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Wednesday, October 07, 1998
No tax break for art's sake
A board enacts a rule that prevents Steve Wynn from getting a tax cut if his gallery charges an admission fee.
By Ed Vogel
Donrey Capital Bureau
CARSON CITY -- Despite pleas from Mirage Resorts Inc. Chairman Steve Wynn, the Nevada Tax Commission voted Tuesday for a regulation that blocks the state from granting tax breaks for the Bellagio's art collection if an admission is charged.
After the 5-3 vote, Wynn said he would not seek any tax breaks now for the $285 million art collection but will charge a $10 admission fee when the Bellagio opens Oct. 15.
"I don't have any more energy for this," said Wynn, who urged the commission in two long meetings to allow him to charge admission and still receive tax breaks.
He expects about 1,800 people a day will visit the art collection. At that rate, the museum would receive about $6.5 million a year in admission charges.
The collection will be so popular that long lines of people at least initially will have to wait to enter the gallery, he predicted.
Aides said the admission charge is necessary to pay for the costs of security, insurance and the climate-control environment of the 2,000-square-foot gallery.
Wynn blamed his defeat on the efforts of state Sen. Joe Neal, D-North Las Vegas.
Neal made his opposition to a tax break for Wynn one of the central issues of his unsuccessful campaign for governor. He left the Tax Commission meeting with a wide grin on his face.
Wynn doubts he will go to the Legislature next year to seek a law that would allow him to charge admission and still claim tax exemptions.
"That is where Joe Neal operates," he said. "I don't know if we will be back with it. It is too time consuming."
He told the commission that he could not understand why Neal "constantly disseminated false information."
The Mirage chairman said he did not seek tax incentives for himself or the Bellagio, but to make Nevada a national mecca for art. He suggested that more art would be shipped to galleries in Nevada if the tax incentives were in place.
"Why this turned into a populist `Don't let the rich guy get away with something' is inexplicable to me," Wynn said.
During the 1997 legislative session, Mirage lobbyists consistently pushed for the art tax exemption bill, though they and art organization leaders maintained it would benefit the Nevada art community, not Wynn.
Wynn himself placed telephone calls to senators when it appeared the measure would die in the final days of the session. As it was, the bill failed to pass the Assembly but was revived and then approved three days later.
The art gallery at the Bellagio will be open between 9 a.m. and midnight. The collection includes works by Van Gogh, Monet, Renoir, Cezanne, Picasso and Matisse.
The Tax Commission was charged with adopting a regulation that put into effect Assembly Bill 536, the enabling law passed by the Legislature last year.
Under the law, a buyer of artworks valued at more than $25,000 can apply for an exemption of 71 percent of the sales taxes due on the purchase price of the work of art. The buyer also can receive a personal property tax exemption.
To qualify for the exemptions, the art buyer must display his collection in a place available for public viewing for educational purposes at least 20 hours a week for 35 weeks a year.
Wynn maintained that as a dealer of art he would have received only a small tax exemption, about $1.5 million, not the $18 million that has been widely reported.
He said he would not receive any sales tax break because the art in the Bellagio collection will be offered for sale and the purchasers will pay the full state sales tax rate of 7 percent.
Reading from an art magazine, Neal said the tax break grew out of a move by Wynn "to use art to lure high rollers to a particular casino."
He expressed concern that the Bellagio might try to get around the law by making the collection available for free viewing for schoolchildren only from midnight to 4 a.m.
"We are talking only about 20 hours a week," Neal said. "You need to make sure the hours are not manipulated. I don't think anyone getting an exemption of $18 million would object to that."
Nonetheless, Assembly Speaker Joe Dini, D-Yerington, told the commission in a letter that Wynn should be allowed to charge admission as long as schoolchildren could visit the collection for free. Dini was author of the art tax exemption law..
Pointing to Dini's letter, Wynn said the commission should change the regulation to allow him to charge admission to all but schoolchildren.
"The Legislature said the art had to be displayed publicly," Wynn said. "It didn't say admission has to be free."
Robert Stremmel, a Reno art gallery owner, backed Wynn, calling his collection the best in the West and saying virtually every art museum charges admission.
"Mr. Wynn has gone to an enormous expense," he said. "No one has a collection like this 'til you get to Chicago. I would feel very good about it (paying admission)."
But Tax Commission member Valerie Cooke questioned whether any other museum that charges admission receives state tax breaks.
After three hours of debate, commission members finally voted to keep the decision they made during an August meeting in Las Vegas. At that meeting, commissioners voted to require free admission to art collections if their owners sought to claim the tax breaks, but at Wynn's request, the commission agreed to reconsider its decision.
Voting for the free admission policy were Chairwoman Barbara Smith Campbell and members Harley E. Harmon, John E. Marvel, Valerie Cooke and Candace Evart.
Opposing the plan were members Robert E. Robertson, Dean Baker and Charles Lenzie.
Before the vote, Andy Barbano, who formerly worked on Neal's gubernatorial campaign, told commissioners they would have to explain publicly if they changed their August votes and decided to give Wynn what he sought.
"Why the change in 60 days?" he asked. "It was almost a unanimous decision in August not to allow an admission charge."
Robertson had sought amendments that would require that art collections be open for free only to Nevada residents.
"Nevada residents are entitled to free admission for giving up tax revenue," he said.
But Smith Campbell and staff attorneys questioned whether such a provision might violate the U.S. Constitution.
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Steve Wynn testifies Tuesday before the Nevada Tax Commission in Carson City.
Cathleen Allison
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