High court asked to review county tax ruling

Friday, July 12, 1996 | 11:59 a.m.

CARSON CITY -- The Nevada Supreme Court has been asked to reconsider its decision that could drain millions of dollars from county governments and send the money to cities and special districts each year. The request came from Humboldt County lawyer Kyle Swanson.

The court ruled June 24 that Humboldt County should not have kept the interest earned on taxes it collected for the Golconda Fire District for 38 years.

Other counties, including Clark County, have followed the same procedure, collecting taxes for cities and special districts and retaining the interest earned instead of distributing it.

In the Humboldt-Golconda case, the county has collected the fire district taxes since 1954 without charge for the processing and kept the interest earned on the money. At first not much money was involved, but when a major power plant and gold mines were opened in the 1980s in the fire district, the amount grew to $350,000 by 1993.

In 1992, Humboldt County started charging the district $1,000 a year for collecting and sending the tax back to the fire district.

Swanson, in his petition, said for the fire district "to contend that they had no idea that invested monies were earning interest for 40 years smacks of ignorance and a complete disregard of due diligence."

Swanson urges the court to impose a three- to four-year statute of limitation on the case, which would bar any repayment to the fire district before the years 1991 or 1990.

The Supreme Court, in its ruling, sent the case back to District Judge Richard Wagner for an accounting of how much was owed the Golconda district. But Swanson asked the court to allow Wagner to also consider the statute of limitation issue and the fairness of a requirement to go back 38 years.

Robert Hadfield, executive director of the Nevada Association of Counties, said the case at first drew little attention from county circles.

"But it's got the attention of counties now," he said.

The association's board of directors will meet July 30 to consider the issue.

In Clark County, officials estimate they earned $2.2 million in interest off the property tax collected last year. Of that amount, 40 percent has been distributed to the school district as mandated by state law.

The county gets to keep 40 percent of the remainder, leaving about $500,000 to send back to other local governments. In Washoe County about $1.4 million was earned in interest last year that may have to be distributed.

Clark County attorneys are reminding cities that the money has been used for the public good.

"It's not like they're sending that money to China or burying it in a hole in the ground," District Attorney Stewart Bell said.