City considers debt and sales tax hike for V&T
August 15, 2005
Bringing the Virginia & Truckee Railway into Carson City will cost the town’s residents an estimated $15 million, or one-eighth of a cent for each dollar spent on taxable goods over the next couple of decades.
Carson City supervisors on Thursday are scheduled to declare their intention to issue $15 million of debt for the V&T line, and an eighth-cent sales tax to pay for it. Without the sales tax, said City Manager Linda Ritter, bonds won’t be issued for the train that state and local officials are touting as a tourist draw.
Nevada counties have for years had the authority to implement a quarter-cent sales tax hike to pay for water-related projects, but so far only Clark and Washoe counties have done so.
Earlier this year, state lawmakers in passing SB159 expanded what the tax could be used for, in smaller counties, to include cultural and historic related projects.
With the V&T in mind, Carson City lobbied in favor of the bill.
An eighth-cent tax in Carson City would generate about $1.25 million a year, according to Finance Director Tom Minton – more than enough to cover payments on V&T debt of nearly $1.14 million a year from 2007 to 2026. Total payback on the loan, with interest, would be more than $23 million by the time it’s paid off.
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The money would be used in conjunction with federal dollars on anything from rail construction to engines, Ritter said.
Ritter said Carson City supervisors could officially decide on whether to implement the extra tax “as soon as mid-September.” The board first must hold public hearings on the proposal and come up with a plan on how to institute it.
The hike would raise sales tax in Carson City from 7 percent to 7.125 percent, sending the tax charge on a $10 purchase from 70 cents to 71 cents.
If the sales tax is raised, it will have to be done before the city officially issues debt for the V&T. Ritter said the aim is to get it all done before about $25 million in new debt is issued for various projects such as a new sheriff’s building and the purchase of Carson-Tahoe Hospital’s rehabilitation center. The city wants to issue all the debt together to avoid extra fees.
“Issuance costs can be quite high,” she said.
Proposals to issue all the new debt must go through several steps, such as approval by a state debt management commission, that could take four to six months, according to Ritter.
“If for whatever reason the sales tax isn’t approved (by then), we’ll just drop the (proposed) V&T debt,” she added.
The railroad project, which recently was approved for $10 million in federal funds, is estimated to cost $30 million to reconstruct the line that will operate between Carson City and Virginia City. Officials hope to have the entire 18-mile length open for business by 2009.
Supporters estimate it will generate about $40 million for the local economy during the construction phase, and $18 million annually after the railway is completed.
Storey County already collects a sales tax that has provided about $1 million so far, and a portion of taxes charged on motel and hotel rooms in Carson City is funding a $4 million bond through the Convention & Visitors Bureau.
n Contact reporter Cory McConnell at firstname.lastname@example.org or 881-1217.
If You Go
WHAT: Carson City Board of Supervisors meeting
WHEN: 8:30 a.m. Thursday
WHERE: Sierra Room of the Community Center, 851 E. William St.