The meeting of the Advisory Committee to the Legislative Committee to Study the Distribution among Local Governments of Revenue from State and Local Taxes was called to order by Guy Hobbs, Chairman, on September 27, 2000, at 10 a.m. in Room 3138 of the Legislative Building, Carson City, Nevada.
COMMITTEE MEMBERS PRESENT:
Guy Hobbs, Chairman, Hobbs, Ong and Associates
Mike Alastuey, Committee on Local Government Finance
Bruce Brooks, Humboldt County
Gary Cordes, City of Fallon
Rick Kester, Committee on Local Government Finance
Marvin Leavitt, City of Las Vegas
Janet Murphy, Tahoe-Douglas District
Dave Pursell, Executive Director, Department of Taxation
Linda Ritter, City of Elko
John Sherman, Washoe County
Terri Thomas, City of Sparks
LEGISLATIVE COUNSEL BUREAU STAFF PRESENT:
Kevin Welsh, Deputy Fiscal Analyst, Fiscal Analysis Division
Kim M. Guinasso, Principal Deputy Legislative Counsel, Legal Division
Jeanne Peyton, Secretary, Fiscal Analysis Division
Exhibit A is the Meeting Notice and Agenda.
Exhibit B is the Attendance Record.
Exhibit C is a memorandum from Linda Ritter, City Manager of Elko, addressed to the Committee, regarding Room Tax Workgroup Update and dated September 26, 2000.
Exhibit D is a titled “Discussion Paper for Personal Property Subcommittee of SB 253 Technical Committee,” dated September 26, 2000, submitted by John Sherman, Finance Director, Washoe County.
Exhibit E is a chart titled “Business Personal Property,” submitted by Mark Schofield, Clark County Assessor.
Exhibit F is a revised chart titled “Business Personal Property,” submitted by Mark Schofield, Clark County Assessor.
Exhibit G is a presentation to the Committee on Agenda Item III-I regarding definitions of Exemptions and Exclusions, submitted by Dino DiCianno, Deputy Executive Director of the Department of Taxation.
Exhibit H is a draft of the changes in the charges of the Subcommittee to Study the Cost of Maintaining Highways, Streets and Roads.
Exhibit I is a memorandum from Linda Ritter to the Committee members regarding “Request for additional changes regarding the distribution of Fuel Taxes,” and dated September 26, 2000.
Exhibit J is a packet of maps titled “Nevada Tax Entity Status” prepared by Janet Murphy.
I. Call to Order -- Opening Remarks
Chairman Hobbs called the meeting to order. He said the first order of business was to approve the minutes from the August 10, 2000, meeting.
MR. PURSELL MOVED FOR APPROVAL OF THE MINUTES FROM THE AUGUST 10, 2000, MEETING. MS. RITTER SECONDED THE MOTION, WHICH CARRIED UNANIMOUSLY (MS. THOMAS WAS NOT PRESENT AT THE TIME OF THE VOTE).
The Chairman indicated that the Committee had a lengthy agenda to cover today and the goal is to try to define as many items as possible into proposals for presentation to the Legislative Committee either at tomorrow’s meeting or a subsequent meeting in early November. Some of the items are ready to be moved forward as bill draft requests (BDRs) and others will need additional work. He encouraged anyone having a comment on the issues being discussed to come forward to testify as the issue is being discussed.
III. Recommendations to Full Legislative Committee
A. Discussion and Possible Action on Recommendation for Bill Draft Request (BDR) Regarding Consolidation and Clarification of Transient Lodging (Room) Tax Statutes – Linda Ritter:
Ms. Ritter indicated that the Transient Lodging Tax work group was given two tasks, which included (see Exhibit C):
§ Combining all statutes related to transient lodging tax into one Chapter of Nevada Revised Statutes (NRS); and
§ Developing statewide standards regarding the imposition and collection of room taxes. The areas of standardization covered:
2. Application of room taxes.
4. Penalties and interest.
5. Due dates.
6. Record requirements/audits.
8. Notification of changes in room tax ordinances and laws.
She explained that the initial draft language was sent to all cities, counties, and convention and visitors authorities on August 16, 2000. It was requested that any comments be returned by August 31, 2000. Forty-seven pages of comments were received from eight separate entities, which were forwarded to the work group members. The work group began with 16 members, which has increased to 29 members (see Exhibit C for a list of the members).
Ms. Ritter noted that the members of the working group came to a consensus on several of the issues, which included:
§ Notification requirements of changes in rates or administrative provisions.
§ Due dates for transient lodging taxes and required reports.
§ Allowance of discounts at the local level.
§ The need to provide uniformity in collection requirements for all room taxes, including the mandatory state transient lodging tax.
§ Calculation of tax on time-share projects.
She indicated that new provisions for the following areas involving administration of room tax collections should be provided; however, the local entities should also be allowed to adopt their own resolutions, regulations or ordinances to address each item. These areas include:
§ Complimentary Rooms.
§ Promotional Packages.
§ Advance Block Purchases.
Ms. Ritter explained that several items would require further discussion. These items include:
§ Definitions – Because of the importance of this item, it will require further discussion.
§ Delinquency and license revocation – Further discussion will be necessary regarding the counties that do not require licenses for room tax collections.
§ Penalties, limitation on claims by operators for refunds, and annual reporting requirements to the state – A date must be determined for the reports to be submitted to the state.
§ Provisions for collection of delinquent transient lodging taxes, and examination of records and records to be kept – She explained that once the working group develops language, they would like to work with LCB staff to ensure that all the statutes have been transferred properly and that the intent of the language is correct.
She explained that the first priority of the working group is to get all the statutes combined. She requested that the issues the work group could not complete by the November meeting be continued next interim.
In closing, Ms. Ritter indicated that the members of the working group are extremely capable, and some are involved in the day-to-day collection of these taxes, and all participants have provided excellent assistance in drafting the proposal. She said she is confident that some conclusions can be reached by the November meeting and a bill draft request should be available in almost final form.
Chairman Hobbs asked if testimony from the Las Vegas or Reno-Sparks Convention and Visitors Authorities could be received today on the list of items that tentative agreement has been reached on.
Mr. Pushnig, Legal Counsel, Las Vegas Convention and Visitors Authority (LVCVA), said that he has had the opportunity to deal with room tax statutes, ordinances and regulations for almost 11 years. He explained that he got involved in this process after reviewing the BDR that was published on the Internet. He thanked Ms. Ritter and Carole Vilardo, Executive Director, Nevada Taxpayers Association, for the work they have performed, which has provided a substantial basis to begin. However, in his opinion, conclusion of the issue will take more time and further discussions. Mr. Pushnig explained that the definition section is extremely critical and will require further work. He suggested that the Committee change the NRS by placing all the statutes relating to room tax into one chapter during the 2001 Session. He indicated that he would work very hard to help prepare a consistent set of definitions to present to the 2003 Session. He said if it is the Committee’s choice to finalize this issue for the 2001 Session, he would do whatever he could to help, but did not believe there was enough time to do a thorough job.
