Lawmakers skeptical of sweeping property tax proposal

Kiley Russell

Friday, April 9, 1999 | 9:46 a.m.

CARSON CITY -- A plan that would block efforts to shift Nevada's dependence on casino and sales taxes to property taxes is being questioned by skeptical lawmakers who say it would bankrupt some counties.

AJR17, a proposed amendment to the Nevada constitution, would roll back Nevada's property tax rate to mid-1990 levels, set the rate at 1 percent of taxable value and limit any annual increases to no more than 2 percent of that value.

"Our bill is certainly fair to current property owners because it bases tax liability on acquisition value, not on the fluctuating real estate market. It's based on what you sell your home for, not what your neighbor sold their home for," Assemblyman Don Gustavson, R-Sun Valley, told the Assembly Taxation Committee on Thursday.

But Assemblyman Roy Neighbors, D-Tonopah, said the amendment would cost the state $200 million over five years and could wreck local government budgets.

"This plan would just basically bankrupt some of the counties out there that are already on the ropes," Neighbors said.

The measure would also prevent any future hike in the real estate transfer tax, which counties dip into for specific spending projects.

"We have a portion of that tax that goes directly to school construction in Clark County and it's desperately needed," said Taxation Chairman David Goldwater, D-Las Vegas.

Goldwater also criticized a provision in AJR17 that would base property taxes on the original sale price of a home, and not on a periodic review of market value.

That provision would force people to stay in their old homes because any move would automatically mean a higher tax rate, Goldwater said, adding that he has many constituents who have been in their homes for a long time.

"Now that Las Vegas is growing, many of them are moving out," he added. "It seems to me like this would discourage someone from making that transition. It seems to prohibit what we're really all about and that is getting a step up."

But Gustavson said that his proposal wouldn't change the way people are taxed when they buy a new home.

"This here is basically addressed whenever anybody buys a new home, whatever area they're in. They know they'll be taxed on whatever the assessed value is on that home," Gustavson told the committee.

The plan would also allow seniors to transfer the assessed value of their old home to any they moved into, regardless of the purchase price, and would mandate that any property tax increases or additions be approved by a two-thirds majority vote in a countywide election.

Because AJR17 would change the Nevada Constitution, it must be passed twice by both houses of the Legislature - once this session and once again in the 2001 session. Before it could be enacted, it would still have to win statewide voter approval in 2002.