Minutes of the Meeting of the Advisory Committee to the

Legislative Committee to Study the Distribution among Local Governments of

Revenue from State and Local Taxes, NRS 218.5388 to 21853886, inclusive

November 2, 2000

Las Vegas, Nevada

 


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 November 2, 2000, at 9:45 a.m. in Room 4401 of the Grant Sawyer State Office Building, Las Vegas, Nevada.  This meeting was videoconferenced to Room 3138 of the Legislative Building, Carson City, Nevada. 

 

 

COMMITTEE MEMBERS PRESENT IN LAS VEGAS:

 

Guy Hobbs, Chairman, Hobbs, Ong and Associates

Mike Alastuey, Committee on Local Government Finance

Marvin Leavitt, City of Las Vegas

 

COMMITTEE MEMBERS PRESENT IN CARSON CITY:

 

Bruce Brooks, Humboldt County

Rick Kester, Committee on Local Government Finance

Janet Murphy, Tahoe-Douglas District

Linda Ritter, City of Elko

John Sherman, Washoe County

Terri Thomas, City of Sparks

 

COMMITTEE MEMBERS ABSENT

 

Gary Cordes, City of Fallon

Dave Pursell, Executive Director, Department of Taxation

 

LEGISLATIVE COUNSEL BUREAU (LCB) STAFF PRESENT:

 

Kevin Welsh, Deputy Fiscal Analyst, Fiscal Analysis Division (Las Vegas)

Ted Zuend, Deputy Fiscal Analyst, Fiscal Analysis Division (Carson City)

Kim M. Guinasso, Principal Deputy Legislative Counsel, Legal Division (Carson City)

Jeanne Peyton, Secretary, Fiscal Analysis Division (Carson City)

 

EXHIBITS

 

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 chart titled “Summary of Combined Local and Central Assessed Business Property Accounts,” submitted by John Sherman, Finance Director, Washoe County.

Exhibit E is a chart titled “Number of Businesses,” submitted by John Sherman.

Exhibit F is a memorandum regarding Business Personal Property Tax Bills, dated October 25, 2000, submitted by John Sherman.

Exhibit G is titled “Changes Needed to Economic Development Abatements,” submitted by Carole Vilardo, Nevada Taxpayers’ Association.

Exhibit H is titled “Regional Property Tax Proposal,” submitted by Carole Vilardo.

Exhibit I is titled “Tax Increment Financing: Discussion points for BDR,” submitted by Guy Hobbs.

Exhibit J is an article titled “The Initiative . . . Potential,” submitted by Carole Vilardo.

Exhibit K is an article titled “The Teacher’s Union Initiative . . ,” submitted by Carole Vilardo.

Exhibit L are suggested changes to NRS 373 (RTC Tax) submitted by Linda Ritter.

Exhibit M is a memorandum from Linda Ritter regarding “Request for additional changes regarding the distribution of Fuel Taxes,” dated September 26, 2000.

 

 

I.  Call to Order  -- Opening Remarks

 

Chairman Hobbs called the meeting to order.  The Chairman indicated that the Committee had several items on today’s agenda that have previously been discussed and others that are fairly new.  The reason for today’s meeting is to finalize as many issues as possible so that they can be presented to the full legislative committee at its meeting in early December 2000.  He advised that the fuel tax bill draft request (BDR) was never voted on, which also must be presented to the legislative committee. 

 

Continuing, the Chairman indicated that today’s videoconference was set up to accommodate the members from each end of the state.  If it works well it will be more convenient to conduct meetings on shorter notice in the future.

 

Ms. Guinasso, Principal Deputy Legislative Counsel, Legal Division, LCB, said that December 15th is the statutory deadline for any legislative committees to provide BDR’s to the Legal Division.  Therefore, the meeting of the legislative committee in early December would be the last meeting in which the committee could request bills to be drafted for the 2001 Session. 

 

Regarding the fuel tax provisions, Ms. Guinasso indicated that there was never a vote taken.  Although she has prepared a draft from the proposal provided by Mr. Leavitt, there has been no official direction to the Legal Division from the legislative committee to submit that proposal as a BDR.

 

 


II.  Consideration of and Possible Action on Recommendations from

Advisory 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 directed the Committee to Exhibit C, a copy of the draft language that was prepared by the Transient Lodging Tax work group.  The draft accomplishes three things:

 

§         Consolidates and organizes existing statutes that apply to transient lodging taxes.

 

§         Provides “base-line” provisions for exemptions, promotional packages and times shares.

 

§         Requires local ordinance, rules and regulations to address certain aspects of transient lodging taxes.

 

Mr. Ritter indicated that the chapter is divided into several sections so that items on transient lodging tax can easily be found.  These sections include:

 

1.           Definition.

2.           Administration.

3.           Imposition and collection by counties.

4.           Imposition and collection by cities and towns.

5.   District to defray cost of improving central business area (Unique to Clark County).

6.           Returns and payments.

7.           Penalties.

8.           Miscellaneous provisions (i.e., exemptions, promotional packages and time share projects).

 

Ms. Ritter noted that an attempt was made to obtain uniformity in certain areas; however, it was found that many differences exist in the way each entity handles the transient lodging tax. 

 

Ms. Ritter indicated that the working group would like to work with LCB on the actual BDR:

 

§         To ensure that the wording throughout the bill is uniform. 

 

§         Regarding audits and when deficiency notices have to be sent out.  The time period in the draft does not allow sufficient time for the larger counties. 

 

§         To discuss whether the transient lodging taxes levied by special acts should be excluded. 

 

§         To possibly include language that would protect bond covenants.

 

Ms. Ritter noted that some people on the working group expressed an interest in continuing to review these statutes to try to provide more uniformity during the next interim period.

 

Ardel Jorgensen

 

Ms. Jorgensen, Director, Clark County Department of Business License, thanked Ms. Ritter for her hard work in trying to accommodate everyone’s wishes when preparing the draft.  She agreed that the draft language was good and on behalf of Clark County, Ms. Jorgensen said they only had a few suggested changes, which include:

 

§         Section ___ .160 – Add authority for the convention center by inserting “244A.597 through 244A.655” following 269.170.

 

§         Section ___ .190, subsection 3 – The language provides 15 days to do an audit and get the determination out to the business on a three-year audit, which is impossible.  Because of the type of businesses that exist in Clark County, she explained that a much longer period than 15 days would be required and said the County would like up to a one-year period to complete audits.

 

Responding to the Chairman, Ms. Ritter said she would address Ms. Jorgensen’s concerns before hearing additional testimony.  Regarding Section ___ .190, subsection 3, Ms. Ritter believed she could make that change.  She asked if it would be more acceptable if the language read, “within four years after the 15th day of the calendar month.”

 

Mr. Jorgensen concurred.

 

Ms. Vilardo suggested looking at the way this is handled with sales tax.

 

Ms. Jorgensen said that Luke Pushnig is also here from the Las Vegas Convention and Visitors Authority and also has some concerns to go over.

