Assembly approves room tax increase

CARSON CITY -- The state Assembly in a 35-7 vote Tuesday backed a 3 percentage point increase in the room tax in Clark and Washoe counties.

The tax will bring in about $230 million over the next two years, money that can be used for covering budget shortfalls and other purposes during that period. Starting in July 2011, the room tax revenue must be used for public education.

All 28 Democrats and seven of the 14 Republicans in the Assembly backed the tax increase, which had been approved as an advisory question on election ballots in November in Clark and Washoe counties.

Gov. Jim Gibbons, who vowed to veto tax increases that do not have support of the people, pledged to sign the bill once it passes the state Senate. Revenue from the measure is included in his two-year $6.17 million budget.

Senators have to act on the tax proposal by March 13 or it will be placed before voters in the November 2010 election. The increase would go into effect July 1 if approved by the Senate.

"The governor has always said yes to this increase," said Daniel Burns, his communications director "The voters of Clark and Washoe counties have spoken, and he will not go against the people."

Assembly members voted on a ballot initiative circulated by the Nevada State Education Association. About 130,000 residents signed the petition to change state law and increase the room tax. Under the state constitution, legislators must act on petitions within the first 40 days of the session, or they will be placed before voters.

"This provides desperately needed sources of revenue for the K-12 system," said Lynn Warne, NSEA president.

She added that 66 percent of Clark County voters and 57 percent in Washoe County supported the advisory question. About 99 percent of the taxes will be paid by patrons of hotels and motels in Clark County. In Clark County, the current room tax is about 10 percent.

Republicans Chad Christensen, John Hambrick and Richard McArthur, all of Clark County, voted against the bill, as did James Settelmeyer of Gardnerville, Ed Goedhart of Amargosa Valley, and Ty Cobb and Don Gustavson, both of Washoe County.

Christensen said he had an obligation to listen to voters and to take a deep look at the effect of the tax on the hospitality industry.

"I have a big, big concern about taxing the industry that is the goose that laid the golden egg," he said. "Gaming and tourism are what we are all about. We have to do everything we can for them to succeed."

"Trying to tax your way out of a bad economy is not going to do it," McArthur said.

Hambrick noted that the advisory question was on the Nov. 4 ballot and that economic conditions have worsened since them. He questioned whether his constituents would back the tax question today.

In advocating for the tax increase, Assemblyman Joe Hardy, R-Boulder City, said that by taking the tax now, the gaming industry might be protected from "more onerous" tax increases later this session.