Apparently buried under 528 chapters before it, chapter 529 of the tax code sets up a variety of potential ways people can start to save toward their childrens’ college, if their states get off the dime. Thanks to the diligence and foresight of Treasurers going back to Bob Seale (Seale, Brian Krolicki, Kate Marshall and Dan Schwartz) and two decades of Legislative proaction, few states have implemented more of those options than Nevada.
If you’ve got young’uns in your life, check out all the state programs at nv529.org.
The Legislature has been called to the strangest special legislative session ever. With early voting now just two weeks away, with no agreement from the League, and with the risk squarely on the collective backs of all current and future workers and residents in Clark County, the special session starts today.
Very little has been revealed. But even if youâ€™re comfortable diving blind, the fraction of detail that has been revealed already offers plenty of reasons to not accept this deal.
- Some oppose corporate welfare for billionaires on principal. Others donâ€™t. If you donâ€™t, please keep reading.
- â€śItâ€™s $750-million in new room tax, no big deal.â€ťÂ Itâ€™s much closer to $2-billion than $750-million. Hereâ€™s the deal: Clark County is going to borrow $750-million around Thanksgiving, and give it to the developer. Thereâ€™s a 33-year mortgage schedule, with monthly payments somewhere around $3.5-million per month. Over the 33 years, it will take about $750-million required to pay it back, plus another billion in interest. So the amount of new room tax needed is much closer to $2-billion, not $750-million.
- Payments will be made from the County General Fund, the same Fund that pays for police, fire, parks, street lights and street maintenance. Itâ€™s mostly property tax and sales tax. Proceeds from a room tax will get deposited into the General Fund. Promoters say they hope it will be enough, and shortfalls will result in cuts to police, fire, parks, street lights and street maintenance. These are â€śGeneral Obligationâ€ť borrowings.
- â€śThe public will own it, or at least part of it.â€ť No it wonâ€™t. The governing body of the corporation will not be elected. And although the public will not share in any profits generated, the public will cover all operating losses, as the debt wonâ€™t be serviced until all operating losses are covered.
- â€śBut itâ€™s tourist taxes. We wonâ€™t have to pay anything!â€ť This is false, see 2B above. The sensible alternative to â€śGeneral Obligationâ€ť bonds are â€śRevenue Bonds.â€ť The collateral is a specific tax source (the room tax hike, in this case), and if it falls short, the lender might not get paid back as fast. But local taxpayers are relieved of the risk.
- â€śBut the developer will cover any cost overruns, not the public.â€ť This is true, but with a significantly larger project budget than any other NFL stadium ever built, the chance of overruns is much smaller than the chance of not spending that much. And any construction savings reduces the developerâ€™s cash contribution, not the taxpayer. The largest NFL stadium is in New York, but as it was 100% privately funded, there is no way to verify its claimed $1.6-billion cost, and it services two NFL teams, not just one. Scratch that one from the list, and the average of the 2 stadiums built since the recession is $1.1-billion. Thereâ€™s a lot of room for coming in under budget.
- â€śBut Tourists will make special trips, which will build our local economy.â€ť Think about this: we built this city offering Americans what they canâ€™t get at home â€“ from zip-lines down Fremont Street to the thriving music scene downtown east of Las Vegas Boulevard, to trysts, to the Grand Canyon, to the most excellent business and hobby conventions on earth, to gambling, to restaurants operated by TV chefs, to February sunburns. While NFL seems extraordinary to Nevadans, itâ€™s actually quite ordinary to our customers. Most of our customers can see a concert in a 60-thousand seat venue any night of the week at home. They have to come here to see Elton John so close you could still hear him if the power went out.
- â€śBut the project could create 14,000 jobs and generate $32 million for education.â€ť Arena construction is a specialty. Many, perhaps most of the workers will come from out of town and leave when theyâ€™re done. And you want to spend $1.75-billion to generate $32 million for education?
- â€śBut the NFL will love us!â€ť The NFL is a captive of TV audiences, and Las Vegas will rank at the bottom of the list of NFL markets ranked by television audience and nearby population. A handful â€“ Charlotte, Jacksonville â€“ will rank smaller but thatâ€™s because they are small satellites of giant markets, closer than Barstow is to us.
WillÂ there be repercussions at the ballot box? None of todayâ€™s legislators served during the 1989 session, where almost half the body took an action that ended their elected service. Mike Oâ€™Callaghanâ€™s old â€śWhere I Standâ€ť article – hereÂ – illustrates.
Las Vegans woke up this morning to this scary headline in the Sun:
In last year, Lake Mead dropped below 10 million acre feet for first time
Meanwhile, over at the Lake Powell water level database, the reservoir upstream from us is only half empty, has been delivering roughly the same amount of water per year since the dam was built a half century ago (with the exception of a couple of flood events, and today holds more than Lake Mead does. The 27 reservoirs above it are more than 80% full.
The National Conference of State Legislators is one of the three “trade associations” Nevada lawmakers can affiliate with. They’ve just published an interesting look at government funded sports stadiums. Essentially, the article says – “Don’t do it! But if you must, here are ten important checkpoints you should include in your deal…”
How many of the guidelines (not counting “Don’t Do It”) can you find that are ignored in the proposed Goodman Stadium downtown?
Here’s the full report.
Disclosure note: From time to time, I serve as treasurer for various political campaigns. I served as campaign treasurer for Dan Schwartz last year.
Nevada Treasurer Dan Schwartz has proposed a budget plan for the state that increases spending 4.6% over the next two years. This stands directly opposed to Governor Brian Sandoval’s proposed state budget that increases spending over 12%, and would require over a billion in tax hikes on Nevadans instead of tourists. This comes on the heels of major state tax hikes, mostly on residents, in 2003 and 2009.
You can read about it in today’s Review Journal, though you have to tolerate the biased reporting, in which the 4.6% spending hike is “conservative” and the 12%+ spending hike is “moderate”. It makes you wonder what the reporter would label an attempt to reduce the size and scope of government!