The proposal is the result of a negotiated compromise back in May between the Nevada State Education Association, Wynn Resorts, Harrah's Entertainment and Station Casinos. The NSEA agreed to stop supporting a ballot initiative that would have raised the tax on casinos' gambling win to pay for higher teacher salaries and other educational improvements in exchange for the casino operators' support for a higher room tax instead. Proceeds from the added room taxes would be used at first to help make up for budget cuts in the worsening state revenue shortfall, and later to supplement regular K-12 funding.

The ballot initiative that won't go forward as a result of the compromise would have raised the state's tax on large casinos to 9.75% from 6.75%, a 44% increase. The compromise has the three casino operators encouraging the Nevada legislature in 2009 to instead raise the room tax as high as 13% from its current 9%, an added cost that would be passed directly onto hotel guests.

The hike in hotel room taxes will require a two-thirds majority of the legislature. If ultimately enacted, by the Legislature or voters, it would raise an estimated $180 million in its first year. Jeremy Aguero, a principal with Applied Analysis, a locally based business research and advisory firm, tells GlobeSt.com that the actual figure is probably closer to $150 million--assuming room rates hold up and development projects continue to come online as scheduled--while Nevada's budget shortfall is approximately $1.4 billion.