Cities tell lawmakers tax formula is unfair

CARSON CITY - Legislators heard a lot of reasons Monday why Laughlin residents should vote against incorporating into a city, and few on why they should vote yes.

North Las Vegas Finance Director Al Zochowski said his city loses $20 million to $30 million a year in so-called "C tax" revenue to Clark County and local governments because of unfairness in the 1997 tax distribution formula.

The six state taxes are returned to counties and local governments under a complex formula that could be revised at the 2013 Legislature.

Fernley Mayor Leroy Goodman said his Northern Nevada city, incorporated in 2001, receives only $138,000 a year in "C taxes" from the state for providing services. City officials have a pending federal lawsuit against the state over the money that they think the city should receive, rather than Lyon County.

Their complaints came during a six-hour meeting of the legislative Subcommittee to Study the Allocation of Money to Local Governments.

They also came at a time when Laughlin voters are preparing for a June 12 election where they will decide whether to form a city, rather than remaining a town under Clark County control.

Whether the proposed city has enough "C tax" revenue might be the determining factor on whether voters back incorporation.

Assemblywoman Marilyn Kirkpatrick, D-North Las Vegas, said Monday that she wants the committee to come up with a new formula in coming months that provides more fairness in tax distributions over the next 10 years.

Kirkpatrick also requested that Zochowski give legislative staff members the analysis he used to find North Las Vegas is being shortchanged.

"As a resident of North Las Vegas, I become nervous when I hear there is so much money that will come out of a C tax formula that you say is broken," Kirkpatrick said. "My constituents think all I have to do is write legislation and they will be whole again."

Earlier Monday, Terry Yurick, an activist for the Laughlin incorporation effort, made a brief presentation in which he called for changing the current tax distribution formula to one based on assessed value of property.

Such a change would give Laughlin $11.5 million a year, not the $6.8 million that the state calculated they would receive from state taxes and local fees.

Yurick said he knows winning incorporation will be difficult, in part because he believes the county does not want to lose the money for Laughlin that it now receives.

He said the testimony illustrates the need for revising the tax distribution formula to one more favorable to Laughlin and other communities.

"The county does not want us to become a city," said Yurick in a phone interview.

"My belief is they are getting tax revenue out of us and aren't doing much for the town of Laughlin."

Contact Capital Bureau Chief Ed Vogel at evogel@reviewjournal.com or 775-687-3901.