Tax plans presented to lawmakers

Nevada lawmakers got their first good look Tuesday at three proposals to save homeowners in growing areas from huge property tax increases.

Legislative Counsel Bureau Director Lorne Malkiewich said the proposals are a freeze, a cap and a formula that limits increases according to how much an area has grown in value.

Sen. Dina Titus, D-Las Vegas, and Sen. Joe Heck, R-Las Vegas, proposed freezing assessed values this year at their 2004 level and then allowing them to increase by the inflation index percentage next year.

Titus said lawmakers must act quickly to prevent huge increases when this year's tax bills go out in July. She argued local governments can survive this year under a freeze, saying they don't need huge increases that will come if lawmakers don't act.

"Local governments are not entitled to windfalls at the expense of people who have not increased their demands for services," she said.

Assembly Minority Leader Lynn Hettrick, R-Gardnerville, said he supports a cap because, rather than capping assessed valuation, it simply caps the amount an individual's property taxes could increase to 6 percent a year.

He said it also avoids complications that could arise with bonding ability if lawmakers instead try to cap assessed valuation. He pointed out 6 percent is less than the average increase in Nevada property values over the past decade.

"I don't like the freeze," said Hettrick. "The impact on counties and schools is huge."

Gov. Kenny Guinn, who sat through the meeting as a member of the audience, said he thinks the cap would sell better with Nevadans than a complex formula. He expressed concern with what a freeze would do to local government and school budgets.

The third option, Malkiewich said, creates a factor in each county that would be used to lower the tax rate to compensate for excessive increases in home and land values.

"The benefit of capping tax bills is that those properties hardest hit get the greatest relief," he said.

Even if a property increased 45 percent in value, its total tax bill could increase only by 6 percent this year. That is less than the average 8 percent to 9 percent property tax values have been rising for a decade in Nevada.

Assembly Speaker Richard Perkins, D-Henderson, said he was concerned about giving more relief to larger, more valuable homes than to middle-income owners.

The formula method, Malkiewich said, would decrease taxes on homes that showed only a modest increase in value. But, he said, it would give less relief to those properties with the greatest increases in value.

According to charts he presented to the combined session of the Senate Taxation and Assembly Growth and Infrastructure committees, a home with a taxable value of $100,000 would pay 11.1 percent less taxes if its value increased by 5 percent, and 2.6 percent less if the increase were 15 percent this year. But if that same home saw its value rise 45 percent, as many properties in Clark County, Lake Tahoe and parts of Douglas and Carson City did this year, the property taxes would increase 22.8 percent.

Malkiewich said all three of the plans are designed to be constitutional and only "short- term fixes."

"We're putting into effect a short-term, stop-gap solution," he said. "And in the meantime working on a permanent solution."

All three proposals include a major legislative study over the next two years that would include changes in the Nevada constitution to allow more flexibility in handling property taxes. Senate Taxation Chairman Mike McGinness, R-Fallon, said the committees will meet again in joint session Thursday to hear several other ideas proposed by lawmakers. He emphasized, however, that the Legislature must act before the end of the month on its short-term solution so that county assessors and tax officials can get the changes figured into this year's property tax bills.