 

Luke Pushnig

 

Mr. Pushnig, Legal Counsel, Las Vegas Convention and Visitors Authority (LVCVA), referred to Section ___.500, subsection 3 and 4 of Exhibit C.  He suggested deleting “suspended” because a license is either revoked or not.

 

Ms. Ritter said that was discussed at the work group meeting and it was already decided to change that.

 

Mr. Pushnig agreed with Ms. Ritter to include specific language protecting bond covenants and the imposition of the tax that has been allocated for those particular bonds.  He explained that it is critical that language is included stating that all the taxes imposed will continually be imposed after this law has been passed. 

 

Mr. Pushnig also complimented Ms. Ritter on the outstanding job she did coordinating the working group and preparing the language.

 


Cory Mayes

 

Mr. Mayes, City of Las Vegas, suggested the following changes:

 

§         NRS ___.025 “Gross Receipts” defined – Include license tax pursuant to the chapter.

 

§         NRS ___.045 “Person” defined – Individuals may rent a room as a corporation or a firm and do not pay the tax.

 

§         NRS ___.055 “Transient Lodging” defined – Many times a portion of a structure is made into an apartment complex and rented and no tax is paid.

 

Regarding “Person” defined, Ms. Ritter directed the Committee’s attention to NRS ___ .035, “Occupant” defined, which is described as a natural person rather than a company. 

 

Also, Ms. Ritter agreed that the operator of the business should be required to display the tax on a room. 

 

Ms. Ritter explained that many of the issues were left open to local rules, ordinances and regulations because each entity has special circumstances. 

 

Continuing, Mr. Mayes referred to NRS ___.190 and said he was concerned with what the state has to do to respond back to the affected interest regarding a determination and the requirement that copies of the different audit documents must be provided.

 

Mr. Pushnig suggested using the procedures set forth in NRS 364.210 to eliminate this issue.

 

Ms. Vilardo noted that during the 1999 Session, a requirement was made that the laws set forth in NRS 360.291 are to be used for any tax that is in Title 32.  Therefore, even if it is not listed in this new legislation, the requirement is still in NRS 360.291.  Ms. Vilardo recommended inserting language stating if an audit is challenged, the actual charges may be collected for the copying of any additional documents. 

 

Michael A.T. Pagni

 

Mr. Pagni, Legal Counsel, Reno-Sparks Conventions and Visitors Authority, said the request to charge for copies came from an operator and refers to NRS 364.220.

 

In reply, Ms. Ritter said she did not recall any other concerns from other entities about including this item and agreed that inserting a charge for copies could be discussed.

 

Ms. Jorgensen informed the members that the generally accepted auditing standards does not allow for an auditors work papers to be distributed outside of the entity that is doing the audit.

 

Mr . Mayes added that his concern is that NRS___.140 deals with the audit as being a confidential item.  He is not concerned with the cost of copying the documents.

Discussion ensued regarding the audit and Ms. Ritter said she would request input from some of the entities to determine if they are having a problem with confidentiality of audits.  She said she would like LCB to review the language and provide their help on some of these issues.  She suggested that a final BDR could be prepared prior to the next full committee meeting in early December 2000.  She asked if it was acceptable to the committee members to give Ms. Guinasso this copy (Exhibit C) of the proposal to begin working on the BDR while the study group continues to modify the few items mentioned today.

 

The Chairman concurred with Ms. Ritter’s suggestion to have Ms. Guinasso begin drafting the bill since the Legislative Committee has provided previous approval. 

 

Mr. Mayes thanked Ms. Ritter for all her work on the transient room tax and said he agreed that the committee should move forward with the BDR.

 

Mr. Pushnig said there were a number of other small items that will need to be modified (i.e., number changes) that LCB should be able to correct.

 

Ms. Jorgensen also noted that there were some minor changes that she would like to work with LCB on.

 

Responding to Ms. Ritter, Ms. Guinasso indicated that when the Legal Division is provided a proposal, the statute requires that all the details are included to “complete” the bill draft, which means that unless a complete request is submitted to the Division, it is not permitted to draft the bill.  She noted that any substantive requirements must be included in the proposal before she can begin drafting because it can be extremely unwieldy to begin drafting a bill that is later changed several times before the bill is completed.  This causes a tremendous holdup in terms of finalizing bill drafts during the shortened days of session. 

 

Ms. Ritter said that she is hoping that the LCB Legal Division will catch some of the details that the working group may have overlooked.  However, the draft (Exhibit C) is complete in terms of substantive requirements.  She said she would work out the last details and provide a final copy to the Legal Division.

 

In reply, Ms. Guinasso said that during the drafting process there might be questions that arise that were not initially considered.  She said she would like to have a contact person for each bill she would be working on.

 

Mr. Pushnig said he could contact John O. Swendseid, Esq., of Swendseid & Stern, who could draft a specific paragraph to protect the bond covenants and the allocation of the bonds, which could be included in the proposal. 

 

Responding to the Chairman, Ms. Ritter summarized the modifications to her draft proposal on transient room tax:

 

§         Section ___.160 of NRS – Add reference to convention and visitors authority.

 

§         Section ___.190 of NRS – Review paragraph 3 and possibly expand the time limit to 4 years.

 

§         Section ___.500 of NRS – Remove reference to license suspension.

 

It was requested that the following items also be included as modifications to the draft:

 

§         Language for protection of existing bond coverage.

 

§         Language for exclusion of special acts.

 

§         Check the issue of confidentiality relating to the audit provisions.

 

The Chairman called for a motion to recommend language as suggested above.

 

MR. BROOKS MOVED TO RECOMMEND A REVISED COPY OF THE PROPOSAL ON TRANSIENT LODGING TAX (EXHIBIT C) INCLUDING THE MODIFICATIONS DISCUSSED TODAY TO THE LEGISLATIVE COMMITTEE FOR A BILL DRAFT.  MR. SHERMAN SECONDED THE MOTION, WHICH CARRIED UNANIMOUSLY. 

 

B.              Discussion and Possible Action on Recommendation for Bill Draft Request (BDR) Regarding Taxation of Personal Business Property – John Sherman:

 

Based on the last Advisory Committee meeting, Mr. Sherman said that the Department of Taxation has been directed to contact the county assessors to collect certain information. He called attention to Exhibit D, a chart titled “Summary of Combined Local and Central Assessed Business Property Accounts;” Exhibit E, a chart titled “Number of Businesses;” and Exhibit F, a memorandum regarding Business Personal Property Tax Bills, dated October 25, 2000.

 

Mr. Sherman explained that information was collected on both revenue impact of exemptions at various levels and quarterly payments.

 

Directing the Committee’s attention to Exhibit D, Mr. Sherman said the “Summary of Combined Local and Central Assessed Business Personal Property Accounts” lists all 17 counties and total of revenue that would be reduced based on various levels of exemptions beginning at $5,000 and going up to $50,000 of taxable value.  With the exception of Clark County, the tax rate used was from Fiscal Year 2000-2001 average county-wide tax rate and the actual taxable values used were from Fiscal Year 1999-2000. 

