Tax proposal in Senate’s hands

Kirsten Searer

Thursday, March 31, 2005 | 11:09 a.m.

CARSON CITY -- Representatives of business interests who complained about the latest proposal to curb property taxes scored a partial win Wednesday.

A plan passed by the Senate Taxation Committee still would cap taxes on owner occupied homes at 3 percent a year. But the committee unanimously voted to cap taxes on all other properties at 8 percent a year.

The original version of Assembly Bill 489 instead capped those property tax increases at the 10-year average in each county.

The amended bill is set to go to the Senate floor today -- the deadline legislators set for themselves to come up with a solution to rising property taxes.

Backers of the change argued that the original version of the bill, which the Assembly passed Tuesday, would have put businesses in a guessing game.

The average growth is about 13 percent right now in Clark County and about 7 percent in Washoe. But Sen. Warren Hardy, who proposed the amendment, said the growth rate could inch up until there is a "public outcry" and small businesses are put in jeopardy.

Hardy, R-Las Vegas, looked at a 6 percent cap but said he thought it might not fly in the Assembly, especially when legislators are facing a time constraint.

"I would be happy with 6 percent, certainly, but again I think we need to be mindful of the objectives of the other house," he said.

Assembly Majority Leader Barbara Buckley, D-Las Vegas, one of the authors of the original bill, said the amendment could slow legislators down.

And Sen. Dina Titus, D-Las Vegas, could throw in another hitch: She said Wednesday she still plans to introduce her amendment to freeze taxes on owner-occupied homes at the 2004 rates, instead of giving a 3 percent cap. All other properties would be treated the same -- probably at the 8 percent cap, she said.

Titus said she's geared up to remind senators that the 8 percent cap gives a break to businesses, so they should give more to homeowners, as well.

"I'm going to shame them," Titus said. "I'm going to say, 'You'll give a big break to big businesses but not to homeowners?' "

Buckley said she thinks the cap will ultimately help large businesses and land speculators the most.

"Our initial analyst information is that small businesses really aren't receiving these large increases," she said.

Buckley also said the flat cap will have a much larger impact on local governments than the 10-year average.

If small businesses are suffering, then the state should expand its hardship plan for them instead of pulling funds from important services, she said.

"We're going to discuss this and hash it out," said Buckley, who declined to speculate on whether a final version of the bill could pass today.

Michael Hillerby, Gov. Kenny Guinn's chief of staff, said the governor preferred the Senate plan because it provides businesses a set increase and it would allow rural counties to benefit from their growth. But Hillerby said Guinn would sign either plan.

Under the Senate plan, growth in revenue in Clark County would decrease from 8.8 percent to 7.2 percent. The county's main taxing district would lose $4.9 million.

Las Vegas' main city fund would lose about $1 million compared to the original plan.

Representatives of local governments said they weren't happy to lose the money, but they could take a temporary hit.

"Each of the plans represents a significant demonstration of restraint on the part of state government and local government together," said Mike Alastuey, who spoke on behalf of Clark County.

Marvin Leavitt, who is lobbying on behalf of the state's large cities, said he could live with either the original proposal or the 8 percent cap.

A 6 percent cap, which senators also looked at, would make him more "nervous," he said.

Hardy said he knew that the state would have to make up an estimated $44 million to the statewide Distributive School Account, which is the main funding source for schools in the state.

"I think it's an appropriate use of our excess tax revenue or our tax surplus to pass meaningful property tax reform that will benefit all of our citizens, whether they be residents or businesses," Hardy said.

And, senators said, the Legislature likely will have to set aside money for rural counties who might see significantly less revenues under either plan.