County seeks refund of $103 million from state

Clark County leaders are demanding that the state refund more than $100 million taken from the county, arguing that the money grab was unconstitutional.

County counsel Mary-Anne Miller sent a letter to the state treasurer's office, saying a May 26 Nevada Supreme Court ruling shows the state acted unconstitutionally when it took county money and "deprived citizens of its intended beneficial use."

Miller was citing the high court's ruling against the state taking $62 million from the Clean Water Coalition, a regional agency not tied to county government. Justices argued that the state can't single out local entities for a revenue grab.

"Please consider this correspondence an official demand of a refund of the amounts diverted under this legislation," Miller wrote in behalf of the Clark County Commission.

In all, the state scooped $180 million from the county to help plug an $800 million shortfall in its 2009-11 budget.

County commissioners want to retrieve property taxes the state has taken. The state diverted about $55 million in operating funds in 2009 and a total of $48 million in capital money in 2007 and 2009. The commission is not trying to recover $80 million that doesn't seem to be affected by the court ruling.

Representatives in the treasurer's and governor's offices said they were deferring to the state attorney general. Edie Cartwright, a spokeswoman for the attorney general, said that the county's demand was being reviewed and that she couldn't comment beyond that.

The Supreme Court decision prompted Gov. Brian Sandoval to back down from his pledge not to extend $620 million in taxes that were set to expire.

Sandoval said the ruling called into question about $650 million the state had planned to pull from local coffers, making it necessary to maintain most existing taxes.

As a result, the state didn't take about $35 million in property tax revenue that Clark County leaders feared would be snatched this year.

The high court's decision and Sandoval's response spurred most commissioners to pursue a refund. The tone of Miller's letter suggests the county is ready for a legal battle.

"That was money that never should've been taken," Commission Chairwoman Susan Brager said Thursday. "I think it's imperative that we are assertive."

Having the money to fund services in a recession is crucial because more people need them, Brager added.

State Sen. John Lee, D-North Las Vegas, said he is opposed to the state grabbing money from local governments but noted it was a longtime practice.

The state can't afford to repay the county more than $100 million in a lump sum, but it might be able to spread the payments over 10 years, Lee said.

"I think they're due the money back," Lee said. "Over time, I think the IOU could be paid."

Both sides should avoid a messy legal tussle in this tough economic climate, Lee said, adding that "this is absolutely the worse time for them not to work with us."

Commissioner Steve Sisolak agreed that going to court would serve neither the county nor the state.

Sisolak said he would be open to the state repaying the county in increments.

The state's money grab resulted in layoffs, cuts in employees' pay and benefits, and a loss of programs and services, Sisolak said. "Everything has been affected."

The county's largest union estimates that in the past two years the county saved $130 million by slashing jobs and trimming compensation, partly in response to the state siphoning money.

If the county were to regain money lost to the state, it would change the tone of bargaining that has begun for a one-year labor contract, said Nick Di Archangel, spokesman for the Service Employees International Union Local 1107.

The county would be able to restore some jobs and maybe even cost-of-living raises, Di Archangel said. "Our members are definitely feeling the strain."

Commissioner Tom Collins said he was curious whether county officials told lawmakers two years ago that it was OK for them to take some money if they didn't touch other funds.

Thus, it's unclear how much money the county can demand be repaid, he said.

In any case, the county shouldn't engage in a power struggle that could alienate lawmakers whose votes will be needed in future sessions, Collins said.

"The state can punish Clark County for every ounce the county could forcibly take back by law," he said.

Contact reporter Scott Wyland at swyland@reviewjournal.com or 702-455-4519.