MINUTES OF THE Meeting
of the
ASSEMBLY Committee on Taxation
Seventy-First Session
March 13, 2001
The Committee on Taxationwas called to order at 1:30 p.m., on Tuesday, March 13, 2001. Chairman David Goldwater presided in Room 3142 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Guest List. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.
COMMITTEE MEMBERS PRESENT:
Mr. David Goldwater, Chairman
Mr. Roy Neighbors, Vice Chairman
Mr. Bernie Anderson
Mr. Morse Arberry Jr.
Mr. Greg Brower
Mr. David Brown
Mrs. Vivian Freeman
Mr. John Marvel
Mr. Harry Mortenson
Mr. David Parks
Mr. Bob Price
Ms. Sandra Tiffany
COMMITTEE MEMBERS ABSENT:
None
GUEST LEGISLATORS PRESENT:
Senator Bob Coffin
STAFF MEMBERS PRESENT:
Ted Zuend, Fiscal Analyst
Kathryn Ely, Committee Secretary
OTHERS PRESENT:
Ms. Ginny Lewis, Deputy Director, Department of Motor Vehicles and Public Safety
Mr. Marvin Leavitt
Ms. Carole Vilardo, Nevada Taxpayers Association
Ms. Barbara G. Byington, Assessor, Douglas County Assessors’ Office
Chairman Goldwater called the meeting to order. Mr. Anderson introduced guest students from Lloyd Diedrichsen Elementary School in Sparks, Nevada. Chairman Goldwater opened the hearing on S.B. 59.
Senate Bill 59: Changes designation of privilege taxes on motor vehicles to governmental services taxes. (BDR 32-39)
Senator Bob Coffin stated S.B. 59 did not change any existing law, only the name. Since 1963, the tax had been called the motor vehicle privilege tax. The money collected was distributed to local schools and government and a commission went to the Department of Motor Vehicles and Public Safety (DMV/PS). Senator Coffin emphasized the commission was not a share of the tax. Senator Coffin commented the tax was named inappropriately, but there was a reason. He explained it was not a privilege to own a car; it was a right. A citizen had the right to own a vehicle, but when the automobile was driven on the roads that was another thing. The actual privilege attached to the license acquired for the privilege of driving. A right to own a vehicle and a privilege to drive were two different things and should be separated. Senator Coffin stated for this reason, the name change would take the “heat away from payment of this tax.” When an owner paid the tax on the vehicle, the owner was then entitled to “governmental services” such as police protection of the vehicle and law enforcement assistance in the event the vehicle was stolen. Senator Coffin respectfully requested the bill be passed and concluded his testimony.
Mr. Neighbors asked if a veteran would still get the exemption and would the Internal Revenue Service treat the exemption as a deduction. Senator Coffin responded that the provisions of the bill, such as the exemptions, would remain in force, only the name was changed. Senator Coffin stated he was unaware how the IRS treated the exemption.
Mrs. Freeman asked why the tax was called a privilege. Senator Coffin responded he was not sure why the name came into existence and referred Mrs. Freeman to several sources where that information might be found. Chairman Goldwater also suggested the historical background might be learned through a discussion with Fiscal Analyst, Ted Zuend, or with Ms. Carole Vilardo of the Nevada Taxpayers Association. Chairman Goldwater directed Mr. Zuend to spend some time with Mrs. Freeman on the subject.
Chairman Goldwater asked Senator Coffin if he was aware of any opposition to the bill and Senator Coffin advised that no one opposed it in the Senate.
Ms. Ginny Lewis, Deputy Director of the Department of Motor Vehicles and Public Safety (DMV/PS) advised the committee that the motor vehicle branch supported S.B. 59. She stated the focus of the branch was to improve services to the motoring public and the overall image of the DMV/PS. Ms. Lewis believed a name change would better educate the public about the tax. The current reference to it as a privilege tax caused confusion and resentment from registering customers. Ms. Lewis commented the DMV/PS technicians at the windows were unfairly at the receiving end of the frustration. She explained the DMV/PS collected and distributed the basic and supplemental privilege tax for the state and, in FY2000, the DMV/PS distributed over $198 million. Unfortunately, from the customer’s perspective, the amount equated to a high cost for car registration. Ms. Lewis stated the public generally did not understand that the taxes were distributed to local government.
Mr. Anderson asked if the name change might broaden the complaints rather than lessen the complaints. Ms. Lewis responded that it was hard to say how customers would react. She commented that, from the DMV/PS’s perspective, it was a better way to help the customer understand.
Chairman Goldwater asked if there was any other testimony offered in support, or in opposition of S.B. 59. There was none and Chairman Goldwater announced his intention to close the hearing. Chairman Goldwater requested a motion be made. Mrs. Freeman asked the Chairman to delay the vote and asked if someone could answer her earlier question.
