Monday, March 7, 2005 | 9:18 a.m.
CARSON CITY -- Enactment of a 6 percent cap on skyrocketing property tax value could force the state to provide more than $40 million more to Nevada school districts over the next two years.
And it could put a crimp in Gov. Kenny Guinn's proposed record $321 million building program for the next two years.
Guinn's budget is built on assessed property value rising 8.4 percent next fiscal year and than by 9.2 percent in the 2007 fiscal year.
But lawmakers are talking about putting a limit on property valuations that would reduce potential big increases in property tax.
Local school districts rely heavily on property tax revenues for their funding, and if the property tax revenue falls short, the state is required to make up the difference.
State Budget Director Perry Comeaux told a Senate-Assembly budget committee Friday that the District School Fund that funnels money to the districts could have problems with a limit on taxes. Financial experts in the Legislature have calculated the shortfall in the school districts will be greater than $40 million if the six percent property valuation cap were imposed.
Guinn has proposed $224.9 million in bonds to finance construction. Bonds are paid off by a property tax rate that is based on property assessments. The state presently imposes 16 cents on the property tax rate. If the property assessments are lower than forecast by the state Department of Taxation, that 16 cents won't bring in as much as anticipated to repay bond holders.
Senate Majority Leader Bill Raggio, R-Reno, said that assuming there is a 6 percent or any of the other proposed caps on property assessment, the Legislature needs to know if the 16 cents will be enough to pay off the suggested $224.9 million in bonds.
Raggio questioned why the executive branch has not put together figures on what will happen to state revenue if the property assessment limit is imposed.
Comeaux said the Guinn administration was aware of the feeling by lawmakers to limit assessments but it had no way of knowing what plan would be accepted. He said once the Legislature makes a decision, "We are prepared to provide adjustments."
The Legislature, starting its second month today, has not hit on any plan to limit fast-rising property value.
The joint budget committee Friday examined the state Public Works Board that oversees the state construction program.
Board Manager Dan O'Brien told the committee that initially he thought there would be a $200 million to $250 million construction program in the coming two years. But the governor proposed a $326 million construction budget.
That will require more staff, O'Brien said. He wants to hire three additional project managers and four inspectors.
O'Brien said his agency intends to hire private firms to oversee the two big upcoming construction projects: the science and engineering building at UNLV and the library at UNR. These private firms would also work with the state project manager and inspectors.
He said there will be stronger oversight of such things as change orders and meeting deadlines.
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