Michael A.T. Pagni
Mr. Pagni, Legal Counsel, Reno-Sparks Conventions and Visitors Authority, said that many issues were discussed at the room-tax working group last week, but he indicated that he has not seen a revised draft yet. Therefore, he could not say yet what issue he concurred on. One of the major issues discussed is whether or not it appropriate for the state to legislate certain standards or should it be left to the discretion of the local governments. He agreed with the LVCVA that consolidation of the statutes is a good concept. He also commended Ms. Ritter and Ms. Vilardo on the job they have done to tackle this difficult task.
If this Committee and the Legislative Committee chooses to move forward with all the issues, they need to be addressed in more detail to ensure there are no questions later on, said Mr. Pagni. In Mr. Pagni’s opinion, consolidation of the statutes could easily be completed to present to the 2001 Session, but he also indicated if the Committee’s choose to proceed on some of the other more complex issues for the 2001 Session, the RSCVA will devote any time that was necessary to help with that effort.
The Chairman clarified that the Legislative Committee has previously approved a draft proposal dealing with the consolidation of statutes. He asked if the present draft proposal deals solely with the consolidation of statutes or does it also include other refined language for items 1 through 7 of Exhibit C.
In reply, Ms. Ritter said that she envisioned that the priority would be to consolidate the statutes, which is a difficult and timely task. She said that she was depending on the Legislative Counsel Bureau (LCB) staff to help with this undertaking. She was unsure how many items would be ready for the 2001 Session, but they would continue to work on them.
Mr. Pushnig said that he too wanted to complete all the issues involved as soon as possible, but they are very important items and there are many other governmental entities involved that would be affected by these changes. In his opinion, it will take some time for everyone involved to concur on the changes to the definitions and to give the local governments the opportunity to provide their input. He noted that any changes that occur would:
§ Have to be made to the ordinances, regulations, or codes of the local governments; and
§ Change the way local governments are accustomed to doing business.
He urged the Committee to ensure that a thorough review is completed before any changes are requested.
Ms. Ritter concurred with Mr. Pushnig and agreed that there will have to be flexibility provided in the statutes. She noted that it would be difficult to provide uniformity on many of the items.
Responding to the Chairman, Ms. Ritter said that because the language in the draft proposal has not been finalized, it is difficult to set any deadlines on when it will be complete. She said the best report she could provide to the Legislative Committee would be to let them know that the working group is continuing to perfect the language and to consolidate the statutes into one chapter. The group is trying its best to complete as many items as possible for the 2001 Session; however, the working group will not make a proposal to the Legislative Committee until full agreement has been reached by all interested parties.
Mr. Ostrovsky, representing Nevada Resort Association, testified that the effort of the working group should focus on the issues that can be resolved prior to the 2001 Session. He indicated that the Nevada Resort Association would not endorse any recommendations that are made by this Committee without the support of the RSCVA and LVCVS. Mr. Ostrovsky said that the Nevada Resort Association, the RSCVA and the LVCVA, have a collaborative effort to promote tourism in the state. He noted that the working group had difficulty agreeing on some of the simplest matters. Therefore, over the next 60 days, the group should focus only on those issues that there is hope of concluding before the 2001 Session.
Responding, the Chairman said that the Advisory Committee would not make recommendations to the Legislative Committee on any issues that are not fully resolved. The Committee is in agreement to take the additional time needed to ensure the outcome is successful.
In reply to the Chairman, Mr. Ostrovsky said that it is possible that following another meeting, the working group could come to agreement on the appropriate annual reporting requirement to the state.
Mr. Pushnig said the language transferred into the new chapter must also be determined. He said he was an advocate of consolidating the statutes into one chapter because it will be much easier and more efficient to have all the statutes relating to room tax in one area. He suggested getting all the state statutes into one chapter first. The statutes that directly affect the local governments could be reviewed over a period of time.
Responding to the Chairman regarding which issues could possibly be completed, Mr. Pushnig said:
§ There was a conceptual agreement among the working group members on the notification requirements and changes to the rates of the administrative provisions.
§ The language has not been finalized on due dates for the transient lodging tax.
§ Allowance of discounts – The language states that the local governments can allow a discount if they want to.
According to Mr. Pushnig, the language that has been prepared is a good base, but will require further refinement. He requested that the working group be allowed to improve the language for the 2003 Legislature.
Mr. Pagni suggested that the working group continue to review items 1 – 7 (items the working group has reached tentative agreement on) of Exhibit C. It was discussed to leave the decision to the local government on many of the issues. Regarding the items that will require further discussion and work, Mr. Pagni indicated that some of those were procedural issues (i.e., penalties, annual reporting, examination of records).
Mr. Ostrovsky agreed. He said that the working group was getting close to agreement on items 1 – 7, but it will still take considerable work to prepare a bill draft that will be acceptable to the entire working group. Also, once the working group completes a proposal, the LCB Legal Division, will have to produce the bill draft. He further indicated that the boards of the various entities and associations would have to sign off on any proposal that is prepared before it can be submitted.
Ms. Ritter explained that she understood the importance of all the entities reviewing the proposal and that is why the draft was submitted to all the entities and every visitors and convention authority.
Ms. Vilardo, Executive Director, Nevada Taxpayers Association, indicated that all the local governments were notified; however, it is unfortunate that so many of the convention authorities either were not informed by their local entity or disregarded the notice. According to Ms. Vilardo, agreements were reached on items 1 – 7 and on some issues the definitions were totally eliminated. She indicated that the working group should be able to receive consensus on the language and put forth the changes to consolidate the statutes.
Additionally, item 5 (annual reporting requirements to the state) only required a simple question to the Department of Taxation regarding allowing more time to the local governments to submit reports to the state. She noted that because there are items that require further discussion, does not indicate that these items are substantive.
In Ms. Vilardo’s opinion, a final draft will be prepared by the next meeting of the working group. There may be amendments made during the session; however, this is typical of the legislative process. If something can be accomplished during the 2001 Session, why wait until the 2003 Session. It was discussed to delay enactment of the legislation until January 1, 2002, in order to allow enough time for the local governments to amend or redo their ordinances,
Ms. Vilardo mentioned that in trying to apply consistency in the statutes, last session the interest was changed on all of the penalties and interest provisions within the tax statutes from 1.5 percent to 1 percent. She said she was going to request to the Legislative Committee at tomorrow’s meeting to make this change to expand to that one area to obtain an interest rate that either matches the 1 percent which was enacted last session; or to follow the judgment statutes (NRS 17.130), prime plus 2 percent calculated over six months.
Mr. Grady, Executive Director, Nevada League of Cities, complimented Ms. Ritter and Ms. Vilardo for the work they did on the room tax. He indicated that Ms. Ritter has had several meetings to discuss the room tax issues that had very little interest until recently. In his opinion, the people involved in this issue should take a more positive stand to try to accomplish as much as possible before the 2001 Session.
