Legal issues raised about tax cap

Cy Ryan and Kirsten Searer

Wednesday, March 2, 2005 | 11 a.m.

CARSON CITY -- The chief attorney for the Nevada Legislature says there may be constitutional concerns about a cap on rising property taxes, but she said nobody has asked her for a legal opinion.

Sen. Sandra Tiffany, R-Henderson, said she has heard "rumblings" that a potential cap may not be constitutional.

Legislative Counsel Brenda Erdoes told the Senate Taxation Committee there may be a constitutional concern on some of the plans. But she did not elaborate.

The session is a month old and both houses have not reached any tentative solution. The target date for any final plan is at the end of March to give county officials time to prepare the tax bills.

After the meeting, Sen. Mike McGinness, chairman of the taxation committee, said, "We may be afraid to ask (for a legal opinion) because we think we may have some sort of a solution out there.

"It seems every time a question is asked, our options become more limited," McGinness said.

He said a legal opinion will have to be sought. "She has alluded to that the cap is unconstitutional and I think we have to get it in black and white."

After the meeting Sen. Terry Care, D-Las Vegas, said the "direction I see us going is towards some kind of a cap." But he did not have any thoughts on the limit that should be set.

"I know it presents problems in the rural areas but everything I've seen so far, the cap seems to be the most equitable," Care said. "If you have a freeze, all you are doing are delaying what you have to do later."

Jeremy Aguero, a Las Vegas tax expert hired by the Legislative Counsel Bureau to help in the property tax issue, said putting a cap on property value would result in a decreased assessed valuation in a number of small counties.

Rural counties' officials have already testified they would be harmed in producing revenue to run their local governments if a limit on property valuations were imposed.

Sen. Randolph Townsend, R-Reno, said the study by Aguero showed the impact on each county and "that is important." He said the committee now has to look at what happens in each county to "the total revenue stream" if a cap is imposed.

"For the rurals that means we may have to remove the $3.64 cap (per $100) and let each one of the rural counties float their rate up to meet their expenses," Townsend said. "That means that in Clark and Washoe they may have to float their rate down."

Meanwhile North Las Vegas Mayor Michael Montandon told reporters Tuesday that the tax rates should be lowered in areas with huge property taxable value increases.

That way, he said, only counties with problems of increasing property values, such as Clark and Douglas, would lower their rates.

Montandon said he hopes to meet soon with leaders from the cities, Clark County and the school district to propose a 15 percent cut in all tax rates. "It's just simple algebra," he said.

North Las Vegas has one of the highest property tax rates in Clark County and Montandon said his city was planning to lower its rate anyway.

But Assembly Minority Leader Lynn Hettrick, R-Gardnerville, said the idea would not work. Areas such as Incline Village at Lake Tahoe, which has seen 80 to 100 percent increases in assessed property value, wouldn't get enough relief, he said.

The maximum tax rate in Nevada, excluding voter-approved issues, is $3.64 for each $100 of assessed valuation.

Aguero presented figures to show how a cap might work on a home in Las Vegas where some of the property value is skyrocketing.

Using a sample home in Clark County that is valued at $170,992 now, the taxable value would rise to $228,642 this coming year. With a cap of the consumer price index plus 1 percent, the tax liability would drop from a proposed $2,401 to $1,862, a decline of 22.4 percent.