Rural counties, Vegas at odds

Kirsten Searer

Friday, Feb. 25, 2005 | 6:46 a.m.

WEEKEND EDITION

February 26 - 27, 2005

CARSON CITY -- Mineral County is one of the poorest and most heavily taxed counties in the state.

Commissioner Richard Bryant, a 58-year resident, has a four-bedroom, two-bath home that was worth $140,000 six years ago. He said he'd be lucky to get $70,000 for it now.

Bryant has watched the population of his county slowly trickle away in recent years, and with the people goes the value of homes and land.

That's bad news in Mineral County, where just 3 percent of the land is taxable. The rest is owned by the federal government, which situated the world's largest ammunition depot near the small town of Hawthorne. Struggling to make up for a small tax base, Mineral has cranked up its property tax rate to $3.66 per $100 of valuation and residents pay the highest amount allowed under state law.

While there's an almost audible clamor in Clark, Washoe and parts of Douglas and Lyon counties to limit skyrocketing property taxes, there's an opposite pull from people in rural counties such as Mineral.

"Any messing with the tax base is going to kill us," Bryant said. "We're struggling to make ends meet."

Eleven of the state's 17 counties, including Mineral, are already close to the maximum amount they can set for property taxes under state law.

They're digging in to maintain this revenue source, but it's difficult in areas such as Mineral County, which has lost 60 percent of its assessed value in the last six years, or Eureka County, where general fund revenues are down 54 percent since 1996, or in Esmeralda County, where one percent of the land -- just 36 square miles -- is owned privately.

The federal government does give counties PILT money, or Payments in Lieu of Taxes, to ease the loss of taxes local governments would normally glean from private land. But that revenue also is unstable -- the Bush administration proposed a 12 percent cut in PILT payments in the next federal budget, a roughly $1.6 million cut in Nevada.

"PILT has never, and will never, make up for a small property tax base," said Andrew List, executive director of the Nevada Association of Counties, who said most counties put the money in emergency reserves or spend it on one-time expenditures such as fire trucks.

Most rural counties would like to keep local property taxes the way they are. But, as White Pine County Comptroller Lester Kerr said, only half joking, "We don't have the majority say." His county's population is about 8,800 people.

Political hot potato?

Politically, legislators have to enact some change to the way property taxes are levied in Nevada, for fear that people in growing areas will begin to lose their homes. It's such a universal issue that Speaker Richard Perkins, D-Henderson, said it is basically non-partisan, unlike the nasty tax debate of the 2003 session.

"That was a political discussion," he said. "This is a policy discussion."

Activists also have made it clear they will float some sort of initiative if they aren't happy with the decision made this session, and the results could yield a dramatic cut in property tax revenues.

Legislators are aware that, if they don't consider the needs of rural counties, the state could end up pitching in for basic services such as law enforcement and roads, said Assemblyman Rod Sherer, R-Pahrump. Lawmakers, he said, don't want to have to "turn around and bail us out."

Rarely do rural counties get such a say in major issues, said Eric Herzik, a political science professor at the University of Nevada, Reno. Water rights are typically the only area where rural counties hold power over urban ones, he said.

"They at least have a bargaining chip or a potential bargaining chip," Herzik said.

Uniform and equal

The issue comes down to three words: "Uniform and equal."

The Nevada Constitution requires that all property be taxed in a "uniform and equal" way, meaning legislators can't fix the property tax problem in Clark and Washoe counties without changing the way taxes are assessed all over the state.

The provision makes this problem almost "impossible," said Assemblyman Pete Goicoechea, R-Eureka.

"That would be like ordering a pair of size 13 shoes for everybody," said Goicoechea, who said he would like to look more at making each county solve its own property tax problem.

The task before legislators is certainly a balancing act. While some residents in growing areas are threatening a political revolt, many local governments -- which rely on a stable property tax base -- have given predictions of gloom about what a cut to their revenue would do.

Even officials from large governments such as Clark County said they see a need to give residents property tax relief but are worried about keeping up with the needs of an exploding population.

Rural counties, however, could fare much worse. Pershing County Commissioner Roger Mancebo joked that homes in his county are "still in the price ranges of the 19th Century." Bryant said homes in Mineral County rarely top $140,000.

Plus, rural counties assess their values only every five years because they don't have the manpower to do it yearly, as Clark County does, Sherer said.

There are "two counties" in Nevada -- those faring well financially, and those looking to make up for job and population losses, List said.

"There are counties with very different economic situations out there," List said. "The solution needs to take into account the disparities."

Many ideas

Of the more than 14 ideas floating around the Legislature, List said one from Perkins would be "the most devastating" to rural counties.

Perkins proposed taking an automatic $50,000 exemption off of each property's taxable value. Home prices in Pershing County are so low that List estimates 91 percent of single-family residences would be tax-exempt under Perkins' plan.

"There would be essentially no property tax in Pershing County," he said.

Perkins said his staff is looking for ways to amend his plan so it wouldn't hurt rural counties. The differences between rural and urban counties "speaks to the complexity" of the property tax issue, Perkins said.

"Some of those counties are so sparse we could let them go to a 5 percent cap and they still couldn't afford to provide services," he said during a committee hearing when one resident proposed a strict cap similar to California's Proposition 13.

Other ideas include:

Capturing new growth

After years of depleting their reserve funds and riding the economic cycles attached to mining, many rural counties are now recruiting different types of businesses to stabilize their economy.

Pershing County, for example, is expecting a new cement plant in Fernley that should yield 400 to 500 jobs.

"The whole Northern part of the state is getting a lot busier," Mancebo said. "It's coming. It's almost like a train coming down the track. It's headed to Lovelock."

A private school for troubled children that will employ about 150 people is under construction in Mineral County, and a military training center is set to shuttle thousands of troops through the area, Bryant said.

And soon about 250 million tons of trash from California will be headed to a huge pit sitting in volcanic crust in Mineral County, which will receive a royalty for every ton placed there.

The way Bryant sees it, the county has done its best to pull itself from near financial ruin, and he hopes assessments will be back in three years to what they once were. So anything the state does now to shave property tax revenue could ultimately cost taxpayers, he said.

"We're struggling, we're very close, but we need some help from the state," he said. "You can either help us today or you can adopt us tomorrow."

"If things keep going as they are, we're going to have to choose between, 'Do we want a fire department or a sheriff's department?' " he said. "If they reduce our taxes, we'll just have to ask the government for bail-out money."