The Chairman said that the Advisory Committee wants to recognize the efforts of Ms. Ritter, Ms. Vilardo, and the many others involved in the room tax process. He said the goal of the Committee today is to clarify the issues being presented and to decide what can be accomplished before the 2001 Session. He indicated that all efforts should be made to try to bring these matters to conclusion; however, if there is disagreement, these items can be continued and worked on at a later date.
Continuing, Chairman Hobbs said that a legislator requested the review of the transient lodging tax, which is what the Advisory Committee is doing. Therefore, the issue needs to be dealt with responsibly and as a matter of high priority.
Responding to Ms. Vilardo, he said that the interest issue is outside of the charge of this Committee and should be brought up separately.
Ms. Ritter said that the working group is presently reviewing the revised language and she would send out the revised draft sometime next week. She encouraged anyone else that wanted to be sent the information to provide her with his or her name, mailing address and e-mail address. In her opinion, if the LVVCA and RSVCA are comfortable with the language prepared, the LCB staff will then have to review the draft to ensure everything was worded properly.
Summarizing the room tax issue, the Chairman said that the Advisory Committee will not suggest any specific language or direction for the conceptual BDR, nor will the Advisory Committee made any recommendations to the Legislative Committee at tomorrow’s meeting, but will only report the progress that the working group has made on resolving some of the issues.
Mr. Welsh indicated that the Legislative Committee, thus far, has submitted two BDRs. He informed those present that the bill draft request is only the beginning of the process; however, the Legislative Committee must request that the Legal Division staff prepare a BDR.
In reply, Ms. Ritter said that the Legislative Committee approved a BDR on the room tax issue at its March 30, 2000, meeting.
B. Discussion and Possible Action on Recommendation for Bill Draft Request (BDR) Regarding Continuation of Review Period for Taxation of Intangible Personnel Property (S.B. 411, 1999 Session) – Guy Hobbs:
Chairman Hobbs said that this issue involves the action, which removed over a period of time, on the tax on intangible personal property. One of the elements of that bill was to have a review done during the interim of several factors. Some of these factors included:
§ The degree to which local government relied upon the tax.
§ Whether or not the tax is applied in an equitable fashion when compared to the application of tax to other businesses that are not within that classification.
§ Possible remediation in the event of fiscal impact.
Some information is available on the impact of removal of this tax, but it has been considered that the best course for the Committee to take is to extend the review period through the next interim so that it will be able to continue to assess the fiscal impact and other matters that were listed in S.B. 411. To date, both the industry and local government have been supportive of extending the review period.
The Chairman suggested that it be requested that a BDR be prepared extending the time period to review this issue. He said the language could be prepared quickly. Further, he said that S.B. 411 required that a report be provided to both the Assembly Committee on Taxation and the Senate Taxation Committee by February 15, 2001. It also required that a subcommittee established to assist in the preparation of that report, which was created, provide a report of its findings on or before October 1, 2000. He said he would be providing a verbal report of the subcommittee’s findings at the Legislative Committee meeting tomorrow. The verbal report will be brief since it will only be recommending an extension of the review period.
MR. LEAVITT MOVED TO RECOMMEND TO THE LEGISLATIVE COMMITTEE TO EXTEND THE REVIEW PERIOD OF THE S.B. 411 SUBCOMMITTEE. MR. PURSELL SECONDED THE MOTION, WHICH CARRIED UNANIMOUSLY.
C. Discussion and Possible Action on Recommendation for Bill Draft Request (BDR) Regarding Taxation of Personal Business Property – John Sherman:
Mr. Sherman, Finance Director, Washoe County, provided a report on the work done on the business personal property tax (see Exhibit D). Subsequent to the August 10, 2000, meeting of the Advisory Committee a series of discussions occurred. From those discussions, a proposal has been brought forth that allows for an exemption of the first $50,000 in taxable value of business personal property in yearly increments of $5,000 for a 10-year period starting with the 2002-2003 fiscal year. It has been suggested that prior to finalizing this proposal, amounts of the exemptions, years of the phase-in, and other terms should be reviewed for the fiscal impact. If this measure moves forward during the 2001 Session it has been suggested that a review of the effect of the exemption should occur before the 2003 Session.
Continuing, Mr. Sherman said the purpose of this proposal is to reduce the:
§ Burden on small business taxpayers to keep the necessary paperwork and reporting at a minimum.
§ Administrative burden on the assessors in terms of processing the declarations of personal property and performing audits on different groupings of business personal property tax.
Mr. Sherman said that a review would have to be done to determine whether or not the exemption will have the intended effect, particularly on the local governments. It is also being proposed to change the payment period of the business personal property tax from an annual payment to a quarterly payment.
He explained that one disadvantage of this exemption would be the cash flow timing. For the local governments, quarterly payments will mean a cash flow shortage within the first couple of months of the fiscal year.
Regarding the change to quarterly payments, Mr. Sherman said the focus was primarily on larger taxpayers. There was some concern from the Advisory Committee that smaller businesses could file for bankruptcy or go out of business before the four installments are paid. There was also some discussion to limit the quarterly installment option to businesses that have been in existence for five years or longer.
Because of their knowledge, Mr. Sherman suggested inviting Carole Vilardo and Mark Schofield, Clark County Assessor to speak on this issue.
Mr. Schofield, Clark County Assessor, said that the assessors omnibus bill if passed would require that only one copy of payment under protest request be filed to appeal a tax payment instead of triplicate copies (one copy to the treasurer, one to the attorney general, and one to the state treasurer).
Ms. Vilardo, said in her opinion business personal property tax is an honor system tax and one that is becoming more difficult to collect. The chance of small businesses either over or under reporting its personal property tax is greater because they usually do not have a sophisticated accounting system or a tax attorney to advise them.
According to Ms. Vilardo, in the past, businesses with very large inventories have tended to own real property and their personal property was secured to the roll. Therefore, these businesses were already making quarterly payments. However, presently many technology businesses are renting from an industrial area, yet they own large amounts of personal property.
She concurred with the proposal to only allow businesses that have been in existence for more than five years to make quarterly payments. If the Advisory Committee agrees with this provision, she suggested it be recommended that a report be completed for the Committee’s review after a specified period of time, so that any problems that may arise could be corrected during the 2003 Session.
Mr. Schofield explained that the total on the spreadsheet provided by him (Exhibit E – Calculations of the effect of the personal property tax exemption) did not add up because they were done in increments. Implementation of this exemption in Clark County would eliminate 9,314 businesses. He explained that these businesses create the largest administrative problem for the assessors. He strongly encouraged the Committee’s support of the exemption; however indicated that many of his colleagues are not totally in support of the exemption.