 

Continuing, Mr. Sherman said that pages 2 and 3 of Exhibit D are a breakdown of the locally assessed values and centrally assessed values, respectively.  Page 4 describes revenue loss at various levels of exemption on the total property tax that would be generated. 

 

Referring to a chart titled “Number of Businesses,” (Exhibit E), Mr. Sherman explained that the document was a list of businesses reporting taxable value at various levels (i.e., $0-$5,000, $5000-$10,000).  Page 2 of Exhibit E, Chart 1 (Percent of Row Totals) describes the percent of businesses in each entity at the various levels of taxable value. 

 

Lastly, noted Mr. Sherman, Exhibit F is a memorandum regarding business personal property tax bills, which lists the number of accounts by county with a tax bill over $10,000.  This survey was done in an attempt to assess the impact of going from annual to quarterly payments on business personal property tax.  Page 2 of the memorandum identifies some concerns, including:

 

§         A business could close down and the unpaid increments would be lost.

 

§         Why allow only accounts of $10,000 or more to pay in installments.  Taxpayers with $1,000 tax bills are also entitled to quarterly installments.

 

§         Billing cycles may need to be changed to be similar to real property billing.

 

Carole Vilardo

 

Ms. Vilardo, Nevada Taxpayers’ Association (NTA), said if the change were made to quarterly installments, the assessors would have to send the bills out at the same time the real property bills are mailed.  The response back on the declaration must be received within 30 days in order to be able to use this provision.  The taxpayer will then be put on a quarterly schedule. 

 

She indicated that it would not be unusual to offer quarterly installments only to those businesses with tax bills exceeding $10,000 that have been in operation at least three years.  Referring to the question of whether quarterly payments should be offered to those with tax bills as low as $1,000, Ms. Vilardo said there is precedence in statute to establish a threshold similar to what is done with mobile homes (i.e., if the tax bill on a mobile home is great than $100, the bill may be paid in four equal installments); however, the threshold can be any amount. 

 

Mary Walker

 

Ms. Walker, representing Carson City, Douglas and Lyon Counties, suggested that the influence any changes made may have on the operating tax rate should be reviewed.  She explained that the operating tax rate in the general fund is based on actual revenues.  Therefore, if revenues decline, an increase in the tax rate will occur.  She suggested having the Department of Taxation examine the affect of any type of exemption to the tax rate.

 

The Chairman suggested separating the two issues of quarterly payment and exemptions for discussion purposes.

 

Mr. Sherman said that he could begin preparing a proposal on the quarterly payment issue to present to the full committee at its next meeting.  He said there would be some substantive changes to the language previously prepared.  These changes would include:

 

§         Sending out the tax bills for the payment of business personal property at the same time the bills are sent out for real property.

§         Payments must be made within 30 days of the date of the bill.

 

§         Quarterly payments would be limited to those that have a tax bill greater than $10,000 and have been in business for at least three years.

 

The Chairman said that a proposal could be brought to the full committee with the final language.  At this time the Advisory Committee could move forward to recommend that drafting of the language for quarterly payments take place.  He asked Ms. Guinasso if this was appropriate.

 

In reply, Ms. Guinasso said that was fine, as long as the Committee was voting on what was needed by the Legal Division of LCB in order to begin drafting the bill.

 

MS. RITTER MOVED TO GO FORWARD WITH A BILL DRAFT TO ALLOW FOR QUARTERLY PAYMENTS FOR BUSINESS PERSONAL PROPERTY TAX BILLS OVER $10,000 FOR BUSINESSES THAT HAVE BEEN IN BUSINESS FOR AT LEAST THREE YEARS.  MS. THOMAS SECONDED THE MOTION, WHICH CARRIED UNANIMOUSLY.

 

Regarding the exemption, Mr. Sherman indicated that throughout the interim, numerous discussions took place and a variety of information was gathered.  A survey of the 11 western states indicated that Nevada was in line with the other states.  It was found that 4 of the 11 states offer an exemption on business personal property ranging from $2,500 to $52,000.  The assessor’s concluded that there would not necessarily be any reduction in the cost of administration.  He explained that a reduction in business personal property tax could shift the additional revenue needed to residential property tax.  From the discussions that have taken place, he recommended that several of the issues would need to be studied further. 

 

Ms. Ritter said that one of her concerns is the impact this may have on small cities that are already struggling financially and are at the $3.64 tax cap. 

 

Ms. Vilardo commented that this has been an issue of the NTA since 1993.  She indicated that the charge of this committee was to review the local taxes and distribution formulas.  One of the initial policy statements was to first determine what would work logically in taxation before looking towards a loss of revenue.  She explained that many of the western states are also reviewing this issue because of the problems in collecting a self-reported tax.  The largest problems occur with self-reporting in areas where many small businesses exist because business personal property tax is seldom audited.   

 

Continuing, Ms. Vilardo said that effective January 1, 1997, a provision was placed in statute eliminating the reporting of personal property tax on consumable supplies, which resulted in approximately $1.9 million to $2.3 million in revenue loss. 

 

Mr. Sherman asked if a taxpayer would still be responsible for filing a declaration regardless of whether they were eligible for an exemption.

 

In reply, Ms. Vilardo said they would be responsible for filing a declaration, but there would most likely not be any audits conducted because of a shortage of staff.  One of the problems is that small businesses do not understand the ramifications of how they are reporting. 

 

Ms. Vilardo indicated that a shift to residential personal property tax may or may not occur if an exemption is provided to business personal property tax.  She proposed that the Committee consider a $5,000 exemption effective July 1, 2003, and increase the exemption to $10,000 for the 2005 fiscal year.  She further recommended that an effort be made during the interim to track what is happening as a result of the exemption.  If it is not working, it could be removed during the 2003 Session.  In Ms. Vilardo’s opinion, allowing an exemption would result in better compliance and more audit time for the assessors.

 

Mr. Brooks mentioned that some of the counties are currently experiencing a decline in assessed valuation.  Based on the figures provided by Mr. Sherman, 56 percent of the businesses in Nevada are $10,000 or under in taxable value.  This has not been a concern of the rural communities, but seems to be an issue that is important to the urban areas.  However, in his opinion, if the urban areas wanted to pursue this issue, he did not think the rural communities would oppose it.  Speaking specifically for Humboldt County, Mr. Brooks said they would not want to see an exemption enacted because of the decline in assessed value.

 

Responding, Ms. Vilardo said it was her understanding that any changes made to personal property must apply statewide. 

 

Ms. Guinasso concurred.

 

Mr. Sherman said that he has had numerous discussions with the Washoe County assessor’s office about this issue and in his opinion it seems to mainly be a concern of Clark County.  The problem with dealing with the state as a whole is that there are so many different environments within the state as far as population and economy. 

 

Ms. Vilardo said that most of the trade associations in the state would support this recommendation; however, she did not want to suggest a proposal that did not have the support of this Committee.  She asked the Committee to make a recommendation to the Legislative Committee to calculate whether business personal property should be included in the rate calculations because of the “rate creep” issue.  In her opinion, this is not an assessor’s issue, but is a business issue. 

