LAS VEGAS (Reuters) – When Harry Reid, the veteran Democratic senator from Nevada, brought up the idea last month of abolishing prostitution in the state, he did so almost as an aside -- a few lines in an eight-page speech.

But his remarks touched a nerve in Nevada, the only state with legal brothels, and the resulting debate has reverberated through the Las Vegas mayor's race.

Nevada allows brothels in counties with fewer than 400,000 residents. That leaves out Clark County and its main city, Las Vegas, a popular gambling and resort center with a reputation as "Sin City."

The state has been home to legal brothels since the early 1970s, currently numbering two dozen.

But Reid, the Senate majority leader, complained that legalized prostitution lent the wrong image to businesses interested in relocating to Nevada, a potential loss of jobs the state can ill afford.

"Nevada needs to be known as the first place for innovation and investment -- not as the last place where prostitution is still legal," Reid said, adding his concern was prompted by a visit by a technology firm to rural Storey County.

Within days, Las Vegas Mayor Oscar Goodman headed in the opposite direction, repeating an idea he has floated more than once in his nearly 12 years in office -- make prostitution legal in the city and create a Wild West version of Amsterdam.

Candidates in the June election to replace Goodman, who cannot run again because of term limits, quickly weighed in.

Larry Brown, now a Clark County commissioner, said, "My position is I'm against it."

'A NEW LAS VEGAS'

"We're trying to create a new Las Vegas here -- there are more important priorities," he said. "Legalized prostitution is not an image we want to put forward."

Bradley Mayer, spokesman for Carolyn Goodman, the mayor's wife and a candidate to replace him, said of prostitution, "The only reason it's being talked about is because Oscar Goodman talked about it."

She is concerned about teenage prostitutes and human trafficking but her campaign is focusing on other issues, he said.

As for the state Legislature, where Reid originally spoke, state Senator Ruben Kihuen, head of the Economic Development and Employment Committee, said there was not much appetite for tackling the issue.

"I don't think the Legislature is going to take on the issue. Most (lawmakers) think it should be left up to local municipalities," Kihuen said.

As to the suggestion that legalized brothels sully the state's image, Kihuen said: "I've heard people say, 'If we didn't have the image of sex, more companies would want to come to Nevada.' But others say that it's why people come here."

Historian Michael Green said the fallout from Reid's remarks showed the love-hate relationship" Nevada has with its image.

"We can resent it, but the day it changes is the day no one comes here," he said.

(Editing by Dan Whitcomb and Ellen Wulfhorst)

MADISON, Wisconsin (Reuters) – Thousands of union supporters protested Gov. Scott Walker's budget proposals on Saturday at the state capital, a day after the state's chief executive followed through on his threat to issue layoff warning notices to unions representing state workers.

Joining the crowd was liberal filmmaker Michael Moore, who praised the protesters gathered in the battle over union bargaining rights as joining the history of the American labor movement.

Walker, a Republican, has proposed increased payments for health care and pension benefits for public workers and stripping their unions of most of their collective bargaining rights, a move he says is necessary to address a budget gap of $3.6 billion for the coming two years.

The warning notices, sent on Friday to at least 13 unions, do not represent actual layoffs for the state's 300,000 public employees but take the war of words between the newly elected governor and state Democrats to a new level.

Moore told the crowd, which was smaller than it has been the last two weekends of the ongoing protests, that the nation was awash in wealth, concentrated in the hands of a few, but the public has been cowed into not standing up for itself.

"Madison is only the beginning," Moore said. "The rich have overplayed their hand.

"There was no revolt, until now here in Wisconsin," he added.

The crowd estimate was put at about 12,000 people, smaller than previous crowds that numbered in the tens of thousands.

Democratic U.S. Rep. Tammy Baldwin reminded the rally of the 1965 voting rights march from Selma to Montgomery.

"What they did was change the course of history," she said. "That is what you are doing today."

Supporting Walker's proposals, meanwhile, the Americans for Prosperity organization was in the midst of a bus tour due to conclude on Sunday in Madison. The tour started on Thursday in Kenosha, with the aim of hitting 10 cities.

Walker's bill remains stalled in the Wisconsin Senate where all 14 Democrats fled to neighboring Illinois two weeks ago to deny the measure the quorum it needs to pass in the chamber.

Dave Hansen, one of the 14, issued a statement on Friday saying: "it has become increasingly apparent that Governor Walker is not interested in compromise, but instead appears intent on prolonging the impasse."

Behind-the-scenes negotiations have failed to produce a compromise. Just one Democrat is needed for a quorum.

The absent Democrats have been threatened with $100-a-day fines and the prospect of being arrested and taken to the Senate if they return to Wisconsin.

With no action expected on the bill, Walker said he will be forced to send out layoff notices to 1,500 state employees, saving some $30 million.

(Editing by Ellen Wulfhorst and Tim Gaynor)