Plan to cut cities’ property tax share

Judy Odierna and Dan Kulin

Tuesday, March 18, 2003 | 11:13 a.m.

Local government officials are worried about a proposal by the State Senate's leader that would cut the amount of property taxes municipalities receive.

Senate Majority Leader Bill Raggio, R-Reno, introduced a bill Monday that would give the state a bigger share of future property tax revenue because, he said, the state cannot meet all of its obligations on its share of the money. The bill would bring an estimated $67 million into state coffers in 2005.

But local officials balked at the proposal, which would split part of the increase in property tax revenue, saying it would cause a revenue shift revenue away from government agencies that need the money.

Clark County Manager Thom Reilly said Raggio's proposal was excessive and would have a significant effect on the county. Reilly said the proposal would cost the county more than $42 million in 2005, $71 million the following year and $105 million in 2007.

"It would have a significant and dramatic impact on the ability to meet the needs of residents of Clark County," Reilly said. "About 50 percent of the property tax already goes to Carson City. Granted it goes for education, but that is the state's responsibility."

Before introducing the plan, Raggio said he thought the Legislature "should really look" at the issue because of the state's responsibilities. Under the plan, growth in property tax revenue that exceeds a three-year average of the consumer price index would be evenly split by the state and local governments. Currently local governments get the entire benefit from revenue growth.

Tax revenue set aside for education and bond repayments would be exempt.

Reilly said the county already is struggling with layoffs at University Medical Center and can't meet Metro's demands for new police officers due to tough economic times. Reilly also said unfunded mandates and money held back by the state for provisions of services will cost Clark County $75 million next fiscal year.

Clark County commissioners sharply criticized Raggio's proposal during this morning's regular meeting.

The legislators "have no understanding of local government," said Commissioner Myrna Williams. "The feeling up there is that we are the cash cow, the golden goose.

Raggio's bill, she said, "would be a recipe for no growth, stagnation."

Commissioner Rory Reid said the governor's tax task force examined every tax element.

"There were very few things they rejected out of hand as bad policy, but this was one," he said. "This is bad policy. It robs Peter to pay Paul, and it is just bad policy."

Commissioner Chip Maxfield and others pointed that by forfeiting half of the revenue from growth to the state, the county would have to raise local taxes by twice the needed amount to make up the difference.

North Las Vegas Mayor Michael Montandon agreed this morning the plan would limit growth, and in effect the state would be forcing cuts at the local level.

"Every time I don't add a police officer, I am cutting police service," he said.

The shift, Montandon said, "would be devastating to us. ... It would be putting a real strain onto our ability to grow."

Henderson Mayor Jim Gibson said he hasn't seen the bill yet, but he was "extremely concerned about any realignment of the property tax." He said cities have the same financial problems as the state.

If there is war, an economic impact will be felt that is certain to be exacerbated by any shift, he said. "If there is a downturn, we'll feel it like they feel it," he said.

The tax shift would cost Las Vegas $31 million over three years, a 10 percent hit on the city's general fund, Deputy City Manager Betsy Fretwell said.

"We hope the Legislature considers that 20 percent of our budget comes from property tax," Fretwell said. "That's our most stable tax source. The rest is vulnerable to an economic downturn. It gives the impression of robbing Peter to pay Paul."

Sun reporter

Launce Rake contributed to this story.