 

Doug Bierman

 

Mr. Bierman representing Eureka and Lander Counties, concurred with the comments made by Mr. Brooks and expressed his concern with the tax issues the rural counties are facing.  If this issue were to be applied throughout the state, Eureka and Lander Counties would have to oppose it.

 


Jerry McKnight

 

Mr. McKnight, Nye County Manager expressed his concern with the exemption issue, but was in favor of quarterly payments.  He said that Nye County has a number of small businesses that would meet the $5,000 exemption, which could be beneficial to the business.  However, from the government point of view, many of the districts are already at the $3.64 tax cap and every dollar is critical to their operation.  He supported Ms. Vilardo’s final comment to study the issue further and actually generate numbers to determine the actual effect this would have on each community and what the impacts might be.

 

The Chairman said there has been a tremendous amount of concern about proceeding with an issue that may create a fiscal impact.   He recommended that the issue be studied further and requested a motion.

 

MR. BROOKS MOVED TO RECOMMEND TO THE LEGISLATIVE COMMITTEE TO CONTINUE STUDYING THE ISSUE OF PLACING AN EXEMPTION ON BUSINESS PERSONAL PROPERTY TAX.  MS. RITTER SECONDED THE MOTION, WHICH CARRIED UNANIMOUSLY.

 

C.              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 presented a proposal to amend NRS 354 by adding two new sections (see Exhibit H).  These sections include:

 

§         Limitation upon revenue from taxes ad valorem.   Levy of additional tax ad valorem for the operation of regional facilities without approval of voters.

 

§         Special ad valorem regional facilities operating fund.

 

Ms. Vilardo noted that a subcommittee of Mr. Alastuey, Mr. Leavitt, Ms. Walker, Ms. Ritter and herself prepared the language.  She briefly explained the scope of the requested legislation.

 

Responding to Ms. Ritter, Ms. Vilardo said that revenues obtained due to the proposed legislation should be used for future projects. 

 

Ms. Ritter said that this proposal could provide a way of keeping some of the existing inter-local agreements and regional facilities funded.

 

Ms. Walker (identified earlier) explained that the funding obtained from this proposal would have to be made applicable to the five counties that it was originally intended.  She suggested changing the effective date to July 1, 2001, which would allow use of the funding in Fiscal Year 2001-2002.  She also suggested adding language allowing inter-local agreements between one or more cities or counties. 

 

Ms. Vilardo said that making the legislation effective July 1, 2001, would not work.   In order to work for the tax rate, it would have to become effective upon passage and approval. 

 

Ms. Guinasso questioned if it was necessary to define “regional.”

 

Chairman Hobbs agreed that this was a good suggestion and should be taken care of in the proposal.

 

Mr. Leavitt questioned if there was a levy by a county and a levy by a city within the same county, would the people in the boundaries of the city be paying twice for the same levy.

 

Ms. Ritter agreed that this could occur in some situations.

 

Discussion ensued among the Committee member regarding different ways to handle a duplicate levy by a city within a county.  It was noted that:

 

§         Each entity does not have to levy the same amount of money for operating purposes.  Also, there may be an entity that does not have to levy at all.

 

§         Establishing a countywide rate defeats the purpose of providing maximum flexibility to each of the entities in determining how they utilize their property tax rates.

 

§         Allow the county to levy within the unincorporated area of the county.  Then whatever cities participate can levy within its own entities, which would eliminate a duplicate levy. 

 

Responding to Ms. Walker, Mr. Leavitt said he did not know of a levy made by a county commission and was not sure if it was legal.

 

The Chairman said that he believed a taxing district must be in place in order to do this.

 

Ms. Walker said there might be some entities that do not need the additional levy at the time an inter-local agreement is entered.  However, it must be guaranteed that those local governments have the ability to levy the additional taxes in the future if necessary, especially with long-term projects such as juvenile centers or jails. 

 

Lisa Sadow

 

Ms. Sadow, City of Reno, questioned whether inserting language setting forth that one or more cities could enter into an inter‑local agreement and assess a tax rate, or maybe the language should be broader, allowing certain districts to be included.  She explained that the City of Reno has an inter-local agreement with the county for fire services and the fire district is a separate locality. 

 

Ms. Vilardo said she would be hesitant to go beyond cities and counties before it has been proven to be viable in those areas first.  It could be evaluated later to determine if it is working and can be expanded to other localities.

 

Brent Hutchings

 

Mr. Hutchings, City of Ely, explained a situation in Ely where the Hospital District needed a new clinic.  When the clinic was built, both the City and the County both participated.  In his opinion, if levying for an inter-local agreement was allowed for cities and counties only, but some type of service was required from a special district, the city or county could levy the additional tax, if necessary. 

 

Mr. Leavitt also pointed out that there are so many overlapping special districts, which could also cause duplicate taxation if this was allowed for the special districts.

 

Responding to Ms. Murphy, Ms. Ritter said the language in the proposal provides for cities or counties to join together on projects through inter‑local agreement.  The county commission cannot force a separate entity to join in on an inter-local agreement if they do not choose to do so.

 

Following brief discussion among committee members, the Chairman said that the language referring to “operation of a facility” should be better defined.  He suggested listing the types of facilities that would be allowed through an inter-local agreement.  He suggested going over this now so that the legal division will have clarification of a regional facility in order to prepare the bill draft request. 

 

In Ms. Vilardo’s opinion, it would be best to keep the language limited and specific in definition, and name only the type of facilities that would be joint operating.  She suggested naming police and fire, jails, and landfills.

 

Mr. Sherman concurred and added that Washoe County is also training police and fire on a regional basis.  Therefore, he recommended recognizing regional training facilities for public safety in the language.

 

The Chairman asked if the Committee would list the facilities so that this item can be brought forward for consideration.

 

The Committee members suggested including the following items as the type of regional facilities that could enter into inter-local agreements:

 

§         Police and fire facilities, including training facilities associated therewith.

 

§         Landfill facilities.

 

§         Adult and juvenile detention and probation facilities.

 

§         Flood control facilities.

 

Mr. Bierman (identified earlier) asked if educational facilities could also be included. 

 

Responding, Ms. Guinasso said that educational facilities are solely within the province of the school district.

 

The Chairman said he appreciated Mr. Bierman’s inquiry; however, he agreed with Ms. Vilardo that the process of sharing the cost of operating a facility should be explored further before adding too many types of facilities.

 

Responding to the Chairman regarding duplicate levies, Ms. Walker suggested placing a stipulation in the proposal requiring that the overlapping city/county tax rate shall not exceed five cents.

 

Mr. Zuend, Deputy Fiscal Analyst, Fiscal Analysis Division, LCB, said that some authority is needed for a county to levy a tax only in the unincorporated areas.  Specifically, if the City of Reno wanted to participate with Washoe County, but the City of Sparks did not want to participate. 

 

Ms. Walker clarified that the original five counties were allowed the ability to levy from both incorporated and unincorporated entities in order to generate enough revenue to pay for the facility.

 

Mr. Sherman suggested adding judicial facilities to the list of facilities allowed to enter inter‑local agreements.

