Property tax review begins

Nevada lawmakers got their first dose of what Senate Taxation Chairman Mike McGinness called "property tax 101" Tuesday - along with a bleak picture from county assessors who say land values are driving massive increases in assessed valuation and, therefore, taxes.

The assessors warned that, whatever lawmakers decide, it needs to happen quickly if they want the changes in effect when this year's tax bills are mailed out.

Lawmakers have promised to try to find some way to relieve the burden of taxes which have increased 30 percent in assessed valuation - particularly in Clark County and communities like Incline Village.

Speaker Richard Perkins, D-Henderson, pointed out that local governments could cut the tax rate back.

"Local governments already have the ability to reduce the levy," he said. "No local government needs a 20 percent increase in their budget."

Local officials, however, point out that a large share of the taxes are outside their authority.

Consultant and former Las Vegas Finance Director Marvin Leavitt said 75 cents of Clark County's $3.14 rate is designated for schools, another 55 cents for school debt plus 17 cents for the state.

In addition, other areas also have approved bond rates for construction and other purposes. He said the result is that local government only has authority to change or lower about a third of the total property tax rate.

"The only people who really have the authority to address it are you," Leavitt told lawmakers.

Carson City Assessor Dave Dawley said the driver behind much of the increasing value of houses is land prices. He said a small Carson City lot that sold for $30,000 in 1999 might now cost $70,000 and a one-acre parcel that went for $60,000 three years ago could cost up to $150,000.

Clark County Assessor Mark Scofield said he has seen land prices jump as much as 300 percent in the past couple of years, driving increases in property taxes of 30 percent to 50 percent.

Nevada Taxation Director Chuck Chinnock told the Senate Tax and Assembly Growth and Infrastructure committees the average cost of a new home has risen from just $83,900 in 1982 to more than $246,000 in 2003.

And he said the statewide average property tax rate has also risen dramatically in that period - from $1.77 per $100 of assessed valuation to $3.11.

Washoe Assessor Bob McGowen warned lawmakers that, unless the Legislature moves by March, it won't be on the July property tax bills.

After repeated comments about the threat of a ballot question forcing down taxes, Assemblywoman Chris Giunchigliani, D-Las Vegas, angrily said she was tired of the threats.

"We should be doing something because it's the right thing to do, not because of threats," she said. "If they're going to do a ballot question, they're going to do it anyway. This Legislature needs to do the right thing."

The joint meeting was the first in a series designed to educate legislators about the Nevada property tax system, the problem of rising property values and taxes.

n Contact reporter Geoff Dornan at gdornan@nevadaappeal.com or 687-8750.

Nevada's property tax structure

The 1979 Legislature capped the maximum property tax rate at $3.64 per $100 of assessed value.

Assessed value is set at 35 percent of taxable value, which is the replacement cost of the home or building minus depreciation of 1.5 percent per year since construction, plus the full cash value of the land. Maximum depreciation on an old home is 75 percent at age 50.

Comparison from 1982 to 2003

1982 1999 2003

Average cost of new home: $83,900 $195,600 $246,300

Median household Income: $20,171 $39,973 $43,527

Average state property tax rate: $1.77 $3.06 $3.11

Participants in the assessment process:

County assessors: Set value of locally assessed property.

Department of Taxation: Sets values for centrally assessed property, which is interstate and intercounty properties as well mining properties in the state.

Taxation Local Government Budget Section: Has oversight and approval of annual budgets for 260 local governments.

Nevada Tax Commission: Approval and oversight of local government budgets, regulatory authority over tax system including property taxes.

State Board of Equalization: Hearing body for appeals from county assessment boards.