Lawmakers split over ‘green construction’ tax breaks

CARSON CITY -- Key legislators clashed Thursday over the meaning of proposed regulations designed to reduce the $900 million in tax breaks Nevada businesses can receive for constructing environmentally friendly buildings.

Assembly Speaker Barbara Buckley, D-Las Vegas, said businesses seeking sales and property tax breaks must adhere to the criteria for "green construction" buildings set out in Assembly Bill 621, passed by the 2007 Legislature.

But Senate Commerce and Labor Chairman Randolph Townsend, R-Reno, said some companies received opinion letters supportive of their building projects from the state Tax Commission before the new law was passed.

They relied on a 2005 law governing tax breaks for green construction, and they should receive tax breaks, regardless of what was stated in the 2007 law, Townsend said.

"It doesn't matter what the commission feels, thinks or said in previous opinion letters," Buckley said. "We get elected to make those decisions. The statute must be followed. The Legislature trumps. We are the official policy-making body, and our statutes must be followed."

But Townsend said he specifically identified which companies qualified for sales tax breaks on the Senate floor just before the bill was approved by his house in June.

"If this is going to be revisited and they have a new standard to meet, you are inviting more litigation," Townsend said. "We will be tied up the rest of our lives."

Their exchanges occurred during a meeting of the Legislature's Subcommittee to Review Regulations.

Under state law, the Legislature must review and back regulations drawn up by state agencies before they go into law. The state Tax Commission must prepare regulations that implement the law approved by the Legislature.

Buckley maintained the opinion letters companies received did not constitute "pre-construction contracts." Such contracts were part of the criteria needed by a company to qualify for the tax breaks.

During the June 1 floor vote on AB621, Townsend said the legislation eliminated sales tax breaks for all buildings except for the CityCenter project being built by MGM/Mirage; Fontainebleau; the Venetian's Lido/Palazzo Resorts projects; the Molasky Corporate Center; the Echelon Place project by Boyd Gaming, and the Panorama Towers project. All are in Clark County.

He said legislators cannot use the new law to redefine what projects qualified for tax breaks under the law approved in 2005.

Legislators sought to revise the older green construction law after learning it would result in more than $900 million in sales and property tax breaks, reducing funding for local government and public schools. The new law is expected to cut the tax breaks in half.

State Taxation Director Dino DiCianno told the subcommittee members he wanted them to look at the tentative regulations designed to put AB621 into effect to ensure they meet legislative intent. The Tax Commission is scheduled to meet Oct. 1 to look at the regulations.

Buckley told DiCianno the regulations cannot say a business received a contract for tax breaks just because the Tax Commission issued them an opinion letter.

"The commission must look at the criteria and evaluate and make a determination in accordance with the statute," she said. "The Tax Commission must follow the statute, regardless of whether you previously used an opinion letter."

Hearing the contrasting views from legislators, DiCianno admitted he was "a little confused" on what he should do.

He agreed to meet with Legislative Counsel Brenda Erdoes and try to come up with proposed regulations that meet the intent of the statute.

The issue could be discussed again at the Sept. 18 meeting of the Legislature Commission, a group of legislators who handle business when the Legislature is not in session.

The regulations cannot be adopted unless most Legislative Commission members from both the Senate and the Assembly give their consent.