Having spent 14 years as an auditor in the business personal property division of the assessor’s office, Mr. Schofield indicated that he has never audited a business that has reported correctly. He said that his colleagues have suggested the exemption amount be reduced to $500 instead of $5,000; however, this would be difficult for Clark County because of its size.
Continuing, Mr. Schofield said that quarterly payments would definitely benefit the larger taxpayers, and even though the cash flow issues would have to be addressed regarding quarterly payments, he did not believe his colleagues would object to this part of the proposal.
The Chairman said that it might be better to deal with the exemption as one topic and the threshold matter for quarterly installments as a separate issue.
Mr. Schofield concurred that the issues should be separated.
The Chairman asked if anyone in the audience had any further comment on these issues.
Mr. Weaver, Carson City Assessor, said it has been difficult to get a total consensus from all the assessors throughout the state on the issue of placing an exemption on personal property. The main concern on the part of most of the assessors is that it could cause a substantial financial impact to their entities. In his opinion, the decision on this issue should not be made by the assessors, but should be decided by the small business in Nevada. He said that probably one percent of businesses actually fill out the form correctly for personal property tax; and when these business owners realize that the more property they report, the higher their taxes will be, they begin to underreport.
Mr. Schofield added that currently all de minimis amounts of personal property are exempt by the Nevada Tax Commission because of a statute that was created by the 1997 Legislature, and no one has complained about the fiscal impact of that. He explained that this exemption is similar to the inventory tax that was totally exempted in 1979; and for a period of five years it was phased out. At that time there were many arguments about that issue, but nothing drastic occurred and all the loss was recaptured by growth. As a personal property appraiser at that time, it was a relief to be free of that task because nothing was more difficult to obtain compliance on or to administrate than the inventory tax.
Mr. Schofield said if it were his choice, he would exempt all business personal property. He said that some assessors are able to complete the assessment process within weeks; however, in Clark County’s case, it takes months to complete and probably 25 to 30 percent of the businesses are estimated because of non-compliance.
In closing, Mr. Schofield said that many businesses planning to relocate to Nevada are surprised when they are sent a personal property declaration. This is something that should be considered when trying to promote economic development.
The Chairman said that there might be questions regarding the level of fiscal impact. He asked Mr. Schofield whether the ability to have different levels of exemptions would exist based on population in a county?
Mr. Schofield said that he and Ms. Vilardo have discussed this issue and Ms. Vilardo is opposed to bifurcating by population throughout the state. It is unfair to have the major fiscal impact affect only Clark and Washoe Counties; however, he said he would support taking that course.
Mr. Leavitt said that before any decisions are made on this item that would eliminate a portion of the tax on the preceding year’s roll due to a change in statute, it would be necessary to determine the effect this would have on the distribution formula for operating purposes. Mr. Leavitt explained various ways this could affect the formula and the entities it would affect.
Ms. Vilardo added that Clark County would have the greatest dollar amount exemption because of its size. Whether or not personal property should be included in the calculation of the formula has previously been discussed. She noted that it was her understanding that the Committee was going to produce calculations to determine the effect of eliminating personal property from the formula. She suggested reviewing a list of both secured and unsecured personal property to determine the impact if personal property were removed from the $3.64 tax.
Mr. Schofield said that at one time all the assessors agreed on removing personal property from the formula; however, several new assessors came forward and protested because of the impact it would have on their county. He was concerned that this would affect the school district so he spoke to Walt Ruffles, Business Division, Clark County School District. Mr. Ruffles said that it will be difficult at first because of the large financial impact to the school district, but would probably be the right thing to do in the long term.
Mr. Leavitt indicated that it has been difficult to determine how this would affect all the entities because the information is not available on every entity. It was his understanding that the Department of Taxation has changed the information requested of the assessors. He said that he agrees it would be better to eliminate all business personal property because it has caused problems for many years as it relates to taxation. However, the fiscal impact of doing this must first be determined.
Mr. Hadfield, Executive Director, Nevada Association of Counties (NACO), said that basically all the counties want the same thing. However, Mineral County is already at the $3.64 cap and is losing both population and assessed valuation; therefore, elimination of personal property from the formula could impact its financial condition even further.
Mr. Hadfield urged the Committee to conduct a review of several counties to determine the long‑term fiscal impact if personal property were removed from the formula.
Ms. Vilardo also encouraged the Committee to conduct a review in the rural counties. In her opinion, it will be found that personal property, particularly in the rural areas, is exacerbating the problem that is occurring with the $3.64 tax rate. If that is the case, the formula will have to be reviewed and possibly restructured.
Mr. Sherman said that he struggled with the issue of the impact that may occur, depending on the dollar amount of the exemption. He said that if a $5,000 exemption was approved, some form of declaration would have to be sent to all taxpayers and administration of how the exemption is handled will have to be determined.
Mr. Schofield said that Clark County assessor’s office has briefly discussed the administration of the exemption if it were approved. However, the office will not put a great deal of effort into reformulating policies and procedures on how to address a piece of legislation, unless it has a good chance of passing.
Discussion ensued among Committee members and Mr. Schofield regarding the proposed $5,000 exemption. Mr. Leavitt said if the Committee decides to proceed on this issue, three types of information would be needed on each entity to determine what the fiscal affect would be. These issues include:
§ Varying levels of exemptions from all assessors.
§ Total general fund revenue.
§ Actual ending fund balance for the past year.
Mr. Schofield offered a copy of a spreadsheet that is compiled by Clark County to the Department of Taxation, which includes the information Mr. Leavitt mentioned above. He suggested the Department could use Clark County’s copy as a framework when requesting the information from the other entities.
Mr. Alastuey said a decision should not be made on this proposal until the expected impact of each area is reviewed. After the review, a determination can be made as to what will be most beneficial to the state.
According to Mr. Cordes, the exemption on personal property may work for Clark County, but it may be an issue that needs to be handled at the local level.
Mr. Schofield indicated if this concept was adopted by resolution, as tax rates are done, each county’s individual needs could then be dealt with separately. In his opinion, this was a fair way of handling the issue because of the different entities throughout the state.
Mr. Brooks said that he is concerned about the continued potential erosion of the tax base in the rural areas. Having worked in both rural and urban areas, he noted that there are distinct differences in the two areas and how they operate. In Mr. Brooks opinion, the Committee needs to review all the encompassing impacts as opposed to looking at one county before any steps are taken to enact an exemption on personal property.
Ms. Ritter said that it is sometimes difficult to obtain the necessary information from all the entities; therefore, she suggested targeting a few counties that are at the tax cap.
Mr. Sherman suggested including total expenditures as part of the information requested of the entities.
Mr. Hutchings, City Clerk/Administrator, City of Ely, said that a concern of his is that the City has five major employers; however, there are a total of 280 business licenses. The majority of those are businesses that have either secured or unsecured personal property. He explained that the City of Ely made an agreement with the County not to levy any additional property tax for the next two years. He expressed his concern over implementation of the exemption because of the City’s limited budget and the present lack of mining activity.
