Editorial: Counties worry about tax decline

Wednesday, March 25, 1998 | 10:26 a.m.

Nevadans are understandably skittish about deregulating the electric power industry.

As the 1997 Legislature passed legislation allowing for competition by the end of 1999, even one of the biggest proponents of electric deregulation acknowledged there were uncertainties ahead. "We're in for a wild ride," Sen. Randolph Townsend, R-Reno, said.

While competition is still almost two years away, Nevada counties already are sounding the alarm bell that they might be hurt by deregulation. In an effort to cut their costs before deregulation of electric utilities comes next year, state Taxation Director Michael Pitlock said monopolies, such as Nevada Power Co., will continue to seek the lowering of their property taxes. On Monday, the state Board of Equalization gave Nevada Power a $1.3 million reduction in its property taxes while Southwest Gas received a reduction of $600,000.

The Nevada Association of Counties is concerned that small counties in particular are going to see big tax revenue losses as competition invades telecommunications and the power and natural gas industries. As tax values are adjusted on companies operating across county boundaries, local governments will lose revenue from their property taxes, the SUN's Cy Ryan reports. Compounding the problem is that some counties are already at the maximum property tax rate, which means they can't boost the property tax to make up for lost revenue.

In theory, competition among utilities should result in a better and wider array of services, along with a decrease in costs. But as the utilities look to trim costs in this new environment, smaller counties are likely to take a hit. When the Legislature convenes in January 1999 it should investigate thoroughly how deregulation will affect county revenues, and seek ways to lessen any adverse impact.