MINUTES OF MEETING

      ASSEMBLY COMMITTEE ON TAXATION

 

      Sixty-seventh Session

      April 1, 1993

 

 

The Assembly Committee on Taxation was called to order by Chairman Robert E. Price at 2:00 p.m., April 1, 1993, in Room 332 of the Legislative Building, Carson City, Nevada.  Exhibit A is the Meeting Agenda, Exhibit B is the Attendance Roster.

 

COMMITTEE MEMBERS PRESENT:

 

      Mr. Robert E. Price, Chairman

      Mrs. Myrna T. Williams, Vice Chairman

      Mr. Rick C. Bennett

      Mr. Peter G. Ernaut

      Mr  Ken L. Haller

      Mrs. Joan A. Lambert

      Mr. John W. Marvel

      Mr. Roy Neighbors

      Mr. John B. Regan

      Mr. Michael A. Schneider

      Mr. Larry L. Spitler

 

 

COMMITTEE MEMBERS ABSENT:

 

      None

 

GUEST LEGISLATORS PRESENT:

 

      None

 

STAFF MEMBERS PRESENT:

 

      Ted Zuend, Deputy Fiscal Analyst, Legislative Counsel Bureau

 

OTHERS PRESENT:

 

      Perry Comeaux, Executive Director, Nevada Department of       Taxation

      Carole Vilardo, Executive Director, Nevada Taxpayers Association

      Robert S. Hadfield, Executive Director, Nevada Association of Counties

 

 

Chairman Price opened the meeting by announcing all business tax bills received would be scheduled for hearing on April 20 and

22.  He also distributed an article from the Elko newspaper which is attached as Exhibit C.

 

Chairman Price called for testimony on SB 36.  The bill explanation for SB 36 is attached as Exhibit D.

 

SENATE BILL 36 -  Requires certain persons for whom audits outside of state are necessary to pay travel and other actual expenses incurred by department of taxation in conducting audit.

 

Perry Comeaux, Executive Director, Nevada Department of Taxation, stated this bill was requested by the department to correct an oversight in the 1989 legislation relative to out-of- state audits.  He explained the language changes on lines 8, 9, 10 and 12 were necessary because approximately 40 percent of the audits performed each year were on use taxes, rather than sales taxes, owed by Nevada consumers for purchases made elsewhere.  This would allow the state to recover the cost of auditing those use tax consumers who maintain their books and records outside the state for use tax liability and reporting.

 

      MR. NEIGHBORS MOVED TO DO PASS.

 

      MR. ERNAUT SECONDED THE MOTION.

 

      THE MOTION PASSED UNANIMOUSLY.

 

Chairman Price asked Mr. Ernaut to handle the presentation of the bill on the floor of the Assembly.

 

Chairman Price called for testimony on AJR 13.  The bill explanation for AJR 13 is attached as Exhibit E.

 

AJR 13 -  Proposes to amend Nevada constitution to authorize           legislature to establish exemption from property taxes             for property on which declaration of homestead has        been recorded. 

 

Vice Chairman Myrna Williams asked Chairman Price, as sponsor of the resolution to open testimony.  Bob Price, Assembly District 17, stated this was an idea he had contemplated for several years.  He explained there were several states which have exempted a portion of the assessed or taxable value on properties which had a homestead filed on primary residential property.

 

In most states when a homestead was filed it afforded the owner some degree of legal protection for his interest in the real property and improvements.  Many states had added some type of a property tax exemption.  What he envisioned happening with passage of this resolution and subsequent approval of a constitutional amendment by the voters would be to reduce the taxable value on a homesteaded primary residence by maybe $20-30,000.  The amount credited could be changed through statute, as necessary.  He added, over the years he had served in the legislature, he had rarely received property tax complaints from large companies.  Complaints had generally come from homeowners and this legislation would potentially give them a break on their taxes, regardless of their financial status.

 

He concluded there was a political downside to this resolution.  During recessionary economic times, such as were now being experienced, there could be a reduction in revenue.  Some states which currently had such a homestead exemption on property values were trying to reduce or eliminate it.  He reminded the committee it took two sessions to make such a constitutional change and by the time it might be accomplished the economy could be stronger.

 

Mr. Marvel indicated there could be substantial difficulty in determining what the impact of such an exemption would be on local governments.  Mr. Price stated he had no projections for what the impact might be.  Mr. Marvel added it was difficult to know what future legislatures would do to expand the exemption.