Responding to the Chairman, Mr. Schofield distributed a revised schedule of exemption on business personal property (Exhibit F). He noted that an assessor’s primary responsibility is to promote equity in the assessment process. He said he would support legislation structured around population, but felt that it would create an inequity across the state.
Ms. Byington, Douglas County Assessor, said that the County recently met in Eureka and it was found that many of the smaller counties do not have any way of obtaining the information the Committee is requesting other than processing it manually, which would take a lot of staff time. Since many of the smaller counties have only one or two employees, it may be difficult to obtain the necessary information. She suggested asked the Department of Taxation which counties could easily gather the information.
Chairman Hobbs said the Committee has requested a lot of additional information. Some of the counties will be able to submit the information in the format provided by Mr. Schofield (Exhibit F). He asked if the Committee agreed that it would be premature to do much more than request the information. Pending review of the information, maybe this issue could be further discussed at the Committee’s meeting in November 2000.
The Committee members made no comments in disagreement with the Chairman’s suggestion.
The Chairman asked if anyone had comments on the quarterly installment option for large taxpayers (over $10,000 in tax).
Mr. Leavitt suggested requesting additional informational on this item as well. He recommended that each entity break down the roll between real and personal property.
Mr. Pursell said that the Committee should clarify exactly what it would be asking the assessors to provide. In his opinion, the information should be requested from all entities and they can advise the Committee if it is not possible to complete the request. He indicated that it might be difficult to differentiate between secured and unsecured personal property. He clarified that the Committee wanted the general fund revenue and the ending fund balance of the general fund for each county; and noted that the Department will request that information from the assessors. Regarding the mining property, Mr. Pursell indicated that the Department would be able to identify that by county.
The Chairman said that it must be decided how the information will be requested from the counties so that it is obtained in a timely manner.
Mr. Schofield clarified that the Committee wanted the number of businesses that are valued at $1 million taxable value or more that are unsecured.
The Chairman said that was correct.
Mr. Schofield said that he would like to do another review of Clark County’s report before it is considered final (Exhibit F).
D. Discussion and Possible Action on Recommendation for Bill Draft Request (BDR) Regarding Encroachment of Property Tax Rates – Guy Hobbs and;
K. Discussion and Possible Action on Recommendation for Bill Draft Request (BDR) Regarding Actions and Authority of Debt Management Commission – Terri Thomas:
Regarding the encroachment of property tax rates, Chairman Hobbs indicated that several entities throughout the state are not currently levying taxes at their allowed ad valorem taxing levels as permitted under the statutes (see Exhibit A, Tab III-D). These entities have either chosen to tax at a lesser level or the entity has been in a position where it has not needed to tax at that level. He explained that various entities sometimes propose measures that would exceed the limits in the form of bonds or tax rate overrides for operating purposes, each of which has the effect of increasing tax rates beyond what is otherwise allowed by law. By doing this, it is possible that one entity could encroach into the rate that is already authorized for another overlapping entity. He indicated that this situation has already occurred and the potential for reoccurrence in the future is high.
He indicated that when one of these cases of potential encroachment exist two things take place: (1) the entity that is negatively affected by the potential encroachment should be officially notified; and (2) evidence of that notification should be included in the Debt Management Commission’s package for the requesting entity that is looking for bonding or overrides. He asked for comments or a recommendation to move forward with a conceptual BDR.
Mr. Leavitt said that this issue does not present a huge problem at present, but with many of the entities moving closer to the $3.64 tax cap, it is possible that it will in the future if something is not done to exercise some control over the situation.
The Chairman said if an entity were to encroach upon another entities allowed ad valorem through a debt initiative, the fact that a contract between the entity and bondholder exists, would likely resolve that problem (i.e., the repayment of the debt would take precedence and the other entity would not be able to levy its tax).
Ms. Thomas suggested that language should be added regarding the timing of proposals submitted to the Debt Management Commission. She explained if an entity is approaching the $3.64 tax cap or within 90 percent of it, there are situations in the statute where the Commission has to weigh alternatives and make judgments regarding the proposals. The statute states that if that occurs the entity must present some sort of “agreement” to the Commission. The question is whether an agreement can be intended to suggest a buy down.
Mr. Sherman also recommended that the affected entity, by resolution, acknowledge or agree that they have no intent to levy their additional authorized tax for the duration of the proposed new levy.
Further discussion ensued among Committee members and it was noted that the following issues were considered when the language for a BDR is prepared:
§ Entities below their allowed ad valorem who have chosen to put overrides on anyway and not use the allowed ad valorem, but instead use the approved override.
§ Any jurisdiction with overlapping rates above 90 percent of the $3.64 tax rate should obtain guidance with regard to when proposals come forward. There is a balancing that the Debt Management Commission is supposed to do regarding the benefit of each proposal.
§ To require that the Debt Management Commission hear all proposals over the 90 percent threshold of the $3.64 cap at one hearing instead of sequentially.
§ More discretion on the part of the Debt Management Commission when making judgments on competing proposals and more clarification on the type of questions.
The Chairman called for a motion to request a BDR and indicated that the language could be worked on before the next meeting.
Ms. Thomas indicated that after an approved presentation is made to the Debt Management Commission; the entity has a three-year period after the original approval to bring the bond to market. However, through the Department of Taxation the entity has the option of rolling over the bond.
CHAIRMAN HOBBS MOVED TO RECOMMEND A BILL DRAFT REQUEST CONCEPTUALLY FOLLOWING THE LANGUAGE IN EXHIBIT A, TAB III-D AND TO FURTHER INCLUDE THE ITEMS DISCUSSED ABOVE. MS. THOMAS SECONDED THE MOTION, WHICH CARRIED UNANIMOUSLY.
F. Discussion and Possible Action on Recommendation for Bill Draft Request (BDR) Regarding Tax Increment Financing for Non-Redevelopment Purposes – Guy Hobbs:
Chairman Hobbs said that this is an issue that is in the conceptual stage. He asked the Committee if it believed this item should be recommended as an alternative financing option to local governments. This issue originally was considered as a way to create an alternative mechanism to special improvement districts for areas with unique characteristics where growth might be anticipated. He indicated that this type of financing could be used for transportation projects within a specially benefiting area like the resort corridor.
Continuing, the Chairman indicated that the entities affected by this would primarily be the school districts. He indicated that defining the specific projects that would be eligible for funding through this source could control the use of tax increment financing.
Responding to several Committee members, the Chairman said that:
§ The Committee must first concentrate on the permissible uses for this type of funding and the information should then be shared with school district officials to obtain their approval.
§ The concern leading to this issue was to design more creative use of existing redevelopment law.
Ms. Walker, representing Carson City, Douglas and Lyon Counties, said that in the rural areas it is difficult to obtain economic development because they do not have the infrastructure. Many retailers have been interested in locating to the Carson City/Douglas County area for many years; however, the roads, sewer and water that is needed is not available.
