News Analysis
'Hybrid' bill
weaker than it appears?
By Steven
Miller
The so-called
‘hybrid’ property tax solution passed by the Nevada Assembly
yesterday is far from the done-deal that media reports have
suggested.
In the Senate the proposal
of Democrat Minority Leader Dina Titus for a one-year freeze
is gathering important new momentum, while beneath the surface
in the Assembly, anxiety remains over AB 489.
Behind the Senate
development is concern over the double-digit tax increases
still set to sting Nevada commercial and business property
owners under the Assembly proposal. That bill would stick
Clark County businesses with property tax increases of over 13
percent, the Las Vegas Review-Journal reported
Wednesday.
In addition, the
legislation would impose a “split roll” regime of higher taxes
on all property owners but homeowners—notwithstanding the
Nevada Constitution’s ban on any property tax assessment
scheme that is not “uniform and equal.”
Because AB 489’s split-roll
provision is a virtual invitation to a legal challenge, GOP
senators now see the Titus proposal as good protection for all
property owners, should the “hybrid” solution fail in the
courts.
Titus has said she could
try to freeze all taxes this year—including both residential
and commercial properties—and postpone the main provisions of
the assembly bill to the year afterward.
Sen. Warren Hardy, R-Las
Vegas, noted that AB-489 has been represented as a compromise
between Assembly Majority Leader Barbara Buckley and Assembly
Minority Leader Lynn Hettrick. But while Assembly leaders
“might view the compromise as a long-term fix,” he said, “I
don’t think we [in the Senate] do.”
Hardy told the Las Vegas
Sun that he and others worry about the burden imposed on
businesses under the legislation.
“Some of us are looking for
ways to make sure businesses are treated fairly. We certainly
don’t like the split roll,” he said. Hardy also pointed out
that a freeze would also help “compel local government to
tighten their belts a little bit. I don’t think that’s a bad
thing.”
Titus told the Sun
that while she may have enough votes to get her amendment
through the Senate, she was unsure if the bill could clear the
Assembly. What she did not spell out is that Assembly Speaker
Richard Perkins, who has positioned himself to reap political
credit for the Buckley-Hettrick compromise, has demonstrated
little willingness to support any proposals that could make
Titus—a competitor for the 2006 Democrat gubernatorial
nomination—look good.
Thus, with GOP fiscal
conservatives in the Senate backing a Titus freeze amendment,
and Perkins resistant, the stage may be set for another
confrontation between the Legislature’s two chambers. Although
poorly reported by Nevada media, such a prolonged deadlock was
the main reason for the acrimony of the 2003 Session, plus the
two special sessions that immediately followed: Perkins and
Buckley refused to accept any major tax-increase “solution”
that did not include the Gross Receipt Tax. At the same time,
even most Democrats in the state senate, not to speak of
Republicans, would not support any version of the GRT.
This session, despite the
41 to 1 majority among Assembly rank and file in favor of AB
489, significant political anxiety rumbles beneath the surface
and could erupt in a confrontation with the Senate. Some of
the angst is telegraphed by the bill’s first 600-odd words—the
lengthy “findings” that attempt to strengthen the bill for the
legal challenges it is likely to face (while also making the
politicians voting for it look wise and compassionate).
A look into key
provisions of the bill reveals some reasons for the anxiety.
First, the legislation is extremely complex—full of long,
compound and convoluted provisions that even legal experts are
finding hard to decode. [You can download the bill
here and read it for yourself.]
Given this complexity, it’s
clear that few Assembly members actually understood the bill’s
provisions when voting for them. Instead, under the pressure
of county tax assessment mailings scheduled for early March,
and pressures from the Assembly’s majority and minority
leaders, they simply relied on leadership assurances. But all
three leaders—Buckley, Perkins and Hettrick—now have a
personal political stake in the bill.
Second, the legislation is
chock-full of apparent weaknesses for eager lawyers to attack.
One finding, for example, says: “The Legislature hereby finds
and declares that an increase in the tax bill of the owner
of a home by more than 3 percent over the tax bill of that
homeowner for the previous year constitutes a severe economic
hardship within the meaning of subsection 10 of Section 1 of
Article 10 of the Nevada Constitution.” (Emphasis added.)
Note that the declaration
does not limit such “hardship” to owner-occupied homes, but
instead refers simply and generally to “owner[s] of homes.”
Thus, attorneys for owners of other residential
properties where the owners themselves do not reside can be
expected to challenge AB 489 in court. The Legislature itself,
they will point out, has acknowledged that their clients
also suffer such a “hardship.” How appropriate is it then,
counsel will ask, for their clients to be denied the 3 percent
cap?
A third concern of all
Assembly members, given the virtually impenetrable text of AB
489, has to be whether or not the central political benefit of
supporting the legislation will even occur. Media outlets have
reported at length that the legislation gives homeowners
residing in their homes a flat 3 percent cap on property tax
increases. But if AB 489 really does that, why does it not
clearly and directly say so? Instead, the bill's complexity
suggests that its authors’ well-known reluctance to let any
prospective taxpayer penny escape the insatiable maw of
government may be operating in some as-yet unseen manner.
Another, related concern,
especially for Democrats, may be the issue of equity for
people who do not own, but rent their residences. Scott Smith,
legislative representative for the Southern Nevada Multi
Housing Association, warned lawmakers that, as written, the
Assembly legislation means a significant new burden on
renters. That's because of the double-digit tax increases AB
489 would mean for rental properties—which in the natural
course of things will be passed on to rental occupants.
Finally, still another
factor that could complicate any quick approval of AB 489 is
Gov. Kenny Guinn's sudden re-insertion of himself into the
public property tax discussion. Throughout the year-long
gathering crisis for taxpayers, the governor publicly refused
to offer any leadership in the effort to find a solution. Now
that the Assembly has produced a bill, however, the governor
yesterday was suddenly talking “we,” again: “If they get this
done,” he told the Review-Journal, “we’ll be in a
position to send a positive message to the people of Nevada
relating to property taxes.”
In some quarters of the
Legislature, one source told BusinessNevada, the
prospect of Guinn now seeking to share credit for any property
tax solution is reason enough to delay such a solution.
