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.
- Some oppose corporate welfare for billionaires on principal. Others don’t. If you don’t, please keep reading.
- “It’s $750-million in new room tax, no big deal.” It’s much closer to $2-billion than $750-million. Here’s the deal: Clark County is going to borrow $750-million around Thanksgiving, and give it to the developer. There’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. It’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 “General Obligation” borrowings.
- “The public will own it, or at least part of it.” No it won’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 won’t be serviced until all operating losses are covered.
- “But it’s tourist taxes. We won’t have to pay anything!” This is false, see 2B above. The sensible alternative to “General Obligation” bonds are “Revenue Bonds.” 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.
- “But the developer will cover any cost overruns, not the public.” 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 developer’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. There’s a lot of room for coming in under budget.
- “But Tourists will make special trips, which will build our local economy.” Think about this: we built this city offering Americans what they can’t get at home – 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, it’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.
- “But the project could create 14,000 jobs and generate $32 million for education.” Arena construction is a specialty. Many, perhaps most of the workers will come from out of town and leave when they’re done. And you want to spend $1.75-billion to generate $32 million for education?
- “But the NFL will love us!” 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 – Charlotte, Jacksonville – will rank smaller but that’s because they are small satellites of giant markets, closer than Barstow is to us.
Will there be repercussions at the ballot box? None of today’s legislators served during the 1989 session, where almost half the body took an action that ended their elected service. Mike O’Callaghan’s old “Where I Stand” article – here – illustrates.