The Chairman explained that as the Committee gets into developing the definitions, the types of projects allowed would also have to be discussed.
Mr. Kester said that the school districts would mainly be interested in looking at the breadth of the law. The school districts are not against economic development, but are not in favor of using school district money to finance the infrastructure for a retail business.
Following discussion among Committee members, the Chairman asked if the members felt comfortable recommending that a BDR be drafted.
Mr. Alastuey said that he was in favor of requesting a BDR.
The Chairman asked for volunteers to help craft the details and descriptions.
Ms. Guinasso clarified that the Legal Division of LCB is constrained by law not to begin a BDR until the details to complete the drafting have been provided by the requestor.
The Chairman said that the draft the Committee has prepared provides substantial foundation to begin the drafting process.
Responding to Ms. Guinasso, the Chairman said that the draft proposal is approximately 20 pages in length. Although some refinement will be necessary, probably 95 percent of the draft is complete.
Responding to Mr. Kester, the Chairman said that the law is currently very broad, but as the definitions for eligible projects are defined in the proposal, the problem will be reduced.
CHAIRMAN HOBBS MOVED TO ASK THE LEGISLATIVE COMMITTEE TO DIRECT THE ADVISORY COMMITTEE TO CONTINUE ITS WORK ON THE DRAFT PROPOSAL FOR TAX INCREMENT FINANCING FOR NON‑REDEVELOPMENT PURPOSES. MR. LEAVITT SECONDED THE MOTION. ALL WERE IN FAVOR EXCEPT FOR MR. KESTER WHO VOTED NO.
E. Discussion and Possible Action on Recommendation for Bill Draft Request (BDR) Regarding Property Tax for the Operation of Regional Facilities – Carole Vilardo, Executive Director, Nevada Taxpayers Association:
Ms. Vilardo noted that during the 1999 Legislative Session, A.B. 314 was approved (see Exhibit A, Tab III-E). It allowed five counties to impose a property tax rate of up to five cents per $100 of assessed valuation to fund the operating cost of a juvenile detention facility. At that time, the Nevada Taxpayers Association, proposed that the tax be allowed for a general purpose for all counties if they had regional projects. However, because of the timing of the session, it was difficult to get the amendment approved because it was especially substantive. The amendment would provide the rural counties with an operating mechanism for regional capital projects without identifying the project.
Ms. Vilardo also suggested that all the property tax increments be identified in NRS 354. She suggested that when tax measures of this type are passed, they should be placed in the applicable statute, but also should be inserted in Chapter 354 of NRS.
Ms. Thomas asked if item number 7 (Exhibit A, Tab III-E) referred to the 5 cents tax for capital projects.
Ms. Vilardo explained that if the 5 cents tax was levied it could only be used for a regional project (agreed to by an interlocal agreement).
Responding to Mr. Leavitt, Ms. Guinasso said that during her search for exemptions in the statutes, a number of inconsistencies in law were identified that need to be consolidated into Chapter 354 of NRS.
In closing, Ms. Vilardo recommended providing in law that the 5-cent levy for regional projects could be used for more than one purpose.
Ms. Walker said that A.B. 314 of the 1999 Session was a joint effort between Carson City, and Churchill, Douglas Lyon and Storey Counties. Ms. Walker said that she concurred with Ms. Vilardo that the allowed use of the tax should be broadened.
Following discussion between Ms. Vilardo and Ms. Walker, it was decided to remove item 7 of Exhibit A, Tab III-E.
Regarding item 4, Ms. Walker suggested changing the language to “included, but not limited to detention and rehabilitation facilities, solid waste, transit . . .”
Ms. Vilardo said she is concerned about specifying certain uses since the tax is for the operation of regional capital projects.
Referring to Ms. Vilardo’s proposal (Exhibit A, Tab III-E), the Chairman said that the concept to have more flexibility is good as opposed to being more specific. However, refinement of some of the elements of the proposal will be necessary. He asked for volunteers to work with Ms. Vilardo to modify the language.
The following members volunteered to work on this issue: Mary Walker, Linda Ritter, Marvin Leavitt, Mike Alastuey, Chairman Hobbs, and Carole Vilardo.
At the request of the Chairman, Carole Vilardo, Linda Ritter and Rick Kester volunteered to work on finalizing the language for the proposed BDR on tax increment financing for non‑redevelopment purposes.
G. Discussion and Possible Action on Recommendation for Bill Draft Request (BDR) Regarding Role of Personal Property in Determining Local Government Operating Tax Rate – Marvin Leavitt:
Mr. Leavitt noted the Committee has discussed this issue in the past, but it has not been able to differentiate personal property from real property on the final taxable basis. Before retiring, Lila Clark, former Chief of Assessment Standards, Department of Taxation, met with the assessors and it was agreed upon that this data would be maintained in the future. He said since the information is not readily available on personal property tax, he was reluctant to make a recommendation to change the formula until this information can be gathered and studied for a year or two. Therefore, he recommended continuation of the study to determine how removal of personal property tax from the computation of the formula would affect the formula. He said this issue could be studied over the next two years and the information gathered could be presented to the 2003 Session.
Mr. Pursell assured the Committee that the Department of Taxation would continue to work with the Assessor’s Association to identify the elements that will be needed from the 17 counties to develop a model that will determine how personal property affects the computation of the formula.
Responding to the Chairman, Ms. Guinasso reminded the Committee that during the 1999 Session, legislation was passed stating that the Legal Division must receive language sufficient to complete drafting at the point a BDR is requested.
H. Discussion and Possible Action on Recommendation for Bill Draft Request (BDR) Regarding the Fiscal Viability of Certain Rural Local Governments – Marvin Leavitt:
Mr. Leavitt explained that this is one of the Committee’s major future projects. Since so many of the rural communities are facing major financial problems, this issue has become more important to study. He recommended beginning the study process by gathering information relating to the financial situation in the rural counties (i.e., assessed valuation, general fund balances, revenue growth compared to population change). In Mr. Leavitt’s opinion, this is one of the most important issues for the Committee to focus on over the next few years.
Mr. Pursell suggested that this issue may also be connected with Agenda Item J and the data collected for the Local Government Financial Reporting Function could respond to some of the concerns mentioned by Mr. Leavitt.
Mr. Brooks questioned whether the entire state should be reviewed in this analysis.
The Chairman agreed that it would be a good idea to have benchmarks to compare the various entities throughout the state and to later determine trends and characteristics. He indicated that a number of factors to be included in this analysis were previously identified (i.e., demographics on the age of the population, school enrollment). He concurred that this is a high priority project and that the counties that are experiencing financial difficulty should be focused on first. He noted that the Committee should also review the distribution of revenues on a regional economy basis as a more effective mechanism for applying revenues.
