected officials.

For politicians, seats on big-spending public authority boards offer immense temptations. Authorities routinely dispense huge sums of taxpayer money, the disposition of which is almost entirely exempt from public oversight. Only the densest pol would not realize the vast possibilities for amassing personal and party power. From such a seat, favors, jobs, contracts, advance information and many other forms of patronage can all be dispensed. Large and small firms, other politicians and people in general can discover it literally pays to be an ally, rather than an opponent..  

The growth of public authorities, both nationally and in Nevada, has meant the insertion above citizens of what some scholars characterize as a “hidden” or “shadow” government. The terms are apt because most citizens are neither aware of the massive power of authorities, nor of how routinely that power is used from off-stage, as it were, to control the life of communities.

If you’ve ever wondered about the sometimes oddly opaque character of Southern Nevada governance, the answer is right in front of you.

Just take a closer look at the LVCVA.

Steven Miller is policy director at the Nevada Policy Research Institute.

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