Las Vegas Sun

March 28, 2024

Property tax cap not pinching budgets of local cities

A report from the Clark County treasurer's office outlines the amount of taxes property owners saved and local governments lost out on by Nevada's implementation in July of a property tax cap. It totaled $1.098 billion in two years.

A property-tax cap imposed by the Nevada Legislature in 2005 is on pace to keep $1 billion in the pockets of Clark County homeowners and businesses in its first two years.

Local governments, however, are not crying poor-mouth because soaring property values still are producing sizable revenue gains for city and county treasuries.

Taxing bodies throughout Clark County will take in $1.79 billion in property tax between July 2006 and June 2007, up 8.8 percent from the one-year total projected to be collected through the end of June, according to the county treasurer's office.

Without the 3 percent cap a year on homeowners' property taxes and 8 percent limit on commercial property taxes, local governments would have taken in an extra $286 million this year and $812 million next year because of a 35 percent jump in assessed values, a treasurer's report concluded.

"When I saw the $800 million, that was a real eye opener," Clark County Assessor Mark Schofield said. "If the public understood and appreciated the benefit the cap provided to them, they would be pleased."

According to the assessor's office, a typical homeowner in unincorporated Clark County with a house valued at $200,000 in July 2004 would have paid $2,000 that year in taxes.

With the 3 percent cap, that same homeowner paid $2,060 in 2005 and will pay $2,121 this year on a home on which the assessed value likely rose by up to $100,000 each year, officials in the assessor's office said. Without the cap, the same homeowner would have paid about $3,000 in 2005 and as much as $4,000 this year in property taxes, officials added.

The treasurer's office's figures demonstrate that the tax limits "are doing what they were intended to do," Las Vegas Finance Director Mark Vincent said.

"They are protecting property taxpayers from having runaway increases in their bills," Vincent said. "But the whole valley is fortunate that we are experiencing quite a bit of new construction that is fueling our growth in property taxes."

Without the caps, the Clark County School District would have received $464.4 million over two years. Clark County would have received $289.9 million, an extra $79.5 million would have flowed to Las Vegas, Henderson would have gained $50.5 million, $35.5 million more would have gone to North Las Vegas and Boulder City would have received $1.1 million.

"We never had the revenue so it is not lost," North Las Vegas City Manager Gregory Rose said. "They are just unrealized gains. When the cap was approved by the state Legislature, it was not to harm municipalities. It was simply that we could not realize those gains."

That appears to have been the result, with most local governments anticipating property tax gains this year that mirror previous years' increases:

The assessed value of taxable property in Clark County jumped from $63.5 billion last year to $85.7 billion in 2006-2007, according to the treasurer's report. About $2 billion of that came via new construction.

Not surprisingly, local governments say, had they received the extra money, they could have put it to good use.

North Las Vegas, for example, said the added revenue would have helped to improve service levels and fund a new police headquarters and other capital projects, Rose said.

But Rose is not lamenting the situation. His proposed budget even cuts the tax rate by 2 cents, which means North Las Vegas will take in even less property tax funds than it could otherwise.

"You have to strike a balance between the level of service you provide and the burden placed on citizens," Rose said.

Some believe that burden remains too heavy.

The fact that local governments are collecting similar amounts of property tax revenue even with the caps in place shows that the 2005 law did not go far enough, said George Harris, chairman of Nevadans for Sound Government. The caps, he contends, guarantee that local governments will be flush with cash for years.

Harris favors a 36-month freeze on property taxes and refunds to taxpayers.

"They have so much cash that they can't spend it fast enough," Harris said.

"They don't need a tax increase. They have more than they deserve and need to give it back. People don't need government to decide how to spend their money. They can make those decisions on their own."

An initiative petition by Sen. Bob Beers, R-Las Vegas, would limit state and local government spending. The proposed Tax and Spending Control measure would limit spending increases to the rate of population growth plus inflation. If enacted, it would require voter approval for tax increases and refund surplus revenues to taxpayers.

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