Chairman Goldwater called Ms. Carole Vilardo, Nevada Taxpayers Association. She came forward and explained that vehicles were all taxed originally as personal property. It was learned that individuals would travel to counties with a lower personal property tax rate and register the vehicle. She explained in either the 1963 or 1965 Legislative Session it went to voters and was approved in lieu of a property tax and would be a tax for the privilege to drive a vehicle. It was considered a privilege to own a vehicle. “Privilege” was a legal term of art. Ms. Vilardo explained, for example, when an application for a sales tax permit was made, for the privilege of collecting the sales tax a fee of $3.00 was paid.
Chairman Goldwater asked again if there was any other testimony to be offered and there was none. Chairman Goldwater closed the hearing on S.B. 59 and opened the hearing on S.B. 64.
Senate Bill 64: Authorizes payment of taxes assessed upon personal property under certain circumstances. (BDR 32-889)
Mr. Marvin Leavitt stated that S.B. 64 dealt with certain circumstances for the payment of personal property taxes. Mr. Leavitt offered historical background and stated real property taxes over $100 could be made in four equal installments. Such a privilege was not available to owners of personal property, unless they own real property. The personal property tax could be placed on the real roll, or the secured rolls, and then paid in four equal installments. S.B. 64 provided an additional method of payment to pay personal property taxes in a situation where the tax was greater than $10,000, and the business had been in existence for more than three years. Mr. Leavitt stated he did not think it would be a burden on local government and believed it was a situation of fairness, particularly in a situation where there was a fairly substantial personal property tax bill.
Mr. Marvel asked if he knew of an example where there would be property involved that could be secured. Mr. Leavitt said that one situation would be if a business had a large amount of personal property, but essentially no real property. For example, if a company rented a structure it would not own real property. It would, however, own large equipment that would be taxed under the personal property statutes.
Ms. Carole Vilardo, Nevada Taxpayers Association, stated S.B. 64 did nothing more than create some equity in an existing situation. There were some instances that were brought to her attention, specifically, technological companies. She explained, in a situation where a technological company first began its business operation in a state, the company would rent a facility until they permanently located. Ms. Vilardo commented there could be very expensive pieces of personal property owned by that company and the company could have personal property bills that could amount to several hundred thousand dollars. Ms. Vilardo commented that to pay the entire amount due on the personal property bill, in this particular situation, would be unfair. She stated the one concern raised by the assessors was a situation where a small company would go out of business before collection proceedings could be instituted. Ms. Vilardo explained this could be “safeguarded” with the $10,000 and three-year provisions.
Chairman Goldwater asked if there were any concerns expressed by assessors’ offices or local governments regarding payments deferred. Ms. Vilardo commented they found under the conditions of “$10,000 and three years in business,” there were only five businesses in the state that could take advantage of it. It had the potential for more if there was an increase in technological businesses. However, it may not happen because of the three-year provision. Usually, those companies, in three years, had decided where their permanent location was going to be.
Mr. Neighbors asked Ms. Vilardo if it was not on the roll, or paid quarterly, and there was a lien on the property, how were the taxes collected? Ms. Vilardo stated a lien against the property would still exist, but it was not on the secured roll. It remained on the unsecured roll because the business did not own property, but the personal property which was movable, could be secured to the real property, which was immovable.
Mr. Neighbors commented that one county in which the Nevada Test Site was located, had over $30 million assessed, sometimes as much as $40 million assessed.
Ms. Barbara G. Byington, Assessor for Douglas County Assessor’s Office was the next speaker. Ms. Byington represented an assessor’s association and stated the association had reviewed the bill. She referred to the provision that information had to be submitted by a certain date. She stated that usually the information was not requested until July 31. If the bill was not sent out until after July 31, the payments could not be made in four monthly installments. The bill did state the declarations must be in earlier. Ms. Byington noted that oftentimes when the declarations were not received until July, the bill was not sent until December. By December, two installments would have already been made which would give the counties their money, placing them ahead, and this would be a benefit. Ms. Byington concluded her presentation.
Chairman Goldwater asked if there was any other testimony to be offered and there was none. Chairman Goldwater announced he would close the hearing on S.B. 64.
Chairman Goldwater asked for motions on bills heard by the committee.
ASSEMBLYMAN NEIGHBORS MOVED DO PASS S.B. 59.
ASSEMBLYMAN MARVEL SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
ASSEMBLYMAN MARVEL MOVED DO PASS S.B. 64.
ASSEMBLYMAN ANDERSON SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
Chairman Goldwater asked if there was any other business and there was none. Chairman Goldwater adjourned the meeting at 2:07 p.m.
RESPECTFULLY SUBMITTED:
Kathryn Ely
Committee Secretary
APPROVED BY:
Assemblyman David Goldwater, Chairman
DATE: