Changes on the Hill and at the AGA
Last month, I noted the significance of the fact that so many members of the new Congressional leadership have extensive experience with the gaming entertainment industry. While having legislators from gaming states in these positions certainly will not cause the industry to curry favor, having leading decision makers in Congress who are more educated and open to industry concerns cannot help but be a good thing.
Nevada and the entire gaming industry scored another victory last month when Shelley Berkley (D-Nev.) was selected to serve on the House Ways and Means Committee, one of the most prestigious appointments on the Hill. I have long said that the two most important committees in Washington for the gaming industry are the Senate Finance Committee and the House Ways and Means Committee, as all tax proposals must pass through these committees. Having Rep. Berkley on that committee will provide a strong voice for the gaming industry – not only in Nevada but across the country.
The preliminary legislative calendar for the 110th Congress is chock full of issues that could have major implications for the gaming entertainment industry. But before the new session got underway, there was some unfinished business to attend to when members of the 109th Congress returned to Washington after the November election. The AGA helped the gaming industry achieve a key victory in the waning hours of the lame duck session, as members of Congress voted to extend a pair of key tax incentive provisions as part of the Tax Relief and Health Care Act of 2006. The first retroactively extends a research and development tax credit to cover all of 2006 and extends the same credit through 2007, avoiding a financial reporting nightmare for gaming equipment manufacturers and other gaming companies engaged in significant R&D activities.
The second extends the time for gaming companies along the Gulf Coast to complete the process of rebuilding in the Hurricane Katrina-ravaged region. The AGA led the successful legislative battle in 2005 that secured the enactment of very favorable tax depreciation benefits for gaming companies rebuilding along the Gulf Coast. These special Katrina depreciation rules permit a deduction of half the cost of a commercial building in the first year, with standard depreciation of the remaining cost. As originally enacted, the building had to be placed in service before December 31, 2008 to qualify for the special depreciation benefits.
The new legislation provides greater timing flexibility in several respects for gaming companies rebuilding their hotel, restaurant, performance, parking, and related facilities in the region. Under the measure, the special first year depreciation deduction of 50 percent of the building’s construction costs would be extended for an additional year. While eligible construction costs would cut off at the end of 2009, an additional year would be provided to place the building into service, through December 31, 2010. These extensions will allow the gaming companies that already have done so much to revitalize the Gulf Coast region to finish the job.
Looking ahead to the 110th Congress, the Democrats have mapped out an aggressive agenda for the first 100 hours of the new session. Democrats took control of Congress by running on a platform of “New Direction” – to unite rather than divide the country. Their new direction consists of a commitment to integrity, civility and fiscal responsibility. The first order of business in the new Congress will be ethics reform, with the expected introduction of an ethics package designed to break the link between lobbyists and legislation.
The AGA has a long history of ethical conduct in our dealings with legislators and their staffs, and this December we decided to take our commitment to the next level by adopting a new Code of Ethics and Conduct for our organization, employees and consultants. The Code reinforces our commitment to upholding the highest ethical principles and standards, and covers a wide range of issues including employee relations, confidentiality and record keeping, conflicts of interest, political contributions and more. It also establishes an ethics committee to monitor compliance with the Code.
The AGA takes this issue very seriously, and we welcome Congress’ increased scrutiny of all lobbyists’ activities. We also encourage individual companies and organizations throughout the gaming industry to adopt policies similar to our new Code. Collectively, a shared commitment to fairness, openness and integrity will go farther to generate goodwill towards our industry on Capitol Hill than any amount of lobbying ever will.
Beyond ethics reform, other issues on the Democrats’ early agenda include U.S. security overseas and here at home, affordable healthcare, families and education, environment and energy, and an increase in the minimum wage, which last was increased 10 years ago. Several tax issues also will be on the table.
Immigration reform is poised to be a major topic again in the 110th Congress, with chances for the passage of a comprehensive immigration reform package improved with the Democratic takeover of Congress. As a part of any immigration legislation, Democrats are expected to insist on a pathway to citizenship for most of the estimated 12 million illegal immigrants currently residing in the United States, which is in line with the shared position of UNITE HERE, the U.S. Chamber of Commerce and the AGA.
Internet gambling also will likely be addressed again this year. At the AGA board meeting in December, directors renewed their support for an independent study of the issue conducted by the National Academy of Sciences or a similar research organization, and we plan to work with members of Congress to advance that aim.
In addition to all the changes in Congress, the AGA board meeting ushered in new changes for the AGA as well. December 31st marked the end of Terry Lanni’s tenure as chairman and Bill Boyd as vice chairman of the AGA, and it is no overstatement to say that his judicious leadership has had a profound impact on the industry and what we have been able to accomplish these past two years. Gary Loveman, chairman, president and CEO of Harrah’s Entertainment, was elected to take up the reins of the AGA, and T.J. Matthews was elected vice chairman. We all should look forward to what their creativity and unique vision will bring to our industrywide efforts in the new year and beyond.