 

Mr. Neighbors commented, based on his negative experiences with the tax base issues at the test site, he was opposed to the exemption because it was for a particular class of property.

 

Mr. Price asked Carole Vilardo, Executive Director, Nevada Taxpayers Association to comment on the resolution.  She stated she supported a circuit breaker type bill and one had actually made it through the last session and died in the Assembly Taxation committee.  She elaborated approximately 38 states presently had such a law, but many of those states had very different property laws or structures than Nevada.

 

Ms. Vilardo pointed out, practically, it was difficult to increase property tax rates and at the same give various exemption to classes of taxpayers.  If this resolution passed she thought all other property tax exemptions should be eliminated and there should be a means test in order to qualify for the exemption.  No one liked taxes, whether property or sales, but taxes were necessary to operate government and provide services.

 

She informed the committee Nevada's homestead exemption had originally been $75,000 then it was increased to $95,000.  There was currently a bill in the Senate which would increase it to $105,000, for legal protection purposes.  She also added existence of a homestead on  a residence currently precluded the homeowner from obtaining refinancing or home equity loans on the property unless they went through steps to remove the homestead first.

 

She told Mr. Price her biggest objection to the resolution was its wording.  She stated if a means test was included within the language of the bill it would afford relief to anyone who had income below a certain level, regardless of which group of taxpayers they belonged to.  A brief discussion followed relative to other types of exemptions and how large an impact various plans would have.

 

Ted Zuend added a charitable exemption, such as the across-the-board exemption based on a means test, could be done legislatively, without a constitutional amendment.  It could be done statutorily.  Ms. Vilardo stated that was correct, but all other exemptions could not be eliminated by statute because some of them were already written into the constitution and some were not.  She said she felt the legislature needed to form a more consistent policy which everyone could understand.  Establishing such a policy would clean up a lot of language and odd fragments within the law.

 

In answer to a question from Mr. Marvel, Ted Zuend said he did not believe there had been a specific study done to determine how much these exemptions were costing the various local governmental entities.  However, the segregation report, produced by the Department of Taxation assessment standards, shows the exemptions which were physically tracked.  Those reports might be used to determine those figures.  He pointed out, additionally, local governments were working under the constraints of the cap tax rate.  Effectively, local governments were not losing revenue due to the exemptions.  Essentially, the exemptions were resulting in a slightly higher tax rate overall to make up for the lost revenues.  Because of their fixed rates, the school districts and, ultimately, the state were more directly affected by the revenue lost due to those exemptions. 

 

Mr. Spitler acquainted the committee with the fact the Department of Wildlife had been a completely self funded entity until several exemptions had been enacted.  Today, the department was partially supported by a $400,000 general fund contribution.  He concluded by saying if exemptions were granted in one area, generally, they must be made up in another.

 

A discussion of means testing and projected impact of the exemption followed.

 

Bob Hadfield, Nevada Association of Counties, was next to speak.  The position of the association was reflected in Exhibit F which is attached.  Mr. Hadfield added his primary concern was with compacted rates and a narrowed revenue base.  He felt the committee should not consider further exemptions without a review of the funding issue in light of the larger overall picture of how much latitude the local governments had relative to the narrow band of property taxes within which they operated.

 

Vice Chairman Williams closed the hearing on AJR 13 and returned the gavel to Chairman Price.  A brief discussion of the problem existing with funding bases and tax rates followed.  Chairman Price suggested the committee request an in-depth interim study on tax policy, exemptions and special districts.  He also stated there would be a resolution drafted to request such a study.

 

      MR. MARVEL MOVED TO INDEFINITELY POSTPONE AJR 13.

 

      MR. ERNAUT SECONDED THE MOTION.

 

      THE MOTION CARRIED UNANIMOUSLY.     

 

Chairman Price asked for a motion to approve all minutes as produced for prior meetings.

 

      MR. REGAN MOVED TO APPROVED THE MINUTES AS PRODUCED.

 

      MRS. LAMBERT SECOND THE MOTION.

 

      THE MOTION CARRIED UNANIMOUSLY.

 

There being no further business to come before committee, the meeting was adjourned at 2:35 p.m.

 

      RESPECTFULLY SUBMITTED:

 

 

                             

      LINDA CHANDLER LAW

      Committee Secretary

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Assembly Committee on Taxation

Thursday

April 1, 1993

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