MINUTES OF THE
SENATE Committee on Taxation
Seventy-First Session
February 15, 2001
The Senate Committee on Taxationwas called to order by Chairman Mike McGinness, at 2:06 p.m., on Thursday, February 15, 2001, in Room 2135 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.
COMMITTEE MEMBERS PRESENT:
Senator Mike McGinness, Chairman
Senator Dean A. Rhoads, Vice Chairman
Senator Ann O’Connell
Senator Joseph M. Neal, Jr.
Senator Bob Coffin
Senator Michael Schneider
COMMITTEE MEMBERS ABSENT:
Senator Randolph J. Townsend (Excused)
GUEST LEGISLATORS PRESENT:
Senator Mark E. Amodei, Capital Senatorial District (Storey County and Parts of Carson City and Lyon County)
STAFF MEMBERS PRESENT:
Kevin D. Welsh, Deputy Fiscal Analyst
Rochelle Trotts, Committee Secretary
OTHERS PRESENT:
Marvin Leavitt, Lobbyist, City of Las Vegas
Carole Vilardo, Lobbyist, Nevada Taxpayers Association
Kit Carson Weaver, C.N.A., Assessor’s Office, Carson City
Mary Walker, Lobbyist, Carson City, Lyon County, Douglas County
Charles W. Joerg, Lobbyist, Nevada Manufactured Housing Association
Madelyn Shipman, Lobbyist, Nevada District Attorneys’ Association, and Washoe County
Virginia (Ginny) Lewis, Deputy Director, Motor Vehicles, Department of Motor Vehicles and Public Safety
Barbara Byington, Assessor, Douglas County
Chairman McGinness:
Senator Coffin has asked the committee to present Senate Bill (S.B.) 59 late in the meeting.
SENATE BILL 59: Changes designation of privilege taxes on motor vehicles to governmental services taxes. (BDR 32-39)
Chairman McGinness:
We will open the hearing on Senate Bill (S.B.) 64.
SENATE BILL 64: Authorizes payment of taxes assessed upon personal property under certain circumstances. (BDR 32-889)
Senator O’Connell:
This bill came out of the interim committee on distribution among local governments of revenue from state and local taxes (Legislative Committee to Study the Distribution Among Local Governments of Revenue From State and Local Taxes, established via Senate Bill 253 of the Sixty-ninth Session) and deals with personal property tax.
SENATE BILL 253 OF THE SIXTY-NINTH SESSION: Creates legislative committee to study distribution among local governments of revenue from state and local taxes. (BDR 17-193)
Marvin Leavitt, Lobbyist, City of Las Vegas:
We had done a considerable amount of work on personal property taxes because it has been the source of a lot of problems over the years due to the fact that one, it is movable, it is self-assessed, it is very difficult to get an equal standard around the state. It is also a factor in the computation of the allowed property taxes as it relates to real and personal property. We will expect to continue some additional work on personal property as time moves forward. This bill is perceived to be a problem because some taxpayers do not own real property and do not have real property on the roll, so they cannot pay personal property tax on a secured roll. Yet, they pay a considerable amount of personal property taxes which, in the past, have not been allowed to be paid in installments, the same as real property taxes. This bill would allow personal property tax, if it exceeds $10,000, to be paid in installments. This being the case, in instances where the taxpayers do not have other property on the roll, they can bring it on to the secured roll. In section 1, subsection 4 of the bill, that exception is provided which relates to special rules as they relate to property that is readily movable and migratory property. The taxpayers have to apply for this exception. The business has to be in existence for 3 years for various reasons; one of which gives you an assurance that indeed there is an ongoing operation and the tax will be paid. This is simply an attempt to allow these taxpayers that have this large amount of personal property to pay the same as real property taxpayers in installments rather than having to pay it in one payment.
Senator O’Connell:
The business has to apply for this type of installment through a written request on an annual basis. Is there any reason why we would require them to do this annually if the business has already done this once, why would the business have to submit a written request each year?
Carol Vilardo, Lobbyist, Nevada Taxpayers Association:
What happens, is you receive a declaration form to be filled out, from the assessor. This gives you the opportunity to delete property which you may have gotten rid of, salvaged, donated, or sold. You also have the obligation under the law to identify any new property. Once a year you put the form through the process. You have 30 days from receipt of the form to return the form with the information on it. The assessor will then send you a bill based on the information you have sent to him. The notice is going to be mostly on trade associations and chambers, with advising their members and working with the Assessors to say if you have been in business 3 years and you have over a $10,000 tax liability, you may request this. We need to do that to compact the time frame so you can have the four installments.
