Public tax break, private leak?

By J. Patrick Coolican

Wednesday, July 16, 2008 | 2 a.m.

Gov. Jim Gibbons had hoped for a fresh start. After an inglorious 18 months in which his public approval sank below President Bush’s, Gibbons shook up his senior staff and succeeded in avoiding tax hikes by prodding state legislators to make painful budget cuts. The governor seemed poised for a do-over.

But another damaging story has emerged, this one about a questionable tax break the governor received after putting pressure on a county tax assessor.

Now an ally of the governor’s fears the story originated with first lady Dawn Gibbons, from whom the governor filed for divorce in May.

If true, this development would be a setback, politically and personally, as the Gibbonses had recently declared a truce in part to stanch the bad publicity.

First, the story: In 2007, Gibbons bought 40 acres of land for $575,000 in Elko County with plans to build a retirement home. As the Associated Press reported last week, the elected Elko County assessor, Joe Aguirre, said Gibbons had placed him in an “awkward” and “uncomfortable position” when he asked him to characterize the land as agricultural rather than residential.

Doing so would reduce Gibbons’ tax liability on the land from about $5,000 to virtually nothing. If Gibbons used his position as governor for personal financial gain beyond his salary, he could be subject to an ethics complaint.

The tax break was created to help struggling ranchers and farmers.

Although Gibbons isn’t using the land for agriculture himself, he leased the land back to the original owner, former District Judge Jerry Carr Whitehead, who reportedly left the bench while under federal investigation in 1996.

Whitehead uses the land for grazing. By law, the land must yield at least $5,000 in revenue to be classified agricultural. Whitehead wrote checks totaling about $5,700 to Gibbons in exchange for the land.

But Aguirre doubted the 40 acres was really worth what Whitehead was paying. In essence, he said, the land isn’t truly producing $5,000 in agricultural revenue, and the Whitehead payment was inflated so that it crossed the threshold for the tax exemption.

Aguirre, a Republican, was interviewed on “Face to Face with Jon Ralston” on Tuesday and fleshed out some details. He said the governor visited him at his office in September and asked for the agriculture designation.

He refused, but then Gibbons hired John Marvel, a member of the state Tax Commission, to be his attorney in the matter.

“I felt like they backed me into a corner,” Aguirre told Ralston. If Gibbons wanted to appeal Aguirre’s decision, he wouldn’t do so at the state Tax Commission. He would go to the county and then to the state Board of Equalization.

Still, the state Tax Commission sets tax policy and rules on exemptions, and as such, has tremendous power over county assessors such as Aguirre.

Ben Kieckhefer, a spokesman for Gibbons, said, “The governor dropped into the assessor’s office about maintaining the agricultural deferral. As a property owner and taxpayer it seems appropriate. I think it’s reasonable that anyone would do the same.”

Kieckhefer also said Marvel is a respected attorney with experience in tax and land use issues in Elko County and so was a natural choice.

Robert Uithoven, Gibbons’ former campaign manager and an adviser, also defended the governor. Aguirre, he said, is “enjoying his 15 minutes” and “this idea he was intimidated into making the wrong decision, if that’s the case, he’s the wrong man for the job.”

Uithoven said it was up to Whitehead to determine the agricultural value of the land, not the county assessor.

Rural Nevadans, who constitute much of the remaining Gibbons base of support, are well versed in the agriculture tax break and are on guard against its abuse. An Elko Republican, who asked not to be named because he has business before state government, said rural residents are “extremely protective of the agricultural break because in some cases it’s the difference between success and failure. Anytime anybody tries to exploit it or abuse it, it puts the measure at risk.”

Steve Wark, a Republican operative, acknowledged on “Face to Face” that Gibbons’ latest problem looks bad, but he said the remaining pool of Gibbons’ supporters is so small it probably won’t matter much.

Here’s what should be of greater concern to Gibbons. One of his allies, who declined to be named discussing the governor’s divorce, said the tax break story likely originated with a leak from Dawn Gibbons or her divorce attorney, who would have access to the financial records — including the money from Whitehead.

The recent public truce between the Gibbonses hadn’t ended the sensational stories about Gibbons’ personal life, but the detente did seem to eliminate significant obstacles — accusations and recriminations — to finishing the divorce.

Now, though, “the truce is over,” the source said.

Dawn Gibbons’ attorney, Cal Dunlap, did not return a phone call from the Sun.