(Chuck Muth) – The simple way to look at the recently passed bill approving the construction of a new stadium in Las Vegas is this…
Nevadans will be getting a world-class, domed $2 billion stadium for just $750 million – which will be paid almost 100% by tourists – and ultimately is projected to generate some $57 million per year in additional tax revenue for Nevadans without raising taxes on Nevadans.
And some wonder why I supported this project?
But the fact is, the funding proposal for the project – which included an increase in the room tax – was less-than-appetizing for conservatives, but not inedible. For those interested, let me explain…
First, unlike most opponents of the project, I attended almost ALL of the meetings of the Southern Nevada Tourism and Infrastructure Committee (SNTIC). So this is an informed opinion, not based on the foam-at-the-mouth rantings of blogger Jon Ralston or the “We Hate Sheldon” ramblings from the Culinary Union that’s been at war with the Las Vegas Sands for almost two decades now.
Secondly, I have long opposed using tax dollars for “economic development” projects, but have argued that if we’re going to do it we should at least “stick to the knitting” and focus on what we do best: Tourism and Entertainment.
The simple fact is we’re leaving a lot of chips on table with our lack of a major-events stadium in southern Nevada. The only existing stadium facility is the decrepit Sam Boyd Silver Bowl, which is only passable as a college football stadium because UNLV continues to stink on ice.
As the old business saying goes, if you’re not moving forward, you’re falling behind. And without a major events stadium, Las Vegas will continue to fall behind – and that’s bad for the entire state, not just Clark County.
So it’s not a question of “if” a new stadium is needed and important to maintaining Vegas’ place in tourism universe, but where, when, how and who.
Many have tried to get various stadium proposals at various locations off the launching pad for many years now. All fizzled for one reason or another.
Enter the Oakland Raiders and what turned out to be a serious desire to relocate its professional football franchise to Sin City despite historic NFL opposition to even advertising Las Vegas during games, let alone allowing them to be played here.
Two simple facts about this…
1.) Without the potential of the Raiders moving to Vegas, this project makes no financial sense whatsoever. The Raiders are the key to making this project doable.
2.) There are only 32 teams in the NFL, and it is a RARE occasion when one wants to relocate. Prior to the Rams move back to Los Angeles this year, the last time a team moved was in 1997 – almost 20 years ago. And it’s an even rarer occasion for one to want to move to Las Vegas.
A rare opportunity came knocking. The question was if Nevada would open the door. Which brings us to the funding formula. Here’s the bottom line…
- The estimated construction cost will be $1.9 billion
- Tourists will kick in $750 million through the room tax over next 30 years
- Private investors will pay the additional $1.15 billion – including any and all cost overruns
Now about the room tax: Some have objected to using “public money” to fund a portion of the stadium construction cost, but in this case it is wholly appropriate. Consider…
- Unlike failed stadium proposals in other cities – where residents funded construction through sales and property taxes – the Las Vegas Dome is being funded 100% from room taxes paid by tourists.
- The tourist room tax was initially established to fund tourism-related projects exactly like the proposed stadium. For example, it has been used for decades to fund the Las Vegas convention center.
- Unlike other stadiums around the country, Las Vegas is uniquely positioned to host 30-40 additional, non-football public events that will attract tourists and put “heads in beds.”
- The stadium will be owned and operated by the public, not the private developers. As such, it’s appropriate for the public to “have a skin in the game.”
- The room tax increase not only fully funds the public portion of the stadium, but also includes provisions that will protect taxpayers in case of an unexpected downturn in the economy.
But the fact is Nevada taxpayers will pay absolutely NOTHING for the stadium – unless they spend a night in a Las Vegas Strip hotel on a “staycation.” And even then, it’ll only run you about 88-cents.
Look, no matter how opponents try to spin it, the bottom line is Nevadans will be getting a brand-spanking new $1.9 billion multi-purpose, domed stadium for the rock-bottom price of $750 million – more than half off!
And we’ll essentially be sticking someone else with the bill (sorry, tourists). Just how dumb would Nevadans have to be not to see that as a GREAT deal?!!
Of course, the deal would be better if we didn’t have to increase the existing room tax. But here’s the reality…
The welfare queens over at the Las Vegas convention center – which have been living off taxpayer subsidies from the room tax for decades while competing against private sector convention facilities at artificially lower rates – carry a lot of political juice in this state.
And the political reality was this…
Unless the convention center was allowed to take a big slurp at the room tax trough to expand its facilities, the all-powerful Strip gaming community was prepared to withhold its support from the stadium project. Which, quite simply, would have killed it.
This is how political sausage is made. You scratch my back, I’ll stick a knife in yours. It’s a lousy system; but that’s the hand we were dealt. Take it or leave it.
So this became an all-or-nothing package deal, which meant an otherwise unnecessary increase in the room tax rate instead of funding the project from existing revenues. And that, some people believe, is a violation of the Taxpayer Protection Pledge signed by a number of state legislators.
As Nevada’s official “Keeper of the Pledge,” I disagree. Here’s why…
There are exceptions to every rule, and the Tax Pledge is no exception. For example, the Tax Pledge makes an exception for raising “user fees,” such as rental fees for a picnic area at a public park or entrance fees to public swimming pools.
The Pledge also makes an exception for the creation of toll roads, as long as it’s for building a new toll road rather than converting an existing roadway that’s already been paid for by taxpayers.
And finally – and this is the most important in this stadium case – it allows for a tax proposal that is revenue neutral.
The most important underlying objective of the Tax Pledge is to thwart additional funding to grow government.
So for example, let’s say you want to raise the gaming tax while simultaneously lowering the property tax for residential homes. Although such a proposal would result in a tax increase on gaming companies, as long as the net result is no additional money going into the government’s coffers it’s not a violation of the Pledge.
Doesn’t make it a good idea; just not a Pledge violation. And with that in mind, let’s take a look at a few generally unreported points regarding this stadium proposal to give it a little more perspective…
1.) Opponents keep calling this a $750 million tax hike. But what they aren’t saying is that it’s a $750 million tax hike SPREAD OUT over 30 years – as opposed to the $1.5 billion tax hike passed by the Nevada Legislature last year that is spread out over two years.
So while the $1.5 billion tax hike is actually $750 million per year for every year for FOREVER, the $750 million stadium tax hike is actually only around $25 million per year for just the next 30 years. BIG difference. And the money is going for a dedicated, one-time purpose – building the stadium – not growing the government for all of eternity.
Now consider this…
An economic impact analysis estimates that the increase in tax revenue, directly related to the stadium once it opens, that will go to state and local governments is right around $57 million.
So in a nutshell, tourists will be paying around $35 million per year to build a stadium which will generate $57 million per year in tax revenue for Nevadans – WITHOUT a tax hike on Nevadans.
In other words, it’s BETTER than tax-neutral.
Nevadans will get a new $1.9 billion stadium essentially for “free” without the room tax increase going towards growing Nevada’s already too-big government.
As such, in my opinion voting for this project was not only a good thing but it was NOT a violation of any legislator’s Tax Pledge.
Some will clearly disagree with my opinion.
But after sitting through hours and hours of committee hearings and testimony – and looking at the big picture – I applaud those legislators who voted for the proposal, while understanding and respecting those who didn’t.
Are you ready for some football?!!!
(Mr. Muth is president of Citizen Outreach, a conservative grassroots advocacy organization, and publisher of NevadaNewsandViews.com. Disclaimer: Las Vegas Sands has been a supporter of Citizen Outreach in the past.)