Committee study to look at property tax options in state
November 29, 2005
A legislative committee agreed Tuesday that Nevada’s property tax system needs repair. But several on the panel made it clear they don’t think California’s Proposition 13 is the answer.
In a review of Nevada’s current system by staff and county assessors, the committee was told property taxes on a home rise to current market value after a sale but keep their depreciation and capped tax level in Nevada.
“That actually makes us a better deal for property owners and buyers than Prop-13,” said Assemblyman Joe Hardy, R-Las Vegas.
Ted Harris, an Incline Village resident, argued Proposition 13, which caps tax increases at 1 percent and property-assessment values at 2 percent a year, provides certainty to property owners to know what their taxes will be next year and he said it hasn’t hurt any of the governments in that state.
But he was challenged by Carole Vilardo, representing the Nevada Taxpayer’s Association, who said those governments made up the $6 billion a year difference by imposing huge fees and other forms of taxes Nevada doesn’t have. She said by imposing Proposition 13 in Nevada, “you will have more inequities than you have now.”
Sen. Mike Schneider, D-Las Vegas, also made clear he doesn’t think Proposition 13 would work in Nevada.
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“If Proposition 13 was the perfect solution, why are all these Californians moving in here? We get 5,000 a month to Las Vegas,” he said.
Committee Chairman David Parks, D-Las Vegas, said after the meeting he too opposes a Proposition 13 in Nevada.
“I firmly believe the system in California is not applicable to Nevada,” he said. “It brings with it its own set of problems.”
And Assemblywoman Peggy Pierce, D-Las Vegas, said across-the-board caps such as California’s “eventually shift the tax burden down the economic ladder.”
The committee is charged with fixing some of the problems in tax-capping legislation approved by the 2005 Legislature.
Assessors Dave Dawley of Carson City and Doug Sonnemann of Douglas County, along with deputy Washoe assessor Josh Wilson, told the panel there are several issues including the problems that arise between “owner occupied” homes capped at 3 percent tax increases a year and rentals that can rise up to 8 percent.
An example they gave is an owner-occupied home on which taxes could increase only 3 percent a year sitting next to a nearly identical rental which has its taxes increase 8 percent a year. Ten years later, the rental is sold to a family and qualifies for the 3 percent cap. But in those 10 years, its taxes have gone up more than 80 percent, while the other has seen just a 30 percent increase. So the new buyers pay half again as much taxes as the family in the home next door.
“Wouldn’t it be simpler to just cap everybody at 3 percent?” asked Sen. Mike McGinness, R-Fallon.
The assessors said that would simplify their lives.
Vilardo urged the committee not to make wholesale changes in the law but, instead, “tweak it.”
“There is no perfect system dealing with property taxes, otherwise everybody would be using it,” she said.
The 2005 legislation “was a solution that proved effective. Does it need some corrections? Yes. But I hope you’ll look at more of a tweaking than wholesale change.”
She said making major changes in tax law every session “creates economic uncertainty” that worries businesses considering a move to Nevada or expansion.
Parks said the committee will hold a series of meetings between now and the 2007 session to develop recommendations and will rely on the experience of Nevada’s assessors in implementing the 2005 law.
n Contact reporter Geoff Dornan at firstname.lastname@example.org or 687-8750.