The Clark County Education Association is seeking to raise the state’s gaming tax rate on the largest companies from 6.75 percent to 9.75 percent by placing a measure on the 2022 ballot.
It’s the first of two initiative petitions the union plans to file to boost taxes for education, the union’s executive director, John Vellardita, said Tuesday in an interview. He expects the other petition to be filed later this week.
Although Vellardita wouldn’t reveal the other targeted revenue stream, he said the two proposed tax increases would bring in an additional $1.4 billion each year. Vellardita said the gaming tax increase alone could generate an extra $340 million in annual revenue. The union leader described the initiative petitions as the “final fix” for the state’s chronically underfunded K-12 education system.
“We’re highly confident that we’ll get them filed,” he said.
The move, likely to be balked at by a gaming industry that has preferred broad-based taxes over industry-specific ones, comes the year after a tense legislative session saw teachers lock horns with Gov. Steve Sisolak over education funding woes. Sisolak, who was elected to office in 2018, declined to take up a major tax overhaul in his first legislative session.
Asked about the measure after a meeting on Tuesday, Sisolak said he hadn’t read the measure or spoken with Vellardita about it.
“I haven’t read the petition yet so I’m not going to comment on the substance of the petition,” he said.
The Nevada Resort Association, however, issued a blistering assessment of CCEA’s initiative petition Tuesday afternoon, calling it a “44 percent tax increase” that would be “very damaging to the state’s economy, job creation, capital investment and future economic development.”
The association, which is the primary advocate for Nevada’s gaming and resort industry, also pointed out that it has consistently backed broad-based business taxes to support public education and views them as a more stable revenue stream.
“Unfortunately, one of the teachers’ unions has chosen a path of higher pay at the expense of tens of thousands of other jobs throughout the state,” association officials said in a statement.
The union’s first initiative petition dropped the same day Clark County School District leaders gathered to unveil a report that identifies failures in ensuring equity and access to all students.
Clark County Superintendent Jesus Jara said the district can overcome some of those barriers by changing internal practices and reallocating resources. He declined to offer his perspective on the union’s quest for additional education dollars, noting that, by law, he can’t endorse petition initiatives.
“For me, I’ve got to focus on the students and the work that I need to do,” he said. “That’s a discussion for the Legislature and the governor.”
The union has formed a new PAC, Nevadans for Fair Gaming Taxes, to back the ballot measure. Earlier this year, the union announced it was increasing members’ dues to fund a so-called Strategic Horizon Campaign, which seeks to find $1 billion or more in state funding for public education.
The last major tax increase to be enacted by the Legislature was in 2015, raising and extending more than $1 billion in revenue. A portion of that tax package was the Commerce Tax on businesses that make $4 million or more a year in gross revenue.
At current rates, gaming taxes are expected to bring in more than $1.6 billion in revenue over the biennium.
The initiative petition states the change would not affect gaming licensees whose monthly gross gaming revenue falls below $250,000 or restricted licensees, such as businesses with 15 or fewer slot machines.
If enacted by the Legislature and approved by the governor, it would go into effect July 1, 2021. Or, if voters approve the ballot measure in the 2022 general election, it would go into effect Jan. 1, 2023.
The teachers union has until Nov. 10 to submit the 97,598 signatures required to qualify the initiative petition to the counties for verification.
The Nevada State Education Association (NSEA), a statewide union from which CCEA recently split, says the Clark County union has not engaged the group in its revenue effort and appears to be going it alone. NSEA President Brian Rippet said his union prefers to raise funds after building a broad-based coalition.
“It needs to be done correctly or we risk falling into a hole again in the future,” he said. “Gaming revenue is diminishing or at best it’s flat. That revenue doesn’t grow along with our states’ needs.”
He also said NSEA prefers working through the legislative process rather than through a ballot measure. In 2014, when NSEA tried to pass a business tax on the ballot, it was defeated by a 4-1 margin and the results were used as an argument against passing a different tax package in the Legislature in 2015.
“The concern would be the risk of going it alone and not having support for funding,” Rippet said, “and having that being misinterpreted by the Legislature that there isn’t support for funding, rather than there isn’t support for that particular method.”
In the waning hours of the 2019 Legislature, lawmakers passed Senate Bill 543, which revamps the state’s decades-old school funding formula by placing revenue streams in a single funding pot and moving toward a weighted funding model that funnels more dollars to student groups with extra needs. The Commission on School Funding has been tasked with guiding its implementation.
The law has been criticized by some education stakeholders who view it as meaningless without a significant infusion of new revenue. But state lawmakers have characterized it as the first step in overhauling how Nevada funds its public K-12 system.
The union has generally supported SB543, but Vellardita said it’s clear the long-term success of the new funding formula hinges on a significant investment. Several studies have pegged the cost of implementing weights — extra funds for students who are learning English, living in low-income households, have a disability or are gifted and talented — at $1.2 billion yearly.
“If there is no significant infusion of dollars in our K-12 system, then that new funding plan is not going to be a fix for our state’s school system,” he said. “It’s just not.”
Vellardita said union members have embraced the Strategic Horizon Campaign, and the union is prepared to spend $10 million to $18 million throughout that effort.
He called on the community’s gaming and business leaders to remember the lesson learned during the 2008 financial crisis — the vulnerability of a state economy reliant on gaming, hospitality and mining — and commit to improving the education system and, in turn, diversifying the workforce.
“A decade has come and gone,” he said. “We still are primarily a two-industry economy and because we have rebounded and come out of the recession, I think people have abandoned investing in public education on the scale that we really need. I would only ask that those enlightened business leaders be part of the conversation to find a final, lasting solution for our K-12 education system because I think it’s strategically in their interests to help grow our economy.”
Vellardita said the union is considering a third area of revenue outside of the initiative petitions, but he declined to discuss what that involves.
Riley Snyder and Michelle Rindels contributed to this story.
This story was updated at 9:35 a.m. on Jan. 14, 2020 with comments from CCEA chief John Vellardita, at 10:30 a.m. with comment from Gov. Steve Sisolak, at 11:25 a.m. with comments from the Clark County superintendent, at 11:50 a.m. with comments from NSEA, at 3:16 p.m. with a statement from the Nevada Resort Association, and at 5:04 p.m. with more information from Vellardita.