 

Ms. Vilardo called the Committee’s attention to page 2 of Exhibit H and noted that in NRS 62.845, Clark County was originally restricted from using this five-cent levy.  If it is to be eligible to use this tax, changes will have to be made to Chapter 62 of NRS regarding the population threshold.

 

After some discussion, it was determined to allow that the five-cent levy be made available to all counties. 

 

The Chairman called for a motion and asked Ms. Guinasso if the Committee had provided clarification as to the definitions and overlapping of entities.

 

Ms. Guinasso said that she did have enough detail; however, noted that she would like to investigate any constitutional or other problems with what the Committee is requesting.

 

MR. LEAVITT MOVED TO APPROVE THE AMENDMENTS TO NRS 354 AND CHAPTER 62 OF NRS AS LISTED IN EXHIBIT H, INCLUDING THE REVISIONS DISCUSSED REGARDING DEFINITIONS AND OVERLAPPING OF ENTITIES AND TO MAKE THIS RECOMMENDATION TO THE LEGISLATIVE COMMITTEE.  MS. RITTER SECONDED THE MOTION, WHICH CARRIED UNANIMOUSLY.

 

E.              Discussion and Possible Action on Recommendation for Bill Draft Request (BDR) Regarding Clarification of Prior Amendments to Statutes Regarding Economic Development – Carole Vilardo:

 

On behalf of the Economic Development Commission, Ms. Vilardo presented its suggestions to the Committee to amend the sections of Nevada Revised Statutes (NRS) 361 that establish the requirements under which abatements can be granted.  She explained that some changes were made during the 1999 Session; however a few areas were overlooked at that time (see Exhibit G).  Suggested amendments were made to NRS 361.0685 and NRS 361.0687 and are illustrated in Exhibit G.  The deletions are bracketed and the insertions are in bold type. 

 

Chairman Hobbs asked if the Committee members had any concerns on the changes presented by Ms. Vilardo.  There being none, he requested a motion.

 

MR. LEAVITT MOVED TO RECOMMEND TO THE LEGISLATIVE COMMITTEE THAT A BILL DRAFT BE REQUESTED INCLUDING THE CHANGES TO NRS 361.0685 AND NRS 361.0785 AS OUTLINED IN EXHIBIT G.  MR. BROOKS SECONDED THE MOTION, WHICH CARRIED UNANIMOUSLY.

 

 

 

D.              Discussion and Possible Action on Recommendation for Bill Draft Request (BDR) Regarding Tax Increment Financing for Non-Redevelopment Purposes – Guy Hobbs:

 

Chairman Hobbs explained that during previous meetings the recommended language has been distributed regarding the reestablishment of tax increment financing.  After receiving feedback from some of the Committee members, a revised copy of the primary features of the proposal was compiled (see Exhibit I).  He noted that a working group comprised of Mr. Kester, Ms. Ritter and he, all reviewed this material prior to this meeting. 

 

Continuing, the Chairman noted that for some time, the Committee has felt that an alternative to special improvement districts and redevelopment would be a meaningful addition to financing options in certain local governments under specific conditions.  The initial impetus for recommending this was to be used for projects within specially benefiting areas in Clark County and the resort corridor.  The Committee also felt that it would be better to allow a broader application throughout the state and wanted to present it as a financing instrument.  He explained that the initial draft limited the use of tax increment financing for non-redevelopment purposes to counties.  This was done in anticipation that the first use of this mechanism would be for a transportation project within a special benefiting area that crossed jurisdictional boundaries.  He further suggested to include cities as well as counties for specific types of economic development projects.

 

Ms. Thomas agreed that it would be a good idea to expand the use to cities.

 

Ms. Ritter said she had originally recommended that use of this financing should also be expanded to use of economic development, which may relate to smaller entities who are trying to extend their infrastructure to areas for industrial development and do not have the private developers who are willing to do that.

 

The Chairman said that this financing is a tool that would be best used for special circumstances that will need to be defined. 

 

Following some Committee discussion, the Chairman said that it would be best to try to capture as many uses for this financing tool as possible; however, if this cannot be decided upon, the Committee should at least try to get the structure of the tool back into the statutes. 

 

Mr. Kester said he had no problem with the direction of the proposal, but is concerned about narrowing the tax base even further.  He explained that the state is presently struggling to use its general fund contribution to fund growth for schools.  He is also concerned about how extensively and creatively this financing tool would be used; and believes the correct approach to the issue is to combine any type of broadening of the initial thrust of this proposal with a rewrite of the redevelopment laws in the State of Nevada. 

 

Continuing, Mr. Kester said he is not opposed to economic development, but is worried about the growth of the tax base and sees this proposal as being restrictive in certain counties (i.e., counties that do not have a lot of economic development at present).  He explained that under current redevelopment law, it is not required that the entities whose property tax may be used for redevelopment are involved in the hearings. 

 

Mr. Alastuey commented that the concerns outlined by Mr. Kester are from direct experience in Douglas County; however, the recommendation does not amplify the need for those concerns and it may represent an opportunity to avoid the circumstances that have been a concern in Douglas County.  He explained that there is no set of statutory directions that could be recommended that would perfectly outline projects for each community.  Use of the financing tool could be restricted; however, if a community makes a poor decision, nothing can be done to prevent that.

 

In closing, Mr. Alastuey said he has a great respect for Mr. Kester and the work that he and the other finance officers for school districts have done around the state.  The only assurance that can be provided is that the present proposal will surface in a way that these laws, in combination with amended earlier laws, would prevent situations that have been experienced lately, and provide communities a better way to develop.

 

In reply, Mr. Kester said he did not see the language in the proposal allowing a limit of 15 percent of the proceeds to be used for operation and maintenance.  He said that he believed Mr. Alastuey was the last person to argue about the 75 cents school tax and the state financing not holding the guarantee whole.  He indicated that the assumptions that go into the Distributive School Account (DSA) are built based upon what the DSA will fund. 

 

Mr. Kester said his concerns are not with economic development, but are with the fact that no limits have been placed in the proposal on what an entity can do in terms of economic development. 

 

The Chairman said that this issue has been raised to place back into statute a tool that had been previously repealed.  The proposal provides for fractional increments, which redevelopment does not provide, allowing an entity to match its cash flow requirements for servicing debt on a capital project.  He briefly explained the scope of the proposal (Exhibit I) and noted that it is important to at least get the structure of the mechanics for tax increment financing back into law.

 

Chairman Hobbs asked if the Committee felt this issue could be resolved through discussion today to be able to move towards requesting a BDR.

 

Committee members and members of the public made the following comments:

 

§         Mr. Sherman said that the way economic development project is defined would determine the extent of the projects funded by tax increment financing. 

 

§         Ms. Walker said that the current redevelopment law restricts a redevelopment district to 15 percent of the assessed value of the entire entity.

 

§         The Chairman explained that counties under a certain size would be allowed 15 percent and counties over the population threshold would be allowed 10 percent.

 

According to Mr. Leavitt, if the financing is used for a legitimate project, the entities that are contributing to the funding will most likely gain revenue in the long-term. 

