Guinn: Property-tax freeze would cost millions

Wednesday, Jan. 19, 2005 | 11:03 a.m.

CARSON CITY -- Gov. Kenny Guinn says a proposed yearlong freeze on assessed property values would force the state to kick in "millions of dollars" extra to the public schools.

The state's formula for financing public schools is based mainly on a combination of property taxes, sales tax and state revenue.

The governor said Monday he has built his budget on the traditional formula because he doesn't know what the Legislature will do on the property tax issue. But the state is obligated to make up any shortfall from part of the property tax going to the school districts.

Senate Minority Leader Dina Titus, D-Las Vegas, is suggesting a one-year freeze on the rising property tax values. And she has heard the concerns but she has answers to them.

Her plan is "not an absolute freeze," she said Tuesday. "There would be some growth money from new properties and improvements." She said she expects "considerable" property tax money from that source.

In addition, the state has a $310 million surplus. "If we need to dip into this, this is the year to do it," she said. Some of that money could be used for the one-year period to pay for any shortfall in the school aid formula.

Guinn wants to use $300 million of that as a rebate of up to $300 on each car owned by a Nevada resident.

Titus said opponents of her freeze proposal are using the specter of a school funding shortfall as a scare tactic. The state Education Department, in building the school aid budget, estimated that property tax revenue would rise 5 percent in each of the coming two fiscal years. And it forecast a more than 4 percent increase each year in the number of students. It also built into its budget a 3 percent inflationary factor for equipment, utilities and other items.

Many property values in Clark County have jumped by 30 to 50 percent. Washoe County has also seen large increases. But property values have fallen in some other counties.

Those who want to impose a limit on property taxes must come up with a plan by March, Titus noted, because the county assessors need to compute and distribute the tax bills shortly thereafter. The Legislature doesn't meet until Feb. 7, giving it only a little more than a month to reach a consensus on this issue.

Her plan, Titus said, would freeze the property tax values for one year and it would give the Legislature more than two months extra in regular session to work on a plan that could go into effect next fiscal year.

School districts now are authorized to take 75 cents of the property rate. According to state budget officials that amounts to more than $525 million this fiscal year. But only 25 cents of that 75 cents is computed in the state school support formula, resulting in $173 million going into the school aid formula.

The districts also receive revenue from the 2.25 cents local school support sales tax. The state then makes up the rest from a variety of sources.

It's unclear at this point how much extra the state would have to pump into the school districts if either a freeze or a limit was imposed on the assessed value of property. There is no new firm estimate on how much new property or additions would come on the property tax rolls.

In the current biennium, the Legislature estimated the assessed value of property would rise by more than 9 percent. But judging from the comments of lawmakers, they are not going to allow it to increase that much in each of the coming two years.