County says new tax plan will hurt

Adrienne Packer

Thursday, April 19, 2001 | 11:03 a.m.

As the Assembly mulls a proposal to change the tax distribution formula, Henderson city leaders said simply removing two elements would provide closer parity in revenues for all Southern Nevada jurisdictions.

County Finance Director Steve Hanson said the "one-plus" element and including Consumer Price Index figures in the formula threw the system off kilter.

The change made in 1997 caused a windfall for Las Vegas while Henderson suffered a loss of $24 million over three years when compared to what it would have received under the old formula, Hanson said.

"The one-plus language is punitive to growing areas," Hanson said.

The element allowed local governments with slow growth to collect more than their share of revenues -- derived from taxes on general sales, cigarettes, liquor, motor vehicle registration and the real estate transfer tax.

If, for example, the revenue pot is $1 million and one city grew by 90 percent and the other by 10 percent, the money would not be dispersed proportionately, with the faster growing city getting $900,000.

Instead, a 1 was placed in front of the percentages, which were then added together. The fast growing city's factor of 1.9 is combined with the slower growing city's factor of 1.1 to equal three. When each factor is divided by 3 it determines what percentage of the pot each city receives.

Under the new formula, the city that grew 90 percent now receives 63 percent of the pot. The community that grew by 10 percent receives 37 percent.

Hanson points to the difference in consolidated taxes collected by Boulder City and Henderson from 1998 to 2000 to support his claim that the "one-plus" formula hurts growing cities.

Boulder City -- a no-growth community -- received $4,847 for each new resident during those two years. It collected $1.3 million for the 270 residents who moved in. Henderson received $204 for each new resident; $6 million for 29,000 new residents.

Henderson also is fighting to take the Consumer Price Index out of the formula. The new system adds the CPI to each city's base revenues, which are used for the daily operation of government. Henderson officials want the CPI figures to be included into growth revenues so it can be used for new services.

The city's proposal is controversial because both Clark County and Las Vegas stand to lose millions of dollars. Each entity also would have to give up $2 million to meet Henderson's request for a base adjustment of $4 million.