 

Mr. Kester pointed out that the determination listed in bullet one of Exhibit I states that it must be proven that the tax increment area has not been subject to growth and development through investment by private enterprise and does not reasonably anticipate development without the project.  Not referring only to Douglas County, Mr. Kester said that this type of finding could easily be made.   Initially, redevelopment districts were not limited to 45 years.  In the State of California, there is a required negotiated pass through only to school districts, but not to every other type of government.  The reason for that is because although economic development may provide growth, it also provides many taxes to the entities involved, and the combination of taxes that support the entity would determine to a large degree whether or not the economic development was financially worth having.  He explained that the school districts depend on property taxes to a large degree and it would not be beneficial to trade off 75 cents of property tax for 45 years. 

 

Continuing, Mr. Kester said he is not concerned about new business moving into the community, but the area included in the tax increment district can include acres.  In rural counties, the determination of that area is important because once the infrastructure is brought into the area and once the area to be included is designed, all the industrial growth could be consumed for a long period of time.

 

The Chairman explained that the proposal allows for a 30-year maximum life of the financing.  He also explained that the intent of the original proposal was to use the 10 and 15 percent limitation in combination with redevelopment.  Applications other than Clark County might include other areas of the state that need infrastructure to do development.  With the existing methods of financing that are available, certain types of projects are not possible, which was the reason for raising this issue and to at least have an alternative type of financing.  The question is does the proposal have enough substance to move forward as a BDR.

 

Ms. Ritter suggested restricting the type of economic development allowed in the proposal to projects such as water, sewer, and street infrastructure; and requiring school district approval.  She said this type of proposal would work better for the rural counties.

 

The Chairman agreed that this was a good suggestion. 

 

Mr. Alastuey said there were probably enough opportunities for targeting and prevention to avoid some of the concerns that have been voiced and could probably move forward with a BDR.

 

Mr. Sherman said that if the overlapping jurisdictions are involved in the process, it might help address what is an appropriate economic development project in a particular community.  The concept of getting the interested parties together to both define what is an appropriate economic development project, along with how the tax increment dollars could be fractionally allocated, may help reduce the fear of this particular financing tool.

 

Mr. Kester said if the issues in the BDR are addressed as specified by Mr. Alastuey and Mr. Sherman, he would probably support it. 

 

The Chairman outlined the committee’s recommendations regarding what should be included in the BDR as follows:

 

§         Removal of the 15 percent allowance for operations and maintenance.

 

§         Extension of the use to cities for economic development purposes with the additional requirement that the school district within the county concur that the project take place.

 

§         The addition of the requirement that subsequently approved initiatives and ballot questions by a school district be “held harmless” from the effects of the increment.

 

Mr. Brooks clarified that the rural areas may want to develop some economic diversification outside of the city limits and would want the authority to do that.

 

In response, the Chairman said that the original draft proposal allowed for counties to initiate tax increment for any public project listed in the county bond act (i.e., sewer, water, transportation, and other public work projects). 

 

Ms. Vilardo said the NTA supports the concept of increment financing; however, she suggested not using the language “economic development,” which could suggest a wide variety of items.  She suggested language such as “a regional shopping area or industrial park.” 

 

Ms. Ritter agreed with Ms. Vilardo.

 

The Chairman further recommended adding “business park.” 

 

Responding to Mr. Sherman, the Chairman explained that if additional entities other than counties, cities and school districts were included in the cross-jurisdictional approval, numerous other issues would develop that would lengthen that process tremendously.

 

MR. LEAVITT MOVED TO RECOMMEND TO THE LEGISLATIVE COMMITTEE THAT A BILL DRAFT BE REQUESTED FOR TAX INCREMENT FINANCING FOR NON‑REDEVELOPMENT PURPOSES WITH THE SUGGESTED AMENDMENTS LISTED ABOVE.  MS. THOMAS SECONDED THE MOTION, WHICH CARRIED UNANIMOUSLY.

 

F.              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 and Terri Thomas:

 

Ms. Thomas said that the NTA provided her with a copy of the report that the LCB was compiling so that she could review it.  In her opinion, the information is comprehensive, but it is not helpful for any purpose that she could think of.  She said that the information that is currently being provided is a vast and difficult task that is not serving the purpose intended.

 

Mr. Leavitt said that the report goes back to a point when the Legislature may have required certain information about local governments and did not have an easy way of obtaining it.  At the time the report was requested there were continual allegations about local governments having large balances and revenue that was growing.  However, for many years now no one has been using the report.  In his opinion, if the function is transferred to the Department of Taxation, a joint effort between the Committee on Local Government Finance and the Department could design a more useful product.

 

Mr. Welsh said that Mr. Leavitt summarized this issue well.  There originally was a purpose for the report; however, the product is no longer useful.  The only statutory action that took place to begin this process was a section in statute directing the executive director of the Department of Taxation to forward all the local government budgets that they receive by statute to the Legislative Counsel Bureau.  The balance of the process was done administratively.  To cancel this process, the Committee must recommend a BDR to repeal the section of NRS.  According to Mark Stevens, Assembly Fiscal Analyst, Fiscal Analysis Division and Mr. Pursell, the balance of the transfer will be taken care of as part of the budget process during the 2001 Session.

 

MS. SHERMAN MOVED TO RECOMMEND TO THE LEGISLATIVE COMMITTEE TO REPEAL NRS 354.595.  MR. BROOKS SECONDED THE MOTION, WHICH CARRIED UNANIMOUSLY.

 

G.              Discussion and Possible Action on Recommendation for Bill Draft Request (BDR) Regarding Government Accounting Standards Statement 34 (GASB 34) “Basic Financial Statements and Management’s Discussion and Analysis for State and Local Government” – Marvin Leavitt:

 

Mr. Leavitt said that earlier this week, the Committee on Local Government Finance (CLGF) spent two days going over Chapter 354 of NRS in an attempt to accommodate GASB 34, as well as making the statutes more consistent.  The CLGF has made some recommendations for changes.  The work that was done has been presented to Ms. Guinasso after the conclusion of the meeting; however, there are still a few items that remain to be accomplished.  One of the items that will require additional work is auditing definitions and functions, and exactly what constitutes an audit.  The language currently in statute does not adequately reflect the work of the auditors. 

 

Ms. Thomas said that as a member of the CLGF and this Committee, she said that without the involvement of other finance officers and interested parties from across the state who participated in the process, the progress that was made would have been impossible.  She thanked those individuals for their hard work.

 

Chairman Hobbs said that Agenda Item III-A would be discussed next and then the Committee would continue with the items remaining under Agenda Item II.  He explained that he had a conflict and would have to leave the meeting in about 30 minutes.

 

 

III.  Other Items for Discussion and Consideration

 

*A.              Discussion and Possible Action Regarding the Status of Initiatives Regarding the Taxation of Gaming Revenue and the Taxation of Corporate Net Profits – Guy Hobbs and Carole Vilardo:

 

Ms. Vilardo said the articles she distributed (Exhibits J and K), are from NTA’s newsletters and are a summary of the two initiatives.  She explained that there was an initiative subcommittee of this Committee that has been deferred on the explanation of these issues.  Regarding the gaming initiative, Ms. Vilardo said that the way Exhibit J, Section 3.3[b] provides revenues to offset the motor vehicle privilege tax is calculated, is that the estimates and distribution of the revenue received would have to be on June 30th, which is actually within the same time frame that it is received. 