Senator Rhoads:
If everyone pays in four equal installments, will this not be a loss of interest to the state?
Ms. Vilardo:
When the assessors went around to see how many people this would impact, they found there are exactly five businesses in this state, at this point and time, that are not in a position to secure the property. It would have been a different story had the 253 committee (established via Senate Bill 253 of the Sixty-ninth Session) accepted this. I had originally requested this from the taxpayers association, to look at this issue, by representing to our membership this was unfair, particularly for businesses that had huge amounts of personal property that they could not secure, to be required to make one payment of $50,000 or $100,000, when a mobile home owner is allowed to make four installment payments if the bill is over $100, which was discussed by the technical committee, this is the reason why you have the two conditions. The concern by the financial people that sit on the technical committee was that with small business with personal property not secured. These are people who do not have real property you can put a lien on. I close my business at midnight on Saturday night and Sunday I have moved everything out. It may take the assessor 3 months to find that out. I may have a tax bill owing. We tried to come up with a dollar amount, then subsequently the dollar amount did not satisfy, so there was a year condition put on it and this is the basis for both of those conditions. Ten thousand dollars means you have a fairly good inventory, a fair amount of merchandise; in theory you would have the wherewithal to be able to pay if you have personal property to that valuation. We do not want to give it to businesses in their first year of operation and that may be out of business in their thirteenth or seventh month. The committee did not want to go less than $10,000. An interesting point is the treasurer of Washoe County wanted to know why we even had the 3-year declaration on this. I would be happy with no 3 years and no $10,000 threshold, but the discussion by the financial people in the committee, they were uncomfortable with doing that at this point.
Senator Neal:
The four equal installments are not self-operational by the statute; it says the individual has to make an application. This also could apply to mobile property that moves around. How would the notice get out to these individuals that have to apply for this and have to do so no later than July 31 of a particular year? It must be in writing to the assessor’s office that they would like to take advantage of this installment. Is the assessor required to give this information?
Mr. Leavitt:
There is nothing specific that requires a particular form. What would happen is a personal property tax declaration is filled out by the person who owns the property. I would think on that declaration, there would be some kind of notice giving them that provision, if they had personal property in excess of $10,000 that would not otherwise be eligible because it could be attached to the secured roll. We have not provided, in this bill, an affirmative requirement to do that, although, it should be done.
Senator Neal:
What would be acceptable in terms of the value of the property? Would it be an appraisal? How would that occur?
Mr. Leavitt:
It is like an income tax. You have a requirement you yourself fill out and indicate what the personal property cost is, and when it was originally purchased, as well as its age. The tax is computed on a depreciated basis, based on its age. It is a self-assessing process.
Ms. Vilardo:
It is a tax that is self-reporting. With smaller businesses, it tends to get over-reported, because they do not understand how it is categorized and then ends up being under-reported. In the assessor’s office, it is not a tax that is frequently audited on small business. There are categories, but when you take a look at Clark County you have approximately 54,000 businesses licensed; you do not have the opportunity, because of minimal staffing, to go out and put those 54,000 businesses on a cycle. It is a very misunderstood tax. A great deal of inequities between one business and another business, without understanding if their equipment should show on short life or where it should appear. The tax should be repealed because of inconsistent application, measurement, and poor understanding or participation by smaller businesses. The assessors have worked very hard to come up with a consistent set of forms, a declaration that is relatively easy to fill out by simplifying the instructions, but people still continue to have problems.
Senator Neal:
The primary need is to reach persons who have property valued at under $10,000 and are not paying their taxes. This discussion is on personal property taxes and not ad valorem taxes.
Ms. Vilardo:
This is property not permanently affixed to a structure, and is constituted as personal property. The exceptions being: motor vehicles, which have to be registered; law books in a law firm; CAT (computerized axial tomography) scan machine in a diagnostic medical center; the fixtures on which clothing hangs in a retail store.
Senator Neal:
Why a limit?
