No easy solution seen for property tax hike

Monday, Jan. 10, 2005 | 11:08 a.m.

Several hundred of Nevada's movers and shakers gathered at UNLV on Friday to examine a gathering storm: the "crisis" of property tax increases and what can, or sometimes can't, work to remedy the problem.

The conference participants seemed to agree on three things:

Clark County officials, among them Assessor Mark Schofield, have warned for most of the past year that property tax increases could spark a voter revolt. The average increase is about 35 percent, although some property owners will see greater increases unless the Legislature does something within the next three months.

Lawmakers, representatives from business interest groups, and academic experts on tax policy looked at some of the growing multitude of proposals to curb the tax increases.

No one solution of 14 articulated proposals came into the conference as a clear favorite, and none of the remedies came out of the symposium as a consensus pick. The conference focused a spotlight on two broad proposals: One would mirror California's 1978 Proposition 13, which capped increases at 2 percent.

Although a Proposition 13-style solution has been advocated by Assemblywoman Sharron Angle, R-Reno, financial and academic analysts said the move in California did not work as expected and spawned a variety of negative consequences.

Mike Sloan, Mandalay Resort Group senior vice president and a veteran of Gov. Kenny Guinn's task force on tax policy, said one significant problem in transposing Proposition 13 to Nevada is that California, unlike the Silver State, has a personal income tax as an alternate revenue source.

"Proposition 13 is not going to work because you don't have the revenue in the state to make up the difference," he said.

Gary Cornia, a professor of public management at Brigham Young University, said that if a sharp cap similar to Proposition 13 were instituted in Nevada, it would have impacts similar to those of California and other states.

In those states, "there has been a shift in the quality and quantity of government services; you need to recognize there will be a reduction," Cornia said.

The one remedy that did seem to gain some traction at the conference was the proposal from Sen. Dina Titus, D-Las Vegas, to simply freeze property taxes for one year at the current level. That would give the Legislature time to tackle the issue without instituting a hurried and potentially flawed change to the existing property tax structure.

Titus, who was one of seven members of the final panel of the day's conference, said the deep philosophical differences among the legislators meant that a simple and constitutionally valid solution will not be easy to find.

"You can't get the politics out of it and that's why I've proposed a freeze," she told the conference. "I wouldn't count on us moving smoothly and sanely to a resolution by next March."

Sen. Sandra Tiffany, R-Henderson, often disagrees with her colleague on a multitude of issues, but suggested Titus may be right.

"To get 63 people to agree, and it's got to be done by March, is going to be difficult," Tiffany said.

Marvin Leavitt, a longtime expert on Nevada state and local tax policy, said a big part of the difficulty is that legislators don't have a shared perspective on the problem.

"It seems like we have a lot of people running around suggesting plans, but we have not yet agreed on basic provisions," he said.

Leavitt said fundamental questions that have to be answered include: Should property tax relief go to those who have had the greatest increases, or should it go to those with the lowest incomes with the least ability to pay the increases?

Analyst Guy Hobbs, who prepared a white paper for the conference that showed significant and potentially fatal flaws to many of the remedy proposals including caps on increases, said the question is whether the system is fundamentally flawed, or if instead the bump in property taxes is due to a temporary aberration.

Assemblyman David Parks, D-Las Vegas, pointed out that while the calls from the public for property relief are growing louder day by day, the demand for government services, such as increased educational spending, are also there.

"We are certainly going to see unmet needs that need to be addressed," Parks said.

Some of the speakers and those attending the conference pointed out that Clark County declared a state of emergency last summer as emergency mental health patients, many of them homeless, crowded hospital emergency rooms, restricting access for other kinds of patients. The issue is still largely unresolved.

And last week, Nevada's school systems were found to be 48 among the 50 states for per-pupil spending. Property taxes have historically been a critical funding element for the schools, as well as state and local government.

Not everyone agrees with Parks' assessment. Tiffany, the conservative Henderson senator, said she doesn't see the demand for any government services other than shorter lines at the Nevada Department of Motor Vehicles' offices.

"I haven't heard one of my people ask for government services," Tiffany said. "They're furious at local government."

Sen. Barbara Cegavske, R-Las Vegas, said her constituents have been demanding a cap on property tax increases of 1 or 2 percent -- a cap that would mirror the Proposition 13 move in California. Cegavske, who said she cancelled meetings to attend what she saw as a very important conference, said the concern is for those constituents who cannot afford the increases.

Some people could lose their homes, she said.

Cegavske echoed others who attended the conference but did not come out of it with a clear vision of what remedy needs to be in place.

"I'm looking forward to more discussion and more debate," she said. "We're looking for solutions, trying to come up with an idea that works for everyone.

"We're just trying to do the best we can with a difficult situation."

Carole Vilardo, president of the Nevada Taxpayers Association and a panel participant, said the state is faced with a choice: action, or a reaction that could be very bad for Nevada. She said legislators need to act and act soon, even if the remedy is not perfectly fair for all taxpayers.

"Too much caution is going to create a problem in my opinion because too much caution will create a Proposition 13," she said.

"There is no perfect tax. If there were we would all have it and we would all implement it in exactly the same manner."