Saturday, March 05, 2005
Copyright © Las Vegas Review-Journal

2005 LEGISLATURE: Tax relief top issue, roadblock

Lack of progress on property taxes frustrates some lawmakers

CARSON CITY -- After four weeks of hearings, testimony and legal analysis, the Legislature appeared no closer Friday to finding a solution to the looming property tax increases that virtually everyone agrees is the most important issue of the session.

And the clock is ticking, with a March 31 "deadline" for action now less than four weeks away.

Some lawmakers are beginning to get frustrated by the lack of progress.

Sen. Randolph Townsend, R-Reno, said if a few technical details could be worked out, a bill implementing a freeze on property tax increases for next year probably would pass the Senate.

"I think you could get 21 votes for the freeze," he said. "Absolutely. Take a shot at it or offer something better."

Senate Minority Leader Dina Titus, D-Las Vegas, who has proposed a freeze in rates for one year, said it's time to try to move forward on the issue.

"I think it's time to put it out there," she said. "Here it is. If you don't like it, then kill it."

The lawmakers said there is consensus forming for the freeze in the Senate. Titus and Sen. Joe Heck, R-Henderson, are collaborating on a bill for a freeze in the coming year followed by limits in future years based on the consumer price index.

But so far Assembly leaders are not committing to one plan over another.

Assembly Speaker Richard Perkins, D-Henderson, who is also chairman of the panel looking at the property tax issue, said property tax relief will come for Nevada residents this legislative session.

Thousands of Southern Nevadans will see their property tax bills climb by 20 percent to 50 percent or even higher beginning July 1 if no action is taken.

"Whether it is this week, next week or whatever the deadline really is, we're going to accomplish property tax relief, there is no question in my mind," Perkins said. "Is there urgency? Absolutely there is urgency. But it's not today, it's in the next few weeks."

Lawmakers were told this week that the various cap proposals offered so far to provide relief, from a 6 percent limit to a freeze, have constitutional concerns.

If the Legislature adopts relief that runs the risk of conflicting with the state constitutional requirement that property taxes be assessed in a uniform and equal way, a legal challenge is likely, Perkins said.

"No matter what we do, it's going to disproportionately affect somebody," he said. "Do I expect someone is going to challenge it? Sure. Someone will see it differently or someone will say it doesn't provide enough money for education. Or whatever it is."

And Perkins said any solution has to be crafted to ensure that in addition to tax relief, essential government services such as public safety and education can be maintained.

The concerns with the constitutionality of the tax caps are twofold: that new construction would not immediately come under a cap, and that caps end up providing different effective tax rates to different valued homes.

An example presented this week by the Las Vegas firm Applied Analysis, using a cap of the consumer price index plus 1 percent, shows that a $75,000 home under this scenario would see an effective tax rate of 0.87 percent. A $128,000 home with the same cap would see a tax rate of 0.84 percent.

Senate Taxation Chairman Mike McGinness, R-Fallon, said local government officials are starting to get nervous about the lack of a favored solution to the property tax issue.

"I'm hopeful we'll get some direction from the legal folks on exactly where we can land," he said. "We're going to have to get as close as we can to `uniform and equal' and take a shot at it."

One potential answer for rural counties that could potentially be harmed financially with a low cap or freeze would be for the Legislature to set aside some funds to help those local governments where a need could be demonstrated, McGinness said.

Such a fund could be administered by the Board of Examiners or the Legislature's Interim Finance Committee, he said.

Clark County Assessor Mark Schofield said the March 31 deadline was set to give the 17 county assessors enough time to re-program their computer systems to reflect legislative changes to the property tax system. The other factor is that local governments craft their preliminary budgets in April.

But the tax bills won't go out until the second week of July, and the first payment isn't due until the third Monday in August, he said.