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Businesses wonder what's next after election

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Businesses wonder what's next after election

By Richard N. Velotta / Staff Writer

With one of the most invigorating election campaigns behind them, Southern Nevada businesspeople have begun asking a new question: What happens next?

Business leaders are dissecting what the Democratic victories will mean in terms of tax policy, health care, labor and other issues that affect the bottom line. Change appears to be on the horizon in federal and state policy.

Most feel that Mission 1 will be to address the worsening economy.

Keith Schwer, director of UNLV's Center for Business and Economic Research, said just because the Democrats now control both the state Senate and Assembly doesn't mean they'll be on the same track toward solutions.

"It's easy to say that we no longer have a divided Legislature," Schwer said. "But that doesn't necessarily mean they're going to get along. But it does cut out one of the more contentious factors."

Besides, he said, there's still a Republican governor at the helm.

"I think, short term, it's going to be a matter of making sure everybody gets paid," Schwer said. "Then, the focus will be on what the governor proposes."

The early indications are that Gov. Jim Gibbons, who declared "everything is on the table," is calling for salary cuts and that any tax increases would have to be "sunsetted," with a firm ending date.

Any tax increase would require a two-thirds vote for passage.

The state faces a $300 million deficit this fiscal year and early projections indicate an estimated $1.5 billion would have to be sliced from the $7.1 billion budget state agencies are seeking over the next two fiscal years.

On the federal level, Schwer said the administration of President-elect Barack Obama will have to determine a strategy for addressing economic recovery that may or may not start with some of the high-profile campaign promises.

For businesses, credit issues are key for future investment, but Schwer acknowledged housing and tax policy matters have been high on many people's agenda throughout the campaign.

Schwer said the redistributive effect of tax policy is nothing new, and the pendulum will change directions just as it did in the Reagan, Clinton and Bush years. But the difference this time is that the nation is in the midst of a deepening recession, which Schwer projects won't end until at least 2010.

He also said he expects the unemployment rate to reach double digits next year.

Alan Feldman, spokesman for gaming giant MGM Mirage, is taking a wait-and-see approach to how things play out on solving the economic downturn, which he agrees is the top issue facing lawmakers.

"It's no secret that these new members of the (Nevada) Senate and Assembly are dealing with an economic crisis unlike anything in our history," Feldman said.

He's not expecting tax increases to be on the agenda.

"Even among Democrats, there's still a group who believe the state, just like businesses and families, have to look at how we're spending," he said.

And that includes proposals to increase room taxes, which were supported 2-1 by voters in an advisory question.

"The convention business is so vitally important, we're shooting ourselves in the foot if that tax is increased," he said.

Feldman said boosting the room tax 3 percentage points for the average tourist is not the biggest concern, since visitors would pay about $3 a night more on a $100 room.

"But we're already getting pushback from convention and meeting planners, who are aware of the proposal," Feldman said. "If we're talking about a large show that books 20,000 rooms a night, adding 3 percent to the bill is not a small number. And there are planners who are looking at Orlando, (Fla.,) here, San Diego and Atlanta. They have lots of choices."

Funding education, he said, should be the responsibility of local residents.

"Why on Earth do we believe we should place the burden of education on tourists?" he said. "It's too important an issue to put the funding in the hands of people who are not invested here."

Feldman reiterated MGM Mirage's longtime stance that a broad-based business tax makes more sense to fund the state's most important needs.

"We'll always pay the largest share anyway, and that's not going to change," he said. "We've got to do this in a broad-based way. You can't rely on the tourism and gaming industries to fund this."

On the national scene, Feldman said he doesn't expect to see much change in how the state's interests are represented in Washington. "Our delegation runs on the party ticket and then goes to Washington to represent Nevada," he said. "They almost always eclipse party politics to do what's right for the state."

That, he said, is particularly true on Yucca Mountain.

"I don't expect to see anything different. Dina (Rep.-elect Dina Titus) will represent alongside Dean (Heller) and Shelley (Berkley)," he said.

He agreed that the economy will be the biggest task federal lawmakers will have to address and that other related issues may be addressed down the road.

Local chamber of commerce representatives expect lawmakers will be in for one of the most challenging sessions in history.

Sharon Powers, who heads the North Las Vegas Chamber of Commerce, said the election results that surprised her the most were the losses by Republican Sens. Joe Heck and Bob Beers.

"Those kind of threw us, and I'm sorry we're losing some institutional knowledge - knowledge of the budget and some of the balancing factor,"

Powers said. "But having both houses under one party rule is not necessarily going to be a negative for the state." Powers said state lawmakers will be focused on "budget, budget, budget."

"I know there's no appetite to raise taxes, but we can't just keep cutting," she said. "How much more can we cut into education, highways and roads before we further damage what we have?"

Powers applauded Gibbons' tax sunset proposal.

"I like the sunset clause only because it puts government on notice that this is not an endless pot of money," she said. "It says, 'We're putting this in for a specific reason, so don't get too comfortable with it.' "

On the federal side, Powers said she is concerned about proposals to push card checks instead of a secret ballot to certify union representation.

"There was a proposal that passed in the House and was defeated in the Senate, and Sen. Obama said when he was running for president that one of his goals was to get that passed in 2009," she said.

Powers said under the proposal, unions could be certified to represent employees by collecting signatures on cards instead of in a secret ballot.

"The right to vote in secret is an American institution," Power said. "We celebrated that very process last week. But the unions want to end the secret vote on certification, but not on decertification. It's very confusing to us as to why that's happening."

Powers said the chamber is concerned since the vote went down party lines, the Democrats will have a greater majority in the Senate. She said she doesn't expect much help from Berkley, since she was one of the co-sponsors of the legislation.

Powers also said the chamber is concerned about proposals to mandate sick-leave benefits.

"It's a problem for businesses because the mandate would require them to comply," she said. "If businesses are required to offer sick-leave benefits for everybody, they'd be forced to double pay, since they not only would be responsible for paying for the sick employee, they'd also have to pay their replacement."

Hugh Anderson, government affairs chairman of the Las Vegas Chamber of Commerce, said he expects health care and the state's retirement system to be big topics in the Legislature in addition to the budget.

"There were no huge surprises to us, and it's clear the electorate was looking for change,"

Anderson said. "We're looking forward to working with our new lawmakers to drive good public policy." Anderson introduced pollster Frank Luntz, who addressed chamber members at a lunch last week. Luntz said Obama's federal agenda should be to restore consumer confidence and encourage greater business investment. He expects overhauling the nation's health care system is a back-burner issue that probably won't be addressed next year.

Richard N. Velotta covers tourism for In Business Las Vegas and its sister publication, the Las Vegas Sun. He can be reached at 259-4061 or at rick.velotta@lasvegassun.com.