Save our schools with additional funding

By Jim Clark
Special to the Bonanza
April 27, 2008

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In the early 1700s the University of Edinburgh taught that democracy was doomed to failure because once people found they could vote to tax others and spend the revenue on themselves, the economic system would collapse. It was the genius of our founding fathers to write into our Constitution a system of checks and balances such that for 220 years now we have not suffered that fate ... yet.

The jury is still out on the relatively recent initiative process which permits citizens to pass legislation and constitutional amendments by circulating petitions and forcing statewide elections on specific measures.

Last December I wrote in the Bonanza that the Nevada State Education Association ... the teacher union ... filed an initiative petition dubbed: “Save our Schools With Additional Funding.” If approved by voters in two successive elections, it will increase taxes on casino gross winnings by 44 percent and direct that those revenues be earmarked: “to, pay salaries of employees (except administrators) and improve the achievement of students.”

The petition stipulates that these revenues would be in addition to the present state K-12 school budget which currently amounts to approximately 50 percent of Nevada’s total spending.

The measure needs 60,000 signatures to qualify for the 2008 ballot, and with 28,000 Nevada State Education Association members, there’s a high likelihood they will succeed. I can guarantee that the teachers circulating these petitions will be saying: “do it for the kids” and soft pedaling the fact that this is really about gargantuan salary increases.

Worse yet according to a recent statewide poll 72 percent of Democrats and 63 percent of Republicans favor the measure. Sure. Why not? If the teacher union picks on casinos they won’t be asking anyone else to pay the freight. This time.
Most of us do not lose sleep over the welfare of casinos, but this proposal deserves a second look. Nevada taxes casinos on gross gaming receipts, not net profits. A 44 percent bump in any tax is confiscatory but gross receipts taxes do not take into consideration whether or not a business is making a profit.

This insidious cash grab is likely to cause job losses, and in tough times casino bankruptcies. Nevada casino workers earn, on average, more than those in other states where gambling is legal. The teacher union proposal would seriously impact employment prospects and shareholder values in even the most successful Nevada casinos.
Moreover, the measure would penalize Northern Nevada gamers whose profits are marginal because they have to compete directly with Indian gaming as opposed to Las Vegas which is more geographically remote from casinos on reservations.

When fiscal year 2006 ended, Nevada’s total tax revenues from all sources was $2.3 billion dollars. Of that casinos paid more than $1.3 billion. Well more than half the entire state budget is paid by the gaming industry and things seem to work OK, but a 44 percent tax increase on gaming could really hurt Nevada’s economy.

The initiative does not provide for any funds for school construction, maintenance or repairs, which means school districts will still be coming after our property taxes for those expenses. Moreover, Washoe County will have a measure on this November’s ballot asking us to increase automobile registration fees and sales taxes to pay for school construction here at home.

Sometimes taxpayers have to ask: “how much is enough.” I think we’re at that point now.

Incline-friendly Judge Bill Maddox of the Carson City District Court recently ruled against a challenge to an unrelated initiative petition saying: “Voters have just as much right to do stupid things as the Legislature does.” He must have gone to law school at the University of Edinburgh.

Incline resident Jim Clark is President of Republican Advocates, a vice chair of the Washoe County GOP and a member of the Nevada GOP Central Committee.