Ms. Vilardo:
When I put this forth as a suggestion for consideration to the 253 committee (established via Senate Bill 253 of the Sixty-ninth Session). I put that forth with no limit or qualifications; just people paying personal property taxes would have the same opportunity as someone who owned a mobile home and had more than $100 in tax due. The committee does a very thorough job, because of the finance people primarily, in trying to evaluate these proposals and making sure that they will not lose money. If they were going to lose on interest, it would be a very compelling reason to address the issue Senator Rhoads raised. One of the concerns the financial people had is personal property is not permanently affixed to something and is very easy to move. I could go in, move it out, and it would be gone. They may have assessed a bill against it. I may not have paid the bill, but, all of a sudden, nothing would be there for them to attach to sell at a sale to make good on my tax bill.
Senator Neal:
How would this bill change that?
Ms. Vilardo:
This bill attempts to give someone who has a record of being in business and would have a larger property tax bill, the right, that is why the conditions were put on it to pay in four installments.
Senator Neal:
Do the assessors have the power to do this now?
Ms. Vilardo
No.
Senator Neal:
The assessor has the authority to do this for the ad valorem taxes.
Ms. Vilardo:
Statute provides that ad valorem taxes will be collected in four installments and sets up the dates of the installments.
Senator Neal:
For personal property we did not have anything in place for installment payments that is assessed and exceeds $10,000. If you have $9999 in personal property tax, you would have to pay it all at once. By building that into statute, is that not discriminatory?
Ms. Vilardo:
It is probably as discriminatory as saying, “In a county of over 100,000, you can levy a tax for this reason, but nobody else can.” I am not saying it is not discriminatory; it is a policy decision to be made. I agree with the Washoe County treasurer’s suggestion that it be for everybody over $10,000 and not 3 years. I agree with your recommendation that we just do this and not have the qualifications, but I agreed to the qualification because of the concerns expressed by the finance people.
Mr. Leavitt:
We have tried to come up with an amount which paying in one payment becomes a substantial burden to the small business. For instance, if you look around at the declarations that are submitted, we have a lot for various small amounts. For two to three hundred dollars and in those particular instances, the four payments along with the effort to record those payments, about equals the amount of money you are going to get. It was felt, because of the small amounts, certain amounts do not need the option of being able pay in four installments. When a bill reaches that size, having to make that payment might be indeed a financial burden on a small business.
Kit Carson Weaver, Assessor’s Office, Carson City:
I am speaking for the Assessor’s Association of Nevada. We have had numerous complaints in situations where a bill is made payable at one time only, and a 10 percent penalty is assessed if it is not paid within 30 days, as opposed to the quarterly method, which has them pay in August, October, January, and March. As far as the interest is concerned, more money would be received earlier and it would be a benefit to the counties to do this quarterly. Right now, these bills are not sent out until December. October, November, and December are not paid until December/January. You can see the whole bill would be paid by December/January, but not before December, usually, and it is beneficial that way. I agree with Senator Neal on the notification to the taxpayer. What we would normally do is, in our instruction sheet, we would tell them if they are going to pay more than $10,000 or whatever the number is, that they would have to notify us by July 31. The treasurer in Washoe County points out it is a lot of work to do this. They bill them in four installments to collect the taxes, and so on. We might as well do this for everybody who would qualify. Ten thousand dollars in taxes is a million dollars in furniture, fixtures and equipment, which adds up to be a lot of money. Some people do not like to secure their property to this real property they have, because they are committing to having all that property the next year. In many cases, they have million-dollar pieces of equipment that were purchased or brought in for a particular job that may be a government contract that they might not have the following year. The other would be large companies that lease equipment that do not have any real property here, Xerox Corporation and IBM (International Business Machines Corporation) that may have millions of dollars and ten thousand dollar taxes in any particular county but nothing to secure it to. I think that the threshold is $1 million in furniture fixtures and equipment, which equates to $10,000 in taxes. Perhaps in the 3 years, the taxpayer probably will not know how much his taxes are, the first year he files. If he files $2 million in business equipment, he is going to have a $20,000 tax bill and it is probably going to be a shock to him. Perhaps, we should make it for anybody who reports by July 31, a $10,000 threshold and they do not have to specifically request it. It would allow treasurers to send out a tax bill for their purposes. By the way, this is an ad valorem tax, it is based on the depreciated value of the equipment. There is real property and there is personal property. The real property is usually collected on the secured roll and that is the roll always automatically billed in four installments. The unsecured, in this case, the people will not know how much the tax bill is going to be, it would be up to us. This report that comes in for these million dollars plus, we will have to put that in the computer to determine what the depreciated value is, use the tax rate to find out if the tax would be more than $10,000 dollars. I agree, perhaps we should mail to those people who would qualify the bill in four installments.