J. Discussion and Possible Action on Recommendation for Bill Draft Request (BDR) Regarding Transfer of Local Government Financial Reporting Function from Legislative Counsel Bureau to Department of Taxation – Marvin Leavitt:
Mr. Leavitt indicated that for the past 20 years an employee of the LCB has gathered information on various local governments throughout the state that was consolidated into a report that was submitted to the Legislature each session. In recent years the report has become outdated and since the person that was compiling the report has retired, it is an opportune time to move the function over to the Department of Taxation along with the transfer of funding. The report can then be designed to include information that will be more useful to this Committee and other interested parties.
Mr. Pursell explained that presently all the information for the report is provided by the local governments, but must be entered into the computer by the Department and the LCB. In his opinion, this is an opportunity to develop an electronic program. Ultimately, the goal is to develop electronic filing of budgets and to capture the data that can be used to keep track of revenues and expenditures of each entity. According to Mr. Pursell, the Department would be willing to take over the function if funding is provided to develop electronic filing; however, the Department does not want to do the data entry on a format that is not usable.
Mr. Sherman concurred with Mr. Pursell. He explained that Washoe County recently wanted to do an analysis comparing the County to other local governments and many steps had to be taken to get the information into electronic format. He also suggested that the information that is compiled should be centrally located so that it is easily accessible to the local governments.
Responding to the Chairman, Mr. Welsh said that transfer of this task would be primarily budgetary. The only statutory requirement was that the Department of Taxation was to forward all the budgets to the Fiscal Analysis Division of LCB.
Ms. Guinasso indicated that the provision would have to be removed from statute and there may be a need to insert new language in statute regarding Mr. Pursell’s testimony.
According to Mr. Pursell, a BDR would be necessary because of the fiscal impact to the Department’s budget. The matter has been discussed with Mark Stevens, Assembly Fiscal Analyst, Fiscal Analysis Division; and further conversations will be necessary before the issue is finalized.
Ms. Thomas indicated that this would also have to be discussed with the local governments to determine the fiscal impact to them and whether the local governments may have financial difficulty providing the information electronically at the time it may be mandated.
Ms. Guinasso indicated that more detail would be needed before a BDR could be proposed.
According to Mr. Leavitt, it would be simple to prepare the proposal required by the Legal Division and it should be completed for the next meeting in November.
Responding to the Chairman’s request for volunteers to work on this project, Ms. Thomas, Mr. Leavitt and Mr. Pursell said they would work on preparing the proposal.
I. Discussion and Possible Action on Recommendation for Bill Draft Request (BDR) Regarding Definitions of “Exemptions and Exclusions” – Dave Pursell:
Mr. Pursell said that Dino DiCianno, Deputy Executive Director, Department of Taxation, would provide the presentation to the Committee.
Mr. DiCianno apologized to the Committee for not providing his written presentation in advance of the meeting (see Exhibit G). He indicated that he would be presenting a brief summary of the specific statutes that fit into the category of exemptions and exclusions. Another category of exceptions was added for those that do not fit into the prior two categories because they are not broad based.
In attempting to fulfill the agenda question of defining exemptions and exclusion, Mr. DiCianno explained that he determined a basis to tie the definition. Sales tax was tied to gross receipts and property tax was tied to taxable property and the taxable value of that property.
Mr. DiCianno thanked Carole Vilardo for her assistance in preparing the definitions. He said it was important that the Committee study the definitions before any conclusions are made. In his opinion, it is important to establish some type of test criteria, which would be able to evaluate existing exemptions or exclusions, or the potential for additional exemptions or exclusions. Referring to page 5 of Exhibit G, Mr. DiCianno outlined some of the suggested questions that could be used as test criteria:
§ Does the exemption meet the purpose for which it was originally intended?
§ Does the exemption lead to more or less equity in terms of its application?
§ Does the exemption hit the target group it was originally intended for or does it have a broader or narrower application then intended? If not, what should be done about it?
§ What is the optimum review period for rarely utilized exemptions?
§ What is the fiscal impact of the particular exemption?
§ What are the means-testing criteria to evaluate whether or not certain exemptions should continue to exist or a new exemption be proposed?
§ Does a particular exemption accomplish a social, economic, or legislative purpose?
Mr. Pursell said that it is fairly easy to identify an exemption by statute for property tax because a report is received from the assessors delineating the information. However, it is difficult to determine this information with sales tax. He said that he hoped to have a breakdown of the 99 different standard industrial codes used by the Department, and also provide a list of sales and use taxes reported and exemptions by the November 2000 meeting. Mr. Pursell indicated that additional guidance would be needed from the Committee as to what the working group should do next.
Mr. Leavitt indicated that every session, numerous measures are presented that provide for exemptions for various items. He requested that the Legislature provide in statute that any bill granting an exemption for taxation is presented to a special committee to be weighed by a certain standard prior to when the bill is heard by committee.
Ms. Vilardo said that she thought the Committee had a bill last session for a constitutional change relative to property tax. In her opinion each type of exemption that is granted should be identified in statute. Because of the way an exemption is written, there is never enough time to fully analyze it. If the information on an exemption is received in advance it should be analyzed regarding the following:
§ The benefit it would provide.
§ How many people would be impacted by it.
§ What the revenue loss would be.
Responding to the Chairman, Ms. Guinasso said that a copy of S.J.R. 20, which proposes to amend the Constitution of the State of Nevada to provide requirements for the enactment of property and sales tax exemption, would be delivered shortly. She indicated that this measure was passed during the 1999 Session and noted that the measure provided guidelines to the Legislature in order to be able to grant an exemption. The measure will be up for approval again during the 2001 Session and if it passes, the measure will go before the voters during the 2002 General Election.
L. Discussion and Possible Action on Recommendation for Bill Draft Request (BDR) Regarding Extension of Activities of Legislative Committee to Study the Distribution among Local Governments of Revenue from State and Local Taxes Beyond the July 1, 2001, Expiration Date:
Ms. Vilardo said at the first meeting of this Committee during this interim, on behalf of the Nevada Taxpayers Association, she proposed that a BDR be requested to extend the Legislative Committee to Study the Distribution among Local Governments of Revenue from State and Local Taxes for another four years. Because of the amount of work that still must be done and the oversight that is needed, she recommended that the Advisory Committee make a recommendation to the Legislative Committee to request a bill draft to:
§ Extend the life of the Legislative Committee to Study the Distribution among Local Governments of Revenue from State and Local Taxes until July 2005.
§ Include the provisions in law to continue the Subcommittee to Study the Cost of Maintaining Highways, Streets and Roads.
§ Include the S.B. 411 Subcommittee as a charge of the full Committee.
The Chairman called for a motion.
MR. SHERMAN MOVED TO REQUEST A BDR TO EXTEND THE LIFE OF THE LEGISLATIVE COMMITTEE TO STUDY THE DISTRIBUTION AMONG LOCAL GOVERNMENTS OF REVENUE FROM STATE AND LOCAL TAXES FOR ANOTHER FOUR YEARS. MR. PURSELL SECONDED THE MOTION, WHICH CARRIED UNANIMOUSLY.
