March 26, 2016 - 8:00 pm
Nevadans may still be struggling with depressed wages, but that’s not stopping local government officials from pushing for yet another tax hike.
Since 2005, Nevadans have been protected from soaring property taxes by a state law that limits their annual growth. Given that property taxes persist even when wages decline, these caps provide much-needed relief to homeowners.
But now that the caps are working, government officials including Clark County School District chief financial officer Jim McIntosh want them lifted, citing the expectation that “we always assume there will be some increase” in property taxes, according to a recent Las Vegas Review-Journal report.
The timing of McIntosh’s request is particularly tone-deaf, given that state lawmakers just passed the largest tax hike in Nevada history — explicitly to benefit agencies such as CCSD.
Nevadans — most of whom have yet to fully recover from the Great Recession — deserve a government that is trying to lighten their burden, not add to it with a barrage of tax hikes.
Instead, government officials are resorting to the tried-and-true tactic of threatening cuts to the most visible government services — such as longer response times for 911 calls — if they don’t get more taxpayer funds.
Scare tactics aside, is it really so unreasonable to ask government to do that which their residents have been doing for years?
In 2014, the median full-time, private Clark County working resident earned only $36,502 — nearly 12 percent less than their inflation-adjusted 2009 earnings and well below the $54,542 earned by the median Clark County local government worker, according to the U.S. Census Bureau.
Before even considering a tax hike, elected officials must do more to ensure that existing tax dollars are being used as effectively as possible.
Elected officials could drastically improve the fiscal health of local governments — without raising taxes — by implementing just two of the 50-plus recommendations from the Nevada Policy Research Institute’s forthcoming Solutions 2017 guidebook.
First, local governments should follow the lead set by the state and adopt performance-based budgeting, which prioritizes expenditures based on broad policy goals established by lawmakers, increasing efficiency and accountability.
Agency directors must demonstrate — in measurable ways — how their programs provide value to taxpayers, rather than just uncritically adopting the previous year’s budget as a baseline for the future.
The most effective form of performance-based budgeting includes a competitive bidding process, such as the kind used by the state of Washington, where both private and public agencies bid to provide public services.
In 2003, Washington faced a staggering $2.8 billion budget deficit — far too large to pass onto taxpayers. When desperate lawmakers agreed to let state agencies face competition for the first time, the results were stunning: increased efficiencies wiped out the entire deficit, producing a balanced budget at no extra cost to taxpayers.
Second, Nevada lawmakers must repeal “prevailing wage” laws, which artificially inflate labor costs for public construction projects annually by an average of 45 percent statewide, costing Nevadans hundreds of millions of dollars every year. While prevailing wage benefits the trade unions who win these lucrative contracts, it remains an indefensible abuse of tax dollars.
The full cost of prevailing wage is revealed in the enormous amount of debt — which consists mostly of construction bonds — held by Nevada’s local governments.
At $23 billion, the combined debt of Nevada’s local governments comes in at 327 percent of their own-source revenue — a ratio 70 percent higher than the national average of 192 percent, according to the most recent data from the U.S. Census Bureau.
Consequently, nearly 13 percent of Nevada’s local governments’ own-source revenue was consumed by the $919 million interest payment on that debt — 60 percent greater than the 8 percent national average.
Before further burdening homeowners with excessive taxes, elected officials must first utilize all of the proven, money-saving options — such as those mentioned above — already available to them.
Robert Fellner is director of transparency research at the Nevada Policy Research Institute.