Senator Neal:
You said this is an ad valorem tax, but it states in this proposal that it applies to the total of personal property taxes.
Mr. Weaver:
All personal property taxes are ad valorem, “according to value.”
Senator Neal:
Is that defined somewhere in our statute?
Mr. Weaver:
I am sure it is in 361 (chapter 361 of Nevada Revised Statutes [NRS]).
Senator Neal:
As we have it stated here, I think we will be giving instructions to the taxpayers that we are talking about personal property taxes, rather than a house that is not attached to land.
Mr. Weaver:
The businesses such as manufacturers, casinos, and so on, that send in these value lists of property for millions of dollars, they know all the tax laws. They know what ad valorem means and are prepared to pay. I think they would appreciate the ability to pay in four installments.
Chairman McGinness:
We will close the hearing on S.B. 64 and open the hearing on S.B. 70.
SENATE BILL 70: Revises provisions governing classification of manufactured homes as real property. (BDR 32-337)
Senator Mark E. Amodei, Capital Senatorial District (Storey County and parts of carson City and Lyon County):
Senate Bill 70 is from the S.B. 323 of the Seventieth Session.
SENATE BILL 323 OF THE SEVENTIETH SESSION: Makes various changes regarding manufactured homes. (BDR 22-997)
Senator Amodei:
I want to thank all of the members on this committee for supporting this measure last session. I thought we made it very clear that property owners who took advantage of the zoning that this created would also have their property treated like real property. In other words, if you wanted to be treated like stick-built for location purposes, subject to the restrictions that were in the bill, then you would also be treated like stick-built for property tax purposes. Apparently, the language that was used last session was not as clear as some people would have liked it to have been. Therefore, Senate Bill 70 in this session is pursuant to the request of some of the local government assessors, and has been promulgated in consultation with the manufactured housing people to, hopefully, make it abundantly airtight clear property such as this. When you take advantage of what is now state law for purposes of manufactured housing in an open-zoning sense, it will be treated like other real property without the attendant voluntary certificates of conversion. There are a couple of proposed amendments that have been provided to me that I have no objections to, that you will be hearing about.
Mary Walker, Lobbyist, Carson City, Lyon County, Douglas County:
This is a clean provision regarding the intent of S.B. 323 of the Seventieth Session. Whether or not a party voluntarily goes through the affidavit of the conversion process, when they do take advantage of the provisions of S.B. 323 of the Seventieth Session, that manufactured home shall be required to be taxed the same as a stick-built house is taxed, which, is real property. There are two amendments that have been handed out (Exhibit C). The first amendment deals with an addition, subsection 5, that was requested by the state division of manufactured housing (Manufactured Housing Division, Department of Business and Industry). That is just to ensure that the certificate of ownership or the title of the manufactured home would be provided to the division of the manufactured housing, so that we are ensured there will be no fraudulent acts, that someone trying to sell the home through a title and then using the ownership certificate to sell it again. We wanted to make sure we had a good process in that regard. The second amendment would add a new subsection 6, and would state that the provisions of subsection 5 do not apply to the placement of a manufactured home in area designated by local ordinance to allow the placement without conversion to real property. That is a request from Washoe County, because their county commission has designated, beside mobile home parks, actual mobile home subdivisions. This would not pertain to those areas that are designated by ordinance that are strictly mobile home areas. The original intent of S.B. 323 of the Seventieth Session, was to allow manufactured homes of 5 years or newer to be able to be placed anywhere in the county. And the vision was that they would be mixed with stick-built homes and stick-built types of subdivisions, and not in subdivisions where all you have are mobile homes. This new subsection 6 would allow for that provision.
Senator O’Connell:
Considering the problem Lyon County had, if they wanted to make the manufactured home with a foundation, why would you want to have this new subsection 6 in there, because of what it does to their assessed valuation?
Ms. Walker:
Subsection 6 would only be for those areas that are, by ordinance, designated by the county commissioners to be a manufactured housing or mobile home area. As far as I know, it has only occurred in Washoe County. In Lyon County or other counties, they have not designated a specific area just for mobile homes.
Even if they did have it put on a foundation and the other amenities, they still would not be taxed as a stick-built home.
Ms. Walker:
There was a discussion regarding broadening the bill. What we are trying to accomplish in regards to S.B. 323 of the Seventieth Session, if the homes are 5 years or newer, and follow certain architectural-type designs, then they shall be taxed as real property.
