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Economy & Business | Legislature

Property tax fight stalls in Legislature, disappointing local governments

Construction on single-family homes in Summerlin on Wednesday, November 22, 2017. (Jeff Scheid/The Nevada Independent)

Despite having traction in the 2017 Legislature, the issue of raising the property tax slipped out of sight in the education-focused 2019 session. 

SJR14, a joint resolution proposed and passed in 2017, needed to pass two consecutive sessions and then be approved by voters on the ballot in order to amend the Nevada Constitution. The bill didn’t receive a hearing in the 2019 session, disappointing many of the measure’s original supporters. 

"We were very hopeful for SJR14. It would have meant over $200 million over 10 years for the city of Reno,” said city of Reno lobbyist Dylan Shaver. “We have the same number of police here as we had in 1991 and the same number of firefighters we had in 2000. Meanwhile, we have 100,000 more people in the city. The city is growing. We've added 50,000 jobs in the last 4 years alone. And because of the things the Legislature has done with property taxes in the past, we're really hamstrung in the way that we can finance these services."

The city of Reno pushed SB556, with the help of Democratic state Sen. Julia Ratti, as a last minute measure to fund public safety services. The bill, which would have allowed local governments with less than 700,000 residents to send an increase in property tax to the ballot in 2020, died after a single hearing. 

Ratti declined to comment further for this story, saying it was too early for her to have put in serious thought on what's next for the property tax.

"I think it was a good bill but I think maybe not the best timing,” Reno Mayor Hillary Schieve said about SB556. Schieve said the city will have to make difficult decisions when determining what to cut in the budget in order to increase the amount of public safety employees. 

“That's always the challenge of looking at the budget every year and having to cut some things so that you can bring on more police officers and that's exactly what we did,” Schieve said.

Under Nevada law, property taxes are collected based on the taxable value of the property, which is determined by the county assessor. The value of the property is determined by the cash value of the property with a statute set rate of depreciation. The amount paid each year cannot exceed 3 percent of the amount that was paid the previous year for single-family residences. This is known as a “cap” because it limits how much can be collected in property taxes.

The taxes are used to help fund the local government’s expenditures, including public schools.

The bill would have amended the way the state of Nevada collects property tax in two ways. First, the depreciation factor of a house would reset at the point of sale. Second, it would remove the cap for the first fiscal year after the sale of the property.

The tax affects Washoe County as well. 

“Washoe County has one of the highest percentages of revenue related to property tax, approximately 49 percent, meaning that we rely on these revenues to provide the many services that are required and critical to our community, as well as the services we provide that create a great place to live,” Washoe County spokeswoman Amy Ventetuolo said in an email.

Mike Kazmierski, president and CEO of the Economic Development Agency of Western Nevada, shared concerns about the education system. 

"The funding formula needed to be fixed and thankfully the Legislature has taken that one on and addressed it,” he said in an interview. “But at the end of the day, we need more money for education, especially now that as a state, really as an economy, we are transitioning to a workforce that needs more skills.”

He said he expected the issue to have a much better chance of moving forward in 2019 than it did in 2017.

"For it to not even get acknowledged, go through a committee and get some discussion, was very disappointing,” he said. “And it not only affected our education system but it also affects public safety.”

Kazmierski said he foresees the Legislature having to increase other taxes down the road because of the growing demands of local governments and education.

Others were pleased the legislation did not advance, including Ray Bacon from the Nevada Manufacturers Association. He raised concerns about the process by which SJR14 would have altered the property tax. 

“Our property tax is a mess,” he said. “Do we need to get rid of the depreciation allowance, since we're the last state to have one? Yes. But we need to do it in an organized, scheduled fashion and not a willy-nilly, cut-it-off-at-the-knees and figure everything is going to be fine. Because it's not.”

Janine Hansen, the executive director of the Independent American Party of Nevada, opposed the bill on the grounds that it would bring a major boost in revenue. She credits the quiet death of the legislation to pressure from Charlene Young, an Independent American Party candidate who ran against Ratti in 2018, and opposition from Washoe County Assessor Michael Clark.

"We worked very hard during the interim to oppose it,” Hansen said. “It would have been the largest property tax increase in Nevada history. It would have doubled or tripled individual property taxes upon the sale of the property.”

Updated at 8:45 a.m. on June 28, 2019 to reflect SB556 received a hearing.

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