Bill would give state a bigger tax share

Erin Neff

Monday, March 17, 2003 | 11:27 a.m.

CARSON CITY -- Senate Majority Leader Bill Raggio today proposed a property tax shift that local governments have been fearing for months.

Raggio, R-Reno, introduced a bill today that would bring in an estimated $67 million to the state in 2005 by taking a share of future revenue growth in the property tax that typically would go to city and county governments.

"I don't think there's a birthright to this source of money," Raggio said last week when he discussed his plan with reporters. "I think it's time we really took a look at it."

Raggio said that because assessed value of property continues to grow at the local level, the state cannot meet all of its obligations while collecting only 15 cents out of property taxes on every $100 of property valuation. That has been the limit for two decades.

His bill would draw more money from local government coffers, but would exempt school district revenue and property tax already earmarked for bond payments, long-term contracts and net proceeds of mines.

Raggio proposes using a three-year average of the Consumer Price Index to determine a percentage to be applied to the revenue. Local governments would be able to keep all of the revenue that equals the average of the CPI.

Any revenue above the CPI average would be split 50-50 between the local governments and the state.

For example, if revenue growth is 11 percent and the CPI average is 4 percent, local governments would get the revenue equal to the first 4 percent and the state and locals would evenly split the remaining 7 percent of revenue growth.

"This is not stealing their money," Raggio said.

Local governments have been fearing this bill for years, since Raggio first began discussing shifting future property tax allocations.

Prior to the legislative session, the governments in Clark County held a strategy session to discuss the effect of such a plan and of other legislation.

Local governments have also hired lobbyist Marvin Leavitt, a longtime local government tax observer, who has argued that it makes no sense for the state to take local government money because it would simply leave fewer resources for cities and counties to provide needed services such as public safety.

He has suggested it is in the state's interest to have local governments providing those services instead of forcing the state to pick up the responsibility for things that have traditionally been handled at the local level.

Raggio said he does not understand why counties would make such an argument because he said he believed the state's funding responsibilities are much greater.

"We have to pay for mental health, TANF (Temporary Assistance for Needy Families), Medicaid and health care costs that the local governments don't," Raggio said. "I think the state has picked up the larger portion of those functions.

"One alternative (to his bill) would be to shift some of the state's responsibilities back to the local governments."

He also disagreed with an assessment that local governments cannot afford to lose a share of future revenue.

"I'm not here as just the state, I represent a county, too," Raggio said. "I believe, and I don't want to start being critical, but just look at the salaries in some of these counties."

Raggio said he cannot understand the high salaries in counties given the state's inability to offer cost of living adjustment raises to its employees or keep state employees from fleeing to local government jobs.

He said Clark County's salaries, for example, are 32 percent higher than state salaries. That difference was one of the reasons integrating the child welfare system in Clark County has proved so expensive.

"It's because of the higher salaries," Raggio said.

Raggio said he did not think his bill would have any real impact in major counties like Clark and Washoe.

"They may have to trim what they do," Raggio said.

He also said if local governments found themselves in dire need of the money, "they have the ability to raise money (by raising taxes)."

Raggio has computed the amount of revenue his plan would bring in to the state using conservative estimates of growth in the state's assessed valuations.

The shift is estimated to affect 2005 revenue as follows: The state would get $67.8 million in additional property tax revenue, while the local governments would still get $91 million.

The state's share of the property tax growth is anticipated to be $97 million in 2006, $126 million in 2007 and $184 million in 2009.