Charles W. Joerg, Lobbyist, Nevada Manufactured Housing Association:
I am representing the Manufactured Housing Association. I agree with Senator Amodei and Ms. Walker, that this is a clean up bill and we thought we had specific language in S.B. 323 of the Seventieth Session. Actually, we believe the language was sufficient, which was supported by two district attorney opinions, one of which was in Washoe County with a concurring opinion by the Carson City district attorney’s office. With respect to the first amendment, this was at the request of Renee Diamond, the administrator of the Manufactured Housing Division, that supports this bill for those homes that are between new and 5 years old for this amendment. The new homes would not have a title to begin with. Ms. Diamond’s concern was that once a home is titled, and if no one surrenders that title, there is a possibility, with some instances which have occurred, you could sell that home as personal property to some unsuspecting buyer, and then turn around and sell it as real property. Ms. Diamond would like to have those titles surrendered to her. This may happen three to five times a year. The other amendment only applies to Washoe County, primarily Sun Valley, where they had areas which were technically referred to as trailer overlays prior to S.B. 323 of the Seventieth Session.
Mr. Weaver:
The assessors are in favor of S.B. 70. We do feel it was very clear what was to be done with the new home or recent model home that has moved into a site-built neighborhood. There was a question how it affected all the other manufactured homes and mobile homes in the community. I think this bill does that with the subsection 6, which does allow. There are zonings in Carson City that call for mobile homes and manufactured homes. I believe this would be in most of the counties. The difference is in Lyon County, if you moved a manufactured home into Lyon County, it must be converted to real property. Right now it is optional, the people can opt for the personal tax depreciation even if they own their own home or if they put it on a permanent foundation. They must apply for it in order to be taxed, at the much higher rate, as real property. In some cases, they cannot get financing unless they do so. It is a question they have to decide for themselves and that is what Washoe County is saying; they do not want to make it mandatory for them to be taxed at the real property rate. The building department would be surrendering the title. We recognized in Carson City that would be a problem; we had already met here to discuss perhaps having a county ordinance that the title be surrendered if the homes were going into a site-built neighborhood. What this will mean, all the building departments in the state will understand they will need to get this receipt for the used home that is being placed in the site-built neighborhood.
Senator Neal:
How would this differ from the selling of the stick-built home?
Senator Amodei:
If these procedures in the amendment were followed, it would not differ from a stick-built house. It would go through a title company because it would already be converted to real property. You would receive the same type of deed as is customary in your area of the state for any real estate transaction.
Senator Neal:
I thought we had done this before?
Senator Amodei:
So did I, but we are here again to make it abundantly clear to those who thought we did not do that before. That is the intent of S.B. 70.
Senator Neal:
We are dealing with a deed here rather than a title?
Senator Amodei:
That is where we want to be, we are going to be dealing with a deed in these scenarios as opposed to a title. If you take the benefits of a deeded neighborhood, you will be treated as deeded property for all purposes.
Senator Neal:
At what point will one of these houses become real property?
Senator Amodei:
When they are sited and given a certificate of occupancy by the local building authority.
Senator Neal:
A type of deed will follow the process that would have to be filed with the recorder’s office.
Madelyn Shipman, Lobbyist, Nevada District Attorneys’ Association, Washoe County:
I am pleased that Mr. Weaver testified that we were not the only ones in the state that had areas that were specifically designated for mobile or manufactured homes. The Sun Valley area is primarily an older mobile home and manufactured home area, and is a designated area to allow mobiles. What they did not want to do, at this point and time, is have a policy decision that stops someone from upgrading, if they wish to upgrade, within that area. That is why we have asked for this subsection 6.
Chairman McGinness:
I close the hearing on S.B.70 and open 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 Coffin, Clark County Senatorial District, No. 3:
I would like to quote that great old Chinese sage, Confucius, who taught that the reform of society begins with what he called the “rectification of names.” In other words, reform begins when we call things by names that describe what they really are and perhaps we can begin to think about them clearly. Unfortunately governed businesses often deliberately cloud issues by coining new euphemisms and inventing new names, so ketchup becomes “vegetable,” lies are “misstatements,” tax increases become “revenue enhancements,” dismissing workers from the jobs becomes “downsizing,” and when bombs go astray and kill civilians it is “collateral damage.” I am proposing to look at particularly unfortunate terms used in our statutes and used by all of us for many years. There is a term that causes confusion, misunderstanding, and resentment, it is the vehicle privilege tax.
