A new analysis from the bipartisan Guinn Center for Policy Priorities think tank is raising questions about the wisdom of a legislative plan to authorize a sales tax increase for schools.

The six-page policy brief digs into AB309, a bill from Assembly Speaker Jason Frierson that — if amended — will allow counties to raise their sales tax by a quarter cent and send the money to non-core education activities, such as pre-K programs and adult education. The goal is to help districts free up funds for basic K-12 instruction; the increase could yield $106 million a year in Clark County and $21 million in Washoe County.

“The Guinn Center agrees with the spirit of AB 309,” the report says. “However, by limiting counties to consider a single revenue stream – the local sales tax – Nevada would become even more reliant on an unstable and regressive tax.”

Analysts say the bill’s provisions would exacerbate certain trends in Nevada tax policy:

• Clark County and Washoe County already derive about two-thirds of their basic school support from local revenue sources, with the state kicking in one-third. Overall, Nevada ranks eighth in the country for states most reliant on local tax revenues. A sales tax increase could leave those districts even more reliant on local money.
• Nevada ranks fourth-highest in the country for sales tax collections per capita. By contrast, it’s 37th lowest in the country for property tax collections per capita. Property taxes are considered a more stable form of revenue than sales taxes, which fluctuate more dramatically through economic cycles.
• Sales taxes are more regressive, taking up a larger share of the income of poorer people than wealthier people.
• The bill could hit counties unequally. Because Washoe County voters approved a sales tax increase in 2016 to support school construction, there is likely less of an appetite for an additional increase.

The bill also has other pitfalls, the report notes. The proceeds of a sales tax increase under AB309 could go to education services but also to address homelessness, making it a less reliable source for schools.

Indeed, the city of Las Vegas has crafted an amendment that would earmark half of funds through AB309 to address homelessness — which would leave schools with less.

And an element of the bill that allows districts more flexibility on how they use tightly restricted, “categorical” funds also has a catch.

“The bill explicitly states that the money received under this block grant, ‘must not be budgeted by a school district or charter school in a manner that creates any obligation or deficit for funding in any fiscal year after the fiscal years for which the money was received,’” the report notes. “This suggests that any salary increase funded by this block grant would only be temporary (or must be able to be funded with money outside the block grant after two years).”

Lawmakers held a hearing for AB309, but have not yet taken votes on the policy. Most Clark County commissioners have not responded to requests about how they would vote on such a policy.

The Guinn Center is urging caution on the bill.

“Nevada’s leaders should consider whether this is the best policy option to secure revenues to address some of the greatest policy challenges facing our State,” the analysis said.