Ms. Vilardo explained:

 

§         If the estimate of the of the amount of revenue collected from the motor vehicle privilege tax is incorrect, there would be no excess in the first year and the state would have to use funds from its revenue source to make up the difference. 

 

§         There also may be a problem with the school districts because the distribution of money is not made following the Nevada Plan.  The Nevada Plan was set up in such a manner that on the operational side has been deemed to be very equitable and meet the intent of the United States Constitution and the Nevada Constitution.  The initiative would add a new element that does not follow the plan, which could open the state up to lawsuits.

 

§         A provision in the initiative allows that the salaries of the highway patrol would be increased 5 percent over the highest amount of any jurisdiction in the United States, which would create a problem with other law enforcement also wanting increases in their salaries.

 

She explained that if the Gaming Tax Initiative (Exhibit J) and the Teachers Union Initiative (Exhibit K) received enough signatures, they would be discussed during the 2001 Legislative Session. 

 

Continuing, Ms. Vilardo explained that there are many problems with the Teacher’s Union Initiative and if passed, the Department of Taxation would have to make the determination as to what is allowable under the Constitution versus what is being filed. 

 

Further explaining the Teacher’s Union Initiative, Chairman Hobbs said that it requires that the state appropriate 50 percent of the revenues that are forecast by the economic forum to basic support guarantee.  According to Chairman Hobbs, passage of this initiative would have a fiscal impact on the state’s budget.  The concern to local government is that the state will have to shift funds from other programs to fund the Kindergarten to Grade 12 requirement’s set forth by the initiative.  Many of the local government’s are already concerned about the discussions through the fundamental review of base budgets and current discussions regarding structural deficits. 

 

The Chairman explained that the Committee felt this was an important issue for everyone to become familiar with and that is why it was placed on today’s agenda.

 

Ms. Vilardo said that Mr. Pursell has not arrived in Carson City yet, which means he is not through with his meeting in Reno, but one of the concerns of the Department of Taxation may be that the current ACES computer system may not be able to handle the 64,000 additional returns.  She also noted that additional personnel would be needed to input the returns. 

 

In Ms. Vilardo’s opinion, the Teacher’s Union Initiative is not a responsible proposal and a lawsuit has been filed on it.

 

In response to Ms. Vilardo, Mr. Kester said that his school board has not yet taken a position on this issue; however, he did not support the initiative.

 

Mr. Ritter said that one of her city councilman has been actively involved in reviewing the initiative and the city has adopted a resolution in opposition of the proposal because of the many loopholes that could adversely affect local government.

 

The Chairman noted that no action would be taken on this item.  It was discussed to make everyone aware of the consequences of these initiatives.

 

II-H.              Discussion and Possible Action on Recommendation for Bill Draft Request (BDR) Regarding the Fiscal Viability of Certain Rural Local Governments – Marvin Leavitt and Guy Hobbs:

 

Mr. Leavitt said that he did not think a BDR was necessary on this issue; however, the Committee should discuss what might be required to accomplish this.  He explained that want needs to be done is to review the finances of all the rural local governments.  Mr. Leavitt suggested that a review of the fund balances be completed and an evaluation of revenue growth comparisons.  An in-depth study will have to be done in order obtain an accurate analysis of what is occurring in the rural communities.  After the analysis is complete, a plan will have to be developed to address the problems. 

 

Continuing, Mr. Leavitt noted that another aspect that will have to be reviewed is whether many of the local governments actually have staff that have the ability to determine the financial position of the entity, which has been a large problem.  Many of the local governments do not identify that they are moving towards a financial crisis until it is too late. 

 

Mr. Welsh said that Assemblyman Carpenter asked if the working group on this issue, would specifically address the situation that occurred with the Board of Equalization at their last meeting when they changed the way that mining companies were able to depreciate their personal property, which will have a fiscal impact on Humboldt County School District. 

 

The Chairman had to leave the meeting at this time; however, he requested that Mr. Leavitt continue the meeting in his role.

 

Mr. Brooks asked if it would be appropriate to form a working group to begin working on this issue.  He said that there are some items that could be handled in advance to help mitigate some long-term problems.

 

Mr. Leavitt concurred.  He further indicated that the first step would be to begin gathering data for all the rural entities.  He suggested beginning with an in-depth study on two or three entities.

 

Ms. Murphy volunteered to be part of the working group and said she could expand the map that she presented at the last meeting for all the special districts and general improvement districts, which includes:  population growth and percentage of taxes received by the entities.  

 

Mr. Leavitt said that any information would be welcome.  He asked Mr. Brooks to be coordinator of the working group to begin the process.  Mr. Leavitt also noted that he would like to be part of the working group.

 

Several of the members volunteered to be part of the working group.  These members include:  Mr. Brooks (coordinator), Ms. Murphy, Mr. Sherman, Mr. Leavitt, Mr. Kester, and Ms. Ritter.

 

Mr. Welsh clarified that this would be a study group and not a subcommittee and would not require LCB staff to be involved in the meetings.  He explained that anyone interested in being involved in this issue should contact Mr. Brooks.

 

Mr. Brooks asked those in the audience who may be interested to leave their name, address, phone number and e-mail address so that they could be contacted when meetings are scheduled.

 

I.              Discussion and Possible Action on Recommendation for Bill Draft Request (BDR) Regarding Removal of Net Proceeds Valuation from the Calculation for Distribution of Regional Transportation Fuel Taxes (NRS 373.150) – Linda Ritter and Brent Hutchings, City Clerk/Administrator, City of Ely:

 

Mr. Ritter said that this issue was originally discussed in October 1998.  She explained that currently the Regional Transportation Commission (RTC) taxes in Elko County are distributed based on assessed value (see Exhibit L).  The City of Elko entered into a bond in the late 1980s to provide for some regional roadways in the area.  What occurred was that the net proceeds valuation increased from about $8 million to about $130 million in a two-year period.  Because of that increase, the RTC apportionment was reduced to the City of Elko for the bond payments.  The City then had to locate the funds to make the bond payment.  She explained that the Subcommittee to Study the Cost of Maintaining Highways, Roads and Streets decided that the RTC tax would be handled separately and not studied as part of that study group.  She requested that the Committee consider eliminating the net proceeds of mines valuation from the calculation.  It is her understanding that this would affect Elko and White Pine Counties.  She said if these changes were made Elko County would incur a fiscal impact of about $78,000 to their portion of the RTC. 

 

Cash Minor


Mr. Minor, Chief Financial Officer for Elko County said he did not have a formal opinion from the Elko County Board of County Commissioners; however, their informal request was to oppose any changes in the RTC apportionment.  It is the opinion of Elko County that until the changes made to Tier 1 of the fuel tax distribution formula have been in use and the effect of them can be determined, changes to either Tier II of the formula or the RTC tax should be put on hold. 

