City leaders struggle with compromise over tax shift

Erin Neff

Friday, May 11, 2001 | 10:20 a.m.

CARSON CITY -- Henderson city officials made some movement toward a compromise on a proposal that would shift tax money from Las Vegas and Clark County to fast-growing, smaller municipalities.

On Thursday morning, while the Assembly Taxation Committee waited to convene a hearing on Assembly Bill 653, Las Vegas Mayor Oscar Goodman and Henderson Mayor Jim Gibson met with other local representatives to try to forge a compromise.

AB653, sponsored by Assembly Speaker Richard Perkins, D-Henderson, would make three adjustments to the tax formula.

First, Henderson would receive $4 million, paid equally by Las Vegas and Clark County. That would bring up the city's tax base, giving it, in effect, a raise in future distributions, in addition to the one-time bonus.

The bill would also remove from the tax distribution formula an inflation factor and the so-called "Plus One" factor, a complicated formula that offsets growth. Fast-growing communities such as Henderson say the "Plus One" factor hurts them.

By the time the Taxation Committee convened Thursday afternoon, Henderson had agreed to place the inflation factor back into the formula and had agreed to allow the "Plus One" factor to be phased out over four years, instead of removed immediately. That would soften the blow its removal would have on Las Vegas and Clark County.

Despite the significant movement on the bill, Perkins told the committee lawmakers need to set policy on this issue.

"This Legislature may need to be an arbiter in this," Perkins said.

The tax distribution formula was changed in 1997, reportedly to let growth pay for growth. But Henderson appealed in 1998, saying the formula change was actually costing it money, and asking for a $5 million base adjustment.

Henderson lost the appeal and estimates it has "lost" $24 million in revenue since.

"Our concern here is that there is a fairness issue here that needs to be resolved," Gibson told the committee.

Without changing the formula, Gibson added, the Legislature would be setting a de facto policy that forces cities to limit growth.

"We don't have the capacity to simply become another Boulder City," Gibson said, referring to the city with growth limits.

North Las Vegas City Manager Kurt Fritsch argued his city would get an extra $500,000 to $1.25 million in future years if the formula is changed.

The committee took no action on the bill Thursday.