Tag law hurting state’s budget: Revenue drain to be plugged

Friday, April 20, 2001 | 11:15 a.m.

CARSON CITY -- A law enacted four years ago but that just took effect in January is causing an unexpected drain of $4 million in tax revenue for state and local governments.

"It's the biggest giveaway in Nevada," said Assemblyman Roy Neighbors, D-Tonopah, noting the benefactors are those citizens who leave Nevada.

Under the law, a motorist who gives up his license plates and cancels his registration with time remaining before expiration can get a refund from the state.

Gov. Kenny Guinn said that is causing a loss of $10,000 in tax revenue a day. And it's helping those who are packing up and leaving Nevada.

Neighbors said he is preparing a bill to eliminate the law, which has not been widely publicized. Neighbors expects that in the future there could be a run on the state Department of Motor Vehicles and Public Safety for the refunds.

Through March 31, the motor vehicles agencies had an estimated loss of $292,712, DMV spokesman Dennis Colling said, adding that the loss for this year will be about $3.9 million.

The state's highways will see $1 million of the loss and the remainder will hit counties and school districts.

Figures supplied by Colling showed Clark County losing $1.9 million this year. Nye County, where Neighbors is from, would take a $56,500 hit. Washoe County would give up $537,412.

Colling said every county and every school districts has been notified about the reduction in revenue. But Neighbors said the state is required to make up the loss of revenue to the school districts. So it hits the state twice.

He said he does not plan to change the law affecting a motorist who buys a new car and trades in his old car in the middle of its registration period. The owner would still be able to apply the unused registration and privilege tax to the new vehicle. That has always been the law, he said, noting that the transfer provision won't change.

Under the present law, the state has refunded checks of $1 or less to 322 people. It costs the state a lot more than the $1 to process and cut the check, Neighbors said.

The "kicker" is that the state controller must track those checks on the books for six years. Some people may never cash them and could just display them on the wall, he said.

Ginny Lewis, DMVPS deputy director, said that of the 10,830 checks issued so far this year, 5,571 were for amounts less than $20. The average refund was $44.

Neighbors said in 1997, the Senate passed a bill involving antique cars in the closing days of the session. When the bill got to the Assembly, an amendment was added inserting the refund language. But there was never any "fiscal impact statement" attached, showing lawmakers what the tax loss would be.

Neighbors said the law will have a "huge impact" on the counties.