Gas tax disbursement to be studied

Friday, Oct. 26, 2001 | 9:16 a.m.

CARSON CITY -- A legislative committee Thursday voted to embark on a study of how more than $24 million of gasoline tax revenue a year is divided among local governments.

The study could set the stage for tax battles between counties and their cities.

Witnesses told the Legislative Committee for Local Government Taxes and Finance, headed by Assemblyman David Parks, D-Las Vegas, the study would be controversial.

"This will be an issue of great difficulty," Bob Hadfield, executive director of the Nevada Association of Counties, said in testimony before the committee.

"Whenever you take money away from somebody who is spending the money and they can't get the job done, it will be most contentious," Hadfield said.

Mary Henderson, representing the city of Reno, agreed it will be "very contentious," and she urged the committee to make sure "everybody's voice is heard."

"We must reach a delicate balance," Sen. Ann O'Connell said, adding that the counties could lose money if certain distribution formulas were adopted.

There is a mandatory 3.6 cents tax on every gallon of gasoline that goes to local government. That amounts to $38 million this year. Clark County's share of that is $16.5 million, said Russell Law of the state Department of Transportation.

The counties keep 35 percent of what they receive, and the remaining 65 percent is divided between the counties and the cities. The money is used for road repair and construction.

In dividing the 65 percent in Clark County, 21.7 percent goes to Las Vegas, 6 percent to North Las Vegas, 8.4 percent to Henderson, 1.4 percent to Boulder City and 61.8 percent to the county, Law said.

Law also said the study committee may want to consider whether general improvement districts should share in the distribution of the money, since the public travels on their streets.

The old formula for distributing the 3.6 cents among all the counties was based on area, population, road mileage and vehicle miles traveled, but the Legislature changed that to have two-thirds based on population and one-third on road mileage.

Some of the fast-growing cities could argue that population should be given greater weight in devising a formula, and that would take away from other governments.

Parks' committee decided to form a committee with an equally divided number of county and city representatives. This working group will hold hearings and make recommendations.

The legislative committee also discussed the effect of the Sept. 11 terrorist attack on local government.

Guy Hobbs, an independent financial consultant from Las Vegas, did an economic model on the two weeks following the attack. Clark County lost an estimated $240 million in economic activity from Sept. 11 to Sept. 25, he said.

That translates to a loss of $5 million in the sales tax and $4.5 million in the hotel-motel room tax, he said.