The Tipping Point

Business comes of age

By Steven Miller
  • Monday, April 28, 2003

April 16—the day that the state senate’s taxation committee killed the Guinn administration’s proposed gross receipts tax (GRT)—was a watershed day in the history of the Silver State.

What it announced, to all and sundry, was the coming of age of Nevada business.

True, business did not simply burst its bonds and leap to a new and glorious freedom. But in the competitive debate on the merit of the bizarre, anti-business GRT legislation sought by the Nevada Resort Association, the general business community had won. And it had gone up against what had, for decades, been the state’s most powerful political force.

Making the GRT its top priority, the resort association had recruited a broad and intimidating coalition of eager allies. On board were not only the Guinn administration, the leadership of the state Democratic Party and the state teacher and Culinary unions, but also a skewed tax panel staffed by NRA members and employees, plus other feeders at the public trough.

Tilting the field even further was the fear lurking in the hearts of many general business folk of anything like a fight. Habituated to years of domination by the mighty NRA, these business people simply declined to enter the field of combat. They assumed themselves so outmatched submission was the obvious choice.

Some of these business folk had been mentally colonized long ago through the resort association’s relentless propaganda operations. Knowing nothing other than what the NRA said, they concluded, when the NRA said they were not paying their “fair share,” that it must be true. On them, the constant NRA refrain that the resort-casinos provide “50 percent” of “state budget” revenues had taken its toll. Never noticed were the occasional sotto voce admissions from the association that by “state budget” was only meant the state general fund—currently only 30 percent of the entire real state budget. Nor had they registered that the “50 percent” figure was half-a-decade out of date, and that a more accurate figure was 33 percent of general fund revenues—in other words, about 9.9 percent (.30 x .33) of the real state budget.

Few business people were aware that, according to U.S. Census figures for the year 2000, Nevada’s non-gaming businesses had paid 81 percent of the business taxes that went to support state and local government. The gaming sector’s share, on the other hand, had been a mere 19 percent.

Other business folk were better informed, so with them the NRA dealt differently. To minimize opposition from this quarter—NPRI has repeatedly been told—a distinct campaign of intimidation was launched. Cross the resort association on this issue (e.g., publicly work against the GRT), these business people were told, and we’ll never give you a dollar for your goods or services.

All this was the backdrop of the April 16 vote—when, in Senate Taxation, legislation to impose a gross receipts tax went down to a massive 6-to-1 defeat. And though talking heads from the resort association, Guinn administration and Democratic Party hastened to claim that the GRT could rise from its grave tomorrow, a more candid appraisal came from the chairman of the assembly’s taxation committee. Even in the Democratic lower house, noted David Parks, the legislation has virtually no chance of getting the two-thirds majority required for passage.

So what had conspired to lay the mighty NRA so low?

Ultimately, it was the organization’s own hubris. A famous line by the poet William Cullen Bryant says that, “Truth crushed to earth shall rise again.” And the truths about the gross receipts tax were simply too glaring to ever remain obscured—no matter how extensive and expensive the NRA’s campaigns of misinformation.

For decades the NRA has sought to be seen as an organization of outstanding corporate leaders who just happen to be in the casino-resort field. But by seeking to impose a cheat on Nevada’s wider business community, the NRA has revived memories of the carnie-midway-speakeasy culture out of which 20th Century gaming arose—a fly-by-night scene where ripping off the “rube” is the name of the game.

Many legislators in Carson City still have not registered what has happened. They, too, are habituated to expect the big-bucks lobbyists from the resort association to eventually prevail. But regardless of what legislation finally passes, a critical mass of the larger Nevada business community has now been permanently weaned away from its prior deference to the Nevada Resort Association. And the Silver State will never be the same.

Steven B. Miller is policy director for the Nevada Policy Research Institute.

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