Gibbons Plan: Use Room Tax Revenues for Road Funding

A front-page article in today's New York Times fills in national readers on the recent travails of Nevada Governor Jim Gibbons. But members of the Las Vegas Convention and Visitors Authority clearly don't need the Times' help in making up their mind about Gibbons. Here's the lede in last week's Review-Journal:

Gov. Jim Gibbons' proposal to use room tax dollars to build highways was called "rude," "irresponsible," "ill- conceived" and "a blatant lie" by Las Vegas Convention and Visitors Authority board members Friday.

Wow. So what did Gibbons propose that generated so much spleen from the Visitors Authority folks?

Gibbons proposes redirecting $424 million in revenue from the tax on hotel rooms from the authority to highway construction over the next eight years, an amount that would be combined with diversions of live entertainment tax and vehicle sales tax to secure $2.5 billion in bonds and get started on the state's most urgent road construction needs, which have an estimated cost of $5 billion.

From the board members' perspective, the main problem with this proposal is that the revenue from the hotel-room tax already is being used to help pay for bonds to build a new convention center-- which means that diverting the revenue could endanger the bonds (and the whole convention center project):

Because bonds have already been sold to pay for the renovation, secured by projected future revenue, the authority's lawyers say Gibbons' proposal violates contract provisions in the U.S. and state constitutions.
"The U.S. and Nevada constitution both have clauses that prevent the government or the state Legislature from changing the deal on bondholders," attorney John Swendseid told the board.

Apart from nit-picky questions of violating the US and state constitutions, the real issue here is that Gibbons simply will not tolerate tax increases of any kind. And when tax increases are verboten, the only other way to meet unmet spending needs is to beg, borrow or steal money from somewhere else. One wonders how much more outlandish these proposals will have to get before Nevada policymakers realize the folly of the "no tax pledge."