Mr. Welsh indicated that the Subcommittee to Study the Cost of Maintaining Highways, Streets and Roads (see Exhibit H) has requested to be continued along with this Committee. However, they have asked that their charge be changed. He asked if this should be included in the motion.
Ms. Guinasso said that it would be best to include the Subcommittee to Study the Cost of Maintaining Highways, Streets and Roads and its desired change of direction, and the S.B. 411 Subcommittee into the motion.
CHAIRMAN HOBBS AMENDED THE MOTION TO INCLUDE CONTINUING THE SUBCOMMITTEE TO STUDY THE COST OF MAINTAINING HIGHWAYS, STREETS AND ROADS WITH THE RESPONSIBILITY OF: 1) REVIEWING ON AN ANNUAL BASIS THE ROAD INVENTORY, HAVING AN APPEAL PROCESS AND RECONCILING THE ROAD INVENTORY EACH YEAR; 2) REVIEWING THE FISCAL IMPLICATIONS TO THE COUNTY AND CITY ROAD DEPARTMENTS WITH THE NEW FORMULA; 3) REPORTING TO THE LEGISLATIVE COMMITTEE ANY NECESSARY ADJUSTMENTS; AND 4) HAVE A COMPLETE ROAD INVENTORY AUDIT EVERY 10 YEARS.
Ms. Guinasso indicated that the motion implies that the Subcommittee to Study the Cost of Maintaining Highways, Streets and Roads should continue without limitation; however, the Legislative Committee to which it is a subcommittee should continue for only four years.
Mr. Welsh indicated that it is the intent of the Subcommittee to continue for the next four years along with the Legislative Committee. If the Subcommittee wanted to continue the process after four years, a BDR would be presented to the Legislature in 2005.
After some discussion, Ms. Guinasso said that complete road inventory audit every 10 years should be part of the fuel tax formula bill, not the bill to continue the subcommittee.
Responding to Ms. Ritter, Ms. Guinasso indicated that the language in the draft is broad and should be sufficient to include studying Tier 2 of the fuel tax distribution formula.
Clarification of Statutory Language Regarding 1st and 2nd Tier
Interlocal Tax Revenue Distribution Agreements
Ms. Guinasso, Principal Deputy Legislative Counsel, LCB, said that the Legal Division was asked to review the portion of the S.B. 254 formula with regard to the cooperative agreements and being able to establish an alternative formula for distribution of those various taxes included in the local government tax distribution account. It was questioned whether there could be an alternative agreement for another formula at the county level for the first tier rather than at the second tier. Nevada Revised Statutes 360.730 and the language in the statute could be used to allow counties to do this at the first tier level if they desired. The caveat to that would be that the entities within the county remained unaffected. If two counties were to decide to share differently in the taxes included in the formula, unlike the statutes that provide for that distribution, and if one of the counties were to receive less pursuant to the agreement, it would be the county’s responsibility to ensure that the entities included within that county remained whole at the second level. The county would have to absorb the difference between the amount that it would otherwise have received pursuant to the statutes and the amount it agreed to, and it could not pass that difference on to entities included within the county at the 2nd Tier distribution.
The Chairman indicated that this issue arose because a question came up as to whether or not two counties could alternatively share their revenue. The concerns were if this would have 1st or 2nd Tier implications and it was determined that it would have a 2nd Tier implication.
New Items for Future Consideration
Ms. Ritter brought up the issue of the assessed valuation in the distribution of the RTC Tax, which is listed under NRS 373 and the inclusion of net proceeds in the calculation of that tax (see Exhibit I). She suggested:
1. Eliminating net proceeds of minerals valuation from calculations for fuel tax distributions involving assessed valuation.
2. Allowing payment of fuel taxes directly to cities and counties, rather than the county receiving the payment and forwarding the city portion at a later date.
She informed the Committee that Mr. Pursell has indicated that the change requested in item (2) could be handled by the Department of Taxation with existing staff and technology.
The Chairman requested that this issue be placed on the next agenda of the Advisory Committee.
Regarding the fuel tax distribution, Ms. Vilardo suggested when a county has not imposed the five-cent fuel tax that the city is provided the option of doing so if it desires. In her opinion, it is not fair to penalize the city from allowing them to attempt to obtain this addition revenue because the county did not approve it.
Ms. Ritter said this issue would require further discussion. She noted that in Elko County the cities wanted the fuel tax increase and the county did not. She suggested that if an entity passes the tax, the revenue should only pass to those entities that wanted the increase rather than the county also benefiting from the additional funds.
The Chairman noted that the Committee has discussed a lot of issues today that will require additional work prior to the next meeting and there is a December 15, 2000, deadline that must be met for submitting BDRs.
Ms. Guinasso said that was the latest a bill draft request could be submitted, but certainly would appreciate receiving the information sooner.
Chairman Hobbs advised that the Committee’s next meeting was scheduled for November 2, 2000. Therefore, a majority of the work should be finalized in advance of the November meeting so that it can be circulated among the members for their review. He said that three additional working groups were organized today, including the:
1. Regional Levy Working Group – Mary Walker, Carole Vilardo, Linda Ritter, Marvin Leavitt and Mike Alastuey. He asked that Carole Vilardo coordinate communication amongst the members.
2. Tax Increment Working Group – Linda Ritter, Rick Kester, Carole Vilardo and myself. The Chairman said he would coordinate this group.
3. Transfer of Reporting Function Working Group – Terry Thomas, Marvin Leavitt and Dave Pursell. He asked if Mr. Leavitt would coordinate this group.
Mr. Welsh said that Mark Stevens, Assembly Fiscal Analyst, Fiscal Analysis Division, LCB should be included in the Transfer of Reporting Function Working Group.
The Chairman directed attention to a map prepared by Janet Murphy. A question had come up regarding special districts and whether or not the ability exists to show what services each district concentrates on and if overlapping is occurring. The map includes incorporated towns, library districts and a variety of other districts.
Ms. Murphy said that the only districts not included in the map are counties, cities, fire, hospitals and schools (see Exhibit J). Included on the map are the taxes that each district participates in and whether it is a consolidated tax or property tax. She explained that the database she prepared could provide numerous information on the entities, including population, percentage of tax received and budget information. She said she would like to accept the task of gathering the information needed on Agenda Item III-H – Fiscal Viability of Certain Rural Local Governments. As a representative of the special districts she indicated that she was concerned with regional facilities and consolidating facilities.
The Chairman thanked Ms. Murphy for taking on this large task and providing this valuable information to the Committee.
Regarding Item III-C (Exhibit E), Mr. Schofield said that the information is incorrect and the information will be recalculated for tomorrow’s meeting.
There was no further public testimony.
There being no further business before the Advisory Committee, the meeting adjourned at 3:45 p.m.
Guy Hobbs, Chairman