 

In response, Ms. Ritter said the fiscal impact to Elko County would actually be delayed.   The County would receive the taxes and place them in an account and they would not be apportioned until the following July. 

 

 


Jerry McKnight

 

Mr. McKnight, County Manager, Nye County, said he would like to see some statistics that would indicate what the impacts would be in the various counties if changes were made to Tier 2 of the formula.

 

Ms. Ritter said she reviewed the “Red Book” to determine what the net proceeds of mines tax is throughout the state.  She indicated that in Nye County it is about $19 million and the actual impact would be minor. 

 

According to Ms. Ritter the impact would be largest in Elko County at $78,000 because the county has the most net proceeds at $130 million.  She indicated that Churchill County has $4 million, Humboldt County has $3.5 million, Nye County has $19 million, Pershing County has $26 million, and White Pine County has $10 million.

 

Brent Hutchings

 

Mr. Hutchings, City Clerk, Administrator, City of Ely, said he supported Ms. Ritter’s recommendation.  He said that 49 percent of the County lives in the City of Ely and yet the city only receives 29 percent of the revenues from this tax based on assessed valuation.  He said he agreed with Ms. Ritter that removing the net proceeds would give the City a fair valuation. 

 

Mr. Leavitt said he was not sure whether or not he supported this issue; however, he believed the issue should be analyzed further.  He suggested making a request to the Subcommittee to Study the Cost of Maintaining Highways, Roads and Streets to evaluate the issue further; or put it on the agenda of this Committee to analyze what the long-term effect would be to the entities. 

 

Messrs. Kester and Brooks agreed that any action today would be premature.

 

Ms. Ritter asked that the item be placed on an agenda in the near future.  She indicated that she made this request in October 1998 and noted that the reason there is not a lot of data available is because very few counties use this apportionment tool. 

 

Continuing, Ms. Ritter said that when the S.C.R. 40 was working on the consolidated tax distribution, net proceeds were excluded.  The RTC taxes were excluded from that discussion and in her opinion, if RTC taxes are discussed, the assessed valuation formula should be discussed in its entirety.

 

Mr. Leavitt asked if the members had a preference on which committee did the analysis on this issue.

 

Ms. Ritter suggested that it be worked on by the same committee that will evaluate Tier II of the fuel tax distribution formula. 

 

Mr. Leavitt agreed since the Subcommittee to Study the Cost of Maintaining Highways, Roads and Streets already had the data relating to miles of streets.

 

MS. RITTER MOVED THAT THE ISSUE OF TIER 2 OF THE RTC TAXES LEVIED BY NRS 373 BECOME A SUBJECT OF STUDY BY THE SUBCOMMITTEE TO STUDY THE COST OF MAINTAINING HIGHWAYS, ROADS AND STREETS.  MS. THOMAS SECONDED THE MOTION, WHICH CARRIED UNANIMOUSLY. (CHAIRMAN HOBBS WAS NOT PRESENT AT THE TIME OF THIS VOTE.)

 

J.               Discussion and Possible Action on Recommendation for Bill Draft Request (BDR) Regarding Payment of Fuel Taxes from the Department of Taxation Directly to Counties and Cities – Linda Ritter:

 

Ms. Ritter explained that because the fuel tax laws are quite old, all the gasoline tax distributions must go through the county and are later distributed to the entities within its borders, which causes about a 30 to 60 day delay in receiving the funds.  She explained that a small entity such as the City of Elko, as well as other small entities could be in a negative cash flow situation for the first two months of the fiscal year. 

 

Continuing, Ms. Ritter noted that the Department of Taxation has indicated that they have the technical ability to make those payments directly to each entity rather than bothering the county treasurer’s office to distribute the payment.  The language making those changes is listed in Exhibit M, which states:

 

§         Allow 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.

 

Ms. Thomas said on behalf of cities she supported Ms. Ritter’s proposal.

 

Mr. Brooks asked if she polled other cities to determine if this is a problem for them. 

 

In response, Ms. Ritter said that the cities in her area would like this change made; however, there are some cities that receive the funds in a timelier manner. 

 

MR. BROOKS MOVED TO RECOMMEND TO THE LEGISLATIVE COMMITTEE THAT A BILL DRAFT BE REQUESTED ALLOWING THE PAYMENT OF FUEL TAXES DIRECTLY TO THE CITIES AND COUNTIES.

 

Responding to Mr. Sherman, Ms. Ritter reiterated that there is a 30 to 60 day delay in cities receiving the funds from the county.  Although not all the entities have this problem, in her opinion, there is no reason why this change should not be made.

 

Mr. Sherman further questioned to what extent the counties have been polled. 

 

Responding, Ms. Ritter said that the information was sent to the Nevada Association of Counties and she hoped they passed it along.

 

Mr. Brooks said that Humboldt County was aware of this and although the entities within the County are receiving their payment in a timely manner, he did not see any reason not to make this change.  He noted that his original motion stands.

 

Claudette Springmeyer

 

Ms. Springmeyer, Douglas County Comptroller, said that Douglas County has no cities within the county; however, Mr. Hadfield discussed with her the fact that the Tier 2 distribution issue should not be opened up until the whole Tier can be evaluated.

 

Ms. Ritter said that she appreciated Mr. Hadfield’s concerns about Tier 2 distribution and noted that she shares the same concerns, but this is a technical issue and will not affect the distribution formula.

 

Mr. Leavitt asked if anyone was in opposition to this change.

 

MR. SHERMAN SECONDED THE MOTION MADE BY MR. BROOKS, WHICH CARRIED UNANIMOUSLY.

 

 

IV.  Public Testimony

 

There was no additional public testimony.

 

Mr. Sherman said that videoconferencing the Advisory Committee has been helpful.

 

Ms. Thomas concurred.

 

Mr. Leavitt agreed that the meetings were working well; however, if the details of a formula had to be worked out, it would be best for the members to be in the same location.

 

Mr. Hutchings requested that the committee consider allowing incorporated cities to apply for implementing the remaining portion of the 9 cents RTC tax that the county has not used.  The city would benefit from the additional tax. 

 

Mr. Leavitt commented that participation in this committee and the Committee on Local Government Finance by both the members and people in the audience has been excellent and he thanked everyone for taking the time and effort to work through this complicated process.

 

Mr. Welsh indicated that the Legislative Committee would have to meet before December 15, 2000.  He said that December 7th appears to be open for most of the members and asked everyone to tentatively place that date on their calendars.

 

There being no further business before the Advisory Committee, the meeting adjourned at 3:15 p.m.

 

                                                                                                                                                Respectfully submitted,

 

 

 

                                                                                                                                                Jeanne Peyton

                                                                                                                                                Secretary

 

APPROVED:

 

___________________________________

Guy Hobbs, Chairman

 

 

___________________________________

Date

 

 

 

 

 

Copies of the exhibits mentioned in these minutes are on file in the Research Library of the Legislative Counsel Bureau, Carson City, Nevada.  You may contact the library at (775‑684-6827).