Knappster: Cancer institute can't catch same tax break as monorail

By George Knapp

Only in Nevada could a privately owned monorail that travels to and from casinos, and nowhere else, be considered a public charity. And only in Nevada could the same people who declared the monorail to be a charity deny the same status to a cancer institute. Actually, the story isn't quite this simplistic, but it's close.

Mercury readers might be familiar with our previous coverage of the monorail's tax status. State taxation officials made the decision to declare the monorail a charity organization. They did it behind closed doors. They did it without a public hearing. And after they did it, they declined to tell anyone about it other than the monorail company itself. There are those who will say it was done this way because the monorail's backers were politically wired, juiced to the max, linked by friendships and business interests and even by blood to many of the most powerful people in Nevada. It also didn't hurt that the monorail project had the blessings of major poobahs in the casino industry.

Okay, fine. The monorail is a charity. Taxation officials had to really jump through some hoops to make the definition fit, but they did it. And now this charity is carrying bingo players, slot fanatics and blackjack degenerates back and forth between the casinos--casinos on the east side of the Strip, that is. Of course, the monorail only carries riders during those times when it isn't shut down because of mechanical parts that tend to rain down on the sidewalks.

Enter the Nevada Cancer Institute. The institute has raised tens of millions of public dollars in an effort to build a world-class treatment center and cancer research facility in Las Vegas. Nevada has one of the country's lowest cancer survival rates and could certainly use help in this area. The NCI is building a $50 million center where patients can get care and where top-notch medical researchers will have the chance to search for cancer cures. It's an ambitious and worthy project, and both the state and the IRS have determined that the institute is a legitimate charity under the law.

Last spring, lawyers for the isntitute filed what they guessed would be a mere formality with the state. They asked the state for an exemption of the NCI's building from any sales taxes. By granting this exemption for any sales taxes on construction materials purchased for the building, the institute would save more than $3 million, money that could be put into treatment and research. The lawyers were shocked when the state told them no.

State taxation officials, the same guys who made the monorail decision, got tough with the Cancer Institute because the institute used a contractor to buy the construction materials. Oh, you can't do that, they said. If the institute had used one of its own employees to buy the tons of steel, brick and concrete, it wouldn't have been an issue. If some little receptionist from the front office had been sent over to negotiate the purchase of a few tons of rebar, or several trucks filled with stucco, everything would have been fine and dandy. But we can't have licensed contractors doing that stuff. If they do, there's no sales tax exemption.

NCI's lawyers thought this was a bit harsh, so they filed an appeal in which they argued, quite reasonably, that the contractor is an agent of the institute, and as such, should enjoy the same tax status for the purposes of this project. Well, you might have thought the institute had insulted the family trees of the state tax folks. They responded with a blistering brief that accused the institute of attempting some sort of "sham" for the sole purpose of avoiding taxes. They could see no other explanation, they said.

Where were these fire-breathing strict constructionists when the monorail's petition was up for consideration? If you were to read the way the state glossed over what the law says and what the monorail does in order to allow that ill-fated train to pocket millions of public dollars, it would make you puke. Suddenly, they've grown balls up there?

I looked back at my monorail files and found that state officials have said in the past that the monorail's contractors would not be exempt from sales taxes. Whether or not that's still the case is open to debate. The head of the Tax Department told me in writing last July that no monorail contractor had ever applied for a tax rebate for work done on the train. The monorail folks told me the same thing. But I have the memos, sent from the monorail's own fax machine to the Taxation Department, asking for a rebate of $753,000 to repay monorail contractor Bombardier Inc. for the sales taxes it forked over to purchase materials. Someone must have overlooked such a petty amount, eh?

Whether the rebate was ever paid is not known. Knappster was told by the Tax Commission that the matter of tax breaks for monorail contractors is once again pending before the commission. Whether it ever makes it onto a public agenda remains to be seen. Funnier things have happened. See, way back when, the monorail's tax status was never forwarded to the Tax Commission for its approval, and tax commissioners were admonished by the attorney general's office to not talk about it publicly, especially with reporters. The Cancer Institute case, however, is going to the commission for a public hearing.

I don't really care whether the monorail retains its tax breaks. That seems like water over the bridge and money down the drain, and there is too much juice to fight it. But denying a sales tax break for building materials that are going to a cancer center seems really picky, even vindictive gamesmanship on the part of someone. At best, it's hyperactive hair-splitting within the state bureaucracy. I can't believe the public will stand for it.

Happy 96th birthday, Review-Journal

I've been invited to participate in the R-J's Centennial Trail Ride coming up in a few weeks, which came as a bit of a surprise. At the risk of being disinvited to the ride and of losing the friendships I still have at the paper, I need to say something about the claimed 100th birthday. I've been reading in the paper's many promotional announcements that it turns 100 this year, just like the city of Las Vegas itself. Wow, I thought, that's pretty cool. Except it isn't really true.

My friend and colleague Bob Stoldal, who knows more about Las Vegas history than any person I have ever met, dug into the archives and found pretty definitive documentation about this question. According to Stoldal's research, a newspaper called the Las Vegas Age came into being on April 7, 1905. It lasted until 1947. In 1909, the ancestor of the R-J was born. It was called the Clark County Review. In the 1920s, the Clark County Review became the Las Vegas Review, and then when it bought the Las Vegas Journal, it transformed into the Las Vegas Review-Journal. In the late 1940s, the R-J bought the Las Vegas Age. That purchase, it figures, gives it the right to assume the birthday of the Age, whether the R-J had anything to do with the Age back then or not.

"You can't buy your birth certificate," Stoldal argues. "It would be like Harrah's buying Binion's, and then Harrah's claiming that it had been in business in downtown Las Vegas ever since Benny Binion was down there. The R-J can trace its birth here to 1909, so happy 96th birthday."

I am told that if you raise this issue with R-J folks, the hair goes up on their backs and they will point out that the Centennial for Las Vegas is equally bogus because there are many other dates that could serve as the official birthdate of the city. Maybe so, but that is a different argument altogether. Class dismissed.

Names and faces

If Jim Rogers wants to be the permanent chancellor of the university system, I say what's the problem? He's smart and honest and knows how to deal with all of the knuckleheads in the system. Conduct a national search if you must, but it's hard to imagine there is a better person for the job. ... Say, how 'bout that $2 billion pipeline that was announced this week? Didn't it used to be a mere $1 billion pipeline? And since it is several years away from being built, does anyone really believe it will cost only $2 billion? Of course, this is another one of those magical projects that probably won't cost the public anything, right? But it's worth it, just so we can steal water from our neighbors, thus guaranteeing more explosive growth here. ... Scientists from Nevada's Desert Research Institute are heading for China to participate in the preservation of the historic Terra Cotta Warriors. More to come. ... Expect news soon about the first government sale of wild horses to private parties under a new law that allows the horses to go to slaughterhouses. ... UFO enthusiasts should head for Laughlin for the 14th International UFO Congress March 6-12 at the Flamingo Laughlin. As usual, some of the fare is a bit wacky but there are several top-notch speakers in the lineup, and lots of cool E.T. merchandise, books, tapes and trinkets to buy.