Nevada Legislature reviews bill on property tax rates

A bill to recalculate the property tax cap was heard Thursday by the Assembly Committee on Taxation.

Assembly Bill 43, proposed by the Nevada Association of Counties (NACO), would create a floor of 3 percent for property taxes on both commercial and residential properties, although homeowners tax bills would only increase based on the change in their property values and no more than 3 percent.

Since 2005, with the passage of Assembly Bill 489, caps were placed on property taxes: a 3 percent cap for owner-occupied homes and 8 percent for all else, including on rented homes, and commercial and industrial property.

A secondary cap was added, calculated by the average of the change in assessed value of all the property in a county, as well as twice the value of the Consumer Price Index (CPI).

That led to a big drop in property tax growth in the last couple years. In six counties, including Carson City, property taxes rose by just .2 percent in 2016.

AB43 would add a floor, based on an amendment introduced Thursday, of 2.6 percent, which is twice the estimated CPI for 2017.

Once the CPI reaches 1.5 percent, the floor would lock in at 3 percent.

The floor would apply to commercial property.

For residential owners, property taxes would increase only by the amount the property value increased and only up to 3 percent.

So, if a home’s value jumped 1 percent, the tax bill would only rise 1 percent. If the property value rose 10 percent, the tax bill would increase 3 percent. If the property value dropped, so would taxes on it.

Representatives from various municipalities spoke in support of the bill, including Mary Walker, who was representing Carson City and several other counties.

Walker said the counties rely on two taxes: the consolidated tax, made up mostly of sales tax which is inherently volatile, and property taxes.

“They’re both unstable now,” Walker told the committee. “All we’re trying to do is stabilize one of our revenue sources.”

About a dozen people, mostly homeowners, spoke in opposition to the bill, primarily because they believed it would raise their taxes.

There was some confusion, though, on how everything would be calculated and what that would mean for homeowners.

“We can all agree on one thing,” said Jeff Fontaine, executive director, NACO, at the conclusion of the meeting. “Our property tax formula is very difficult to understand.”

The committee convened without taking any action on the bill.