A brief history, although you are all veterans of tax, it was instituted by the Legislature in 1963 to replace the personal property tax on vehicles, which had proven to be almost impossible for assessors to administer. The main features of the tax have not changed since that time, except for the supplemental, optional one-cent tax put on in 1991 and by some counties a little later. The tax was usually collected by the Department of Motor Vehicles and Public Safety (DMV/PS), in most cases. The base of the tax is the taxable value, which is 35 percent of the manufacturer’s suggested retail price, adjusted for the age of the vehicle and we all know about the depreciation schedule which is on page 3 of your bill. The rates, the 4 percent basic privilege tax applies to all vehicles; in addition, an optional local tax of 1 percent applies in three other counties: Clark, Churchill, and Washoe. It is a significant tax, one that is easily overlooked until you see the numbers. All together the basic and optional privilege taxes generate about $209 million in revenue, making this one of the largest sources of revenue for local governments and school districts and that is the point of the bill. It is time for this tax to be called for what it really does and that is it provides for local government and schools or for shorthanded local government services.
Senator O’Connell:
In many instances when there is a tax, we ask them, the drafters of the bill, to identify the tax on the bill and change the name of it to government services. Would it not be appropriate to ask the governments to identify the taxes that go into this government service tax?
Senator Coffin:
I think that is an excellent idea. The Department of Motor Vehicles and Public Safety will testify on this bill shortly. Let us find out logistically, if the paper they use to print out the receipts can show it all.
Senator O’Connell:
I get complaints on this, and respond, identifying the taxes and where those taxes are spent. That does not seem to make them any happier about paying the tax, but at least they understand why the tax cannot be lowered, because of the bonding and indebtedness attached. When I saw government services taxes, it seemed like a good time to talk about that.
Senator Coffin:
Yes, I support that and let us see if it is a logistics problem for DMV/PS, or how we can help them work out their problem, if there is one. What you bring up about this whole thing is a systematic problem, because there are reasons for these taxes to be collected. On a legal sense of privileges as defined as a particular benefit or advantage for someone, or extraordinary power, or an exemption, which, people do not receive when they do not own a car. They have a right to own a car, it is not a privilege to own a car, it is a right to own a car. The current name conveys the idea that in return for some substantial payment, the government is granting certain citizens a privilege, the privilege of owning a vehicle. Senate Bill 59 proposes to change the name of the levy from vehicle privilege tax to governmental services tax. It shifts the focus from the supposed privilege that citizens are being granted to the services they are receiving for the money they pay for that car or six cars, licensed, registered, or not. They are entitled to have fire protection, police protection in case of theft, it relates directly to the property, which they are ensuring with their property taxes. They are paying for a policeman to go find their car after it has been stolen. The point of the levy, as originally intended long before 1963, was to pay for local government, schools, fire, police, and everything else government does, regardless of its quality, it has to have the funds. I was told by the Legal Division of the Legislative Counsel Bureau that it does nothing other than change the name.
Senator Rhoads:
I welcome your bill. I have had a lot of phone calls trying to explain to someone why they just paid $180, and it is called a privilege.
Senator Neal:
On page 6, section 17 of S.B. 59, which amends NRS 371.170, “shall” has been stricken out of the passage that reads “No penalty shall be assessed for the delinquent payment of a governmental services tax . . .,” to now read “No penalty may be assessed...”. So the supposition that follows does not do that. It says “After the date the taxes become due, and the vehicle is repossessed on behalf of the legal owner…”, It is saying that a penalty may be assessed.
Senator Coffin:
My best guess answer on this is, and you could verify it with legal counsel, that particular phrase may appear in other bills this session. These are contingent sentences; certain things are contingent upon another.
Senator Neal:
You take out the mandatory language and put it into permissive language that follows with a supposition. “After the date the taxes become due, the vehicle is repossessed on behalf of the legal owner”; the statute says it “shall not be assessed”, but with the change, now it can be. That is more than just a name change.
Senator Coffin:
That is worth researching; and we should look through the bill for more instances. We should ask legal to vet their own work on this.
Chairman McGinness:
As the bill drafters continue, they change their terms of art.
Senator Neal:
If they would change it from “shall” to “must,” I would not have a problem with it, but in this one, it is changed from “shall” to “may” and it is a concern.
Senator Coffin:
You will find in the middle of the next page, section 19 of the bill, you will find a “shall” converted to “must,” but that is because that action is not contingent upon some other occurