In Senate Majority Leader Bill Raggio's eyes, he's Robin Hood seeking to take from the rich and give to the poor.
For several years, Raggio, R-Reno, has argued the state is growing more and more desperate for cash, while certain local governments -- especially in Washoe and Clark counties -- are fat enough to give their employees big raises and benefits, increase services, and still wind up with money in the bank because they rely primarily on property taxes.
SB308, Raggio said Monday, is designed to fix that.
"This would allow the state as well as local governments to share in growth," he said.
He said his plan won't take a dime from what cities, counties and other local entities now get. But as those revenues grow each year, the state would get half of that money.
Since the "tax shift" of 1981, the state has stayed pretty much out of the property tax, relying instead on gaming revenues and the sales tax, insurance premiums, business activity and other taxes. The state's property tax share has been limited to 15 cents, used primarily for capital construction.
Locals have maintained that is their deal with the state and that they have first right to the property tax revenues.
But with most of its revenue stream dependent upon tourism and susceptible to even minor economic downturns, the state has suffered, especially since Sept. 11, 2001.
Gov. Kenny Guinn says the state is looking at a $705 million shortfall over the coming two-year budget cycle just to maintain existing services.
"For about three sessions, I have been saying the revenues at the state level are not growing," he said. "The one revenue source that grows really, truly with growth, is the (property tax) of the state.
"I don't think there's a birth right to this source of money," said Raggio.
He said his proposal is separate from the governor's tax package and doesn't raise taxes. He said it simply shifts some of the wealth created by Nevada's continuing growth to the state.
"This doesn't take any of their existing revenue away," he said. "But it does start requiring all governments to work together."
To protect existing local government commitments, SB308 exempts the share of property tax growth that goes to schools, growth needed to cover local bonds and money needed to pay existing long-term contracts. It also allows for inflation.
But any growth above that would be split between local governments and the state.
Raggio said he believes the state has the right to dip into what locals consider their prime revenue pot because it has picked up more and more responsibility for programs over the years -- especially in funding social programs.
"One other solution would be to shift some of those responsibilities back to the locals," he said.
SB308 would generate an estimated $67.8 million for the state in fiscal 2005 and about $30 million a year after that. Raggio said that is based on very conservative projections of annual property-tax revenue growth, ranging from 6 percent to 8 percent over the next decade. In fact, he said, property tax has continually averaged 9 to 10 percent growth a year statewide.
Raggio said if his proposal had been law this fiscal year, it would have shifted $1,153,312 to the state. Altogether, Reno, Sparks and other local entities in Washoe County still would have received $6.2 million in new revenue because of the growth in property tax values.
Under the same scenario, it would have cost Carson City's local entities a total of $178,506. Those same entities -- Carson City, the water subconservancy, Sierra Forest Fire Protection District and Eagle Valley Underground Water Basin -- still would have collected $510,025 in new revenue.
