Counties fear reduction of utilities’ taxes

Tuesday, March 24, 1998 | 10:02 a.m.

CARSON CITY -- Nevada counties are worried they are going to suffer some big tax revenue losses as telephone, electric and natural gas businesses are being opened to competition.

The Nevada Association of Counties sent word Monday to the state Board of Equalization that reducing the taxable value of these companies will "result in financial hardships in many companies."

The equalization board opened its two-day meeting to consider appeals on the value of the properties for tax purposes. The properties include those owned by electric, natural gas, telephone, airline, railroad and water companies where the state sets the values.

The board agreed to reduce the taxable value of Nevada Power Co., from $1.8 billion to $1.73 billion and Southwest Gas from $1.1 billion to $950 million. The reductions were agreed upon between the staff of the state Department of Taxation and the two utilities because of changes in capitalization rates.

But there was no agreement between AT&T and the tax staff, which feels the taxable value in Nevada of the telephone company is $142.4 million. The company estimates its value at $120 million.

The board spent most of the day hearing arguments on AT&T. John Goodman, a utility appraiser hired by the telephone company, said its full cash value in Nevada was $121.4 million. The testimony will resume April 8.

Goodman and other telephone representatives say that franchise value should not be used in computing values. Telephone companies don't have a monopoly anymore so franchises should be put on the tax valuation list, Goodman said.

Electric and natural gas companies will be open to competition in 1999 and they are expected to argue then that their taxable values will go down.

Robert Hadfield, executive director of the Nevada Association of Counties, said reduction in valuations will especially hurt the smaller counties.

As tax values are adjusted on companies operating across county boundaries, local governments will lose revenue from their property taxes.

To compound the problem, some counties are at the maximum property tax rate of $3.64 per $100 of assessed valuation. So they can't boost the property tax to make up for the lost revenue.

"Of major concern and importance to local governments is the protection of their tax base," Hadfield said. "Property tax rates may go up, exacerbating the tax cap problem in many counties and the concomitant competition for tax rates."

His last statement refers to the battle between the cities, counties and local districts for a bigger share of the $3.64 maximum tax rate.