Douglas won’t get nearly the windfall many believe from new stores
The new Target and Home Depot stores have been ballyhooed as Douglas County’s financial saviors, a fountain of sales tax cash that will help government provide much needed services.
But under state law that divides sales tax revenue, the county will see precious little of the new money generated by those two stores because Douglas is already getting far more than it generates in sales tax revenues each year.
At 1.75 percent of all retail sales, the Supplemental City/County Relief Tax is local government’s primary replacement for the revenue local governments lost when lawmakers chopped back property taxes in 1981.
Under complex formulas set up to make certain small counties weren’t left penniless by the tax shift, Douglas and nine other Nevada counties are guaranteed a minimum of revenue from SCCRT no matter the actual amount generated.
Because of that guarantee, Douglas County generated $7.1 million in SCCRT taxes but got back $10.35 million – an extra $3.25 million.
All 10 counties get more back in SCCRT money than they generate. And they get that money off the top, before the other, non-guarantee counties including Washoe, Clark and Carson City divide what’s left.
Anne Collins of the Taxation Department said the guarantee system has little impact on the state’s big counties because most of the extra money comes from out-of-state sales tax collections done by the state, not individual counties.
Nevada governments from top to bottom rely on sales tax revenue. The state gets 2 percent and schools 2.25 percent. City and county governments get a half-percent in basic support plus the 1.75 percent SCCRT money. That makes the total basic sales tax in Nevada 6.5 percent.
Douglas and the other nine counties on the list will continue to get their money under the guarantee until their actual sales taxes reach and pass what the formula provides.
Because SCCRT is only a quarter of the 6.5 percent sales tax, that translates to a $185 million increase in total retail sales in the county to Douglas to match this year’s guarantee. And because the guarantee amount increases with inflation and growth, that magic number will get bigger every year.
The county will get more in its Basic City/County Relief Tax money, but that is just a half-percent of the total sales tax collected.
County Manager Dan Holler said, “We also have a quarter percent that is dedicated to parks and recreation, library, seniors and the airport.”
Based on numbers, when both stores are up and running, the county anticipates the quarter cent to generate $250,000 to $300,000 per year, Holler said.
“Estimating, based on the sales tax figures, (Target’s) on track,” Holler said.
Douglas’ school district, however, is not under any formula and will get its full share of the added tax revenue from the new stores. Because the schools get 2.25 percent of every retail dollar, that could add several hundred thousand dollars to their budgets.
Carson City and Douglas County have been in an intense competition to attract new stores, both offering tax breaks and incentives where possible.
To win the battle, Douglas created a redevelopment district to fund improvements to water and other services where the stores will be located.
The county authorized up to $3.5 million to do that work.