Douglas cuts sales tax umbilical

Nearly three decades after the Legislature confirmed that Douglas would receive revenue based on its population, the county will be on its own from now on.

Of the five counties that were subject to losing their guaranteed status, Lyon and Douglas did not seek a one-year waiver.

Douglas Chief Financial Officer Terri Willoughby appeared before Nevada Tax Commissioners on Monday to assure them the county was aware of the repercussions.

Once off guaranteed status, the county will no longer receive money generated in other jurisdictions based on its population.

“We feel that a waiver is not needed at this time,” Willoughby told tax commissioners. “We foresee continued growth in both our population and tax base. We’ve done quite a bit of analysis and feel it’s normal growth.”

Willoughby laid out the details for county commissioners at their March 3 meeting. 

“We can’t go back to being a guaranteed county,” Willoughby said. “We need to ensure residents know that its important to buy local.”

Under state law there isn’t really much of a choice on when a county goes off guaranteed status. Once there is a year where a county generates 10 percent more than it receives, it is subject to lose the guaranteed status.

Nevada funds the counties through a consolidated tax that includes tobacco, liquor and other sources, but sales tax accounts for the lion’s share of the revenue.

According to the Nevada Department of Taxation, county merchants collected $17.6 million in sales and other taxes during 2021, $1.96 million more than the $15.64 million the county received from the state.

Monday’s tax commissioner meeting was to hear requests for waivers so counties could keep their status.

Pershing, White Pine and Lander counties were also on the list, but they sought a waiver.

White Pine County Finance Director Elizabeth Frances said the county receives a lot of income when the mines are going strong. 

“We have multiple large construction projects that are wrapping up right now,” she said. “When those projects are done the related taxes will also go away.”

She cited a pumped storage electrical generation project that’s in the works north of Ely that could produce significant revenue for the county.

Lander County Manager Bert Ramos told commissioners last year’s revenues were due mainly to the mines.

“When the mines are doing well, we tend to exceed the amount,” he said. “I believe that probably the simple answer.”

One of the issues for rural counties like Pershing, White Pine and Lander is that any large purchase can have an outsized effect on sales tax generation.

In the case of Pershing, tax officials said there was a single taxpayer with an irregular, yet correct filing. Had it not been for that one instance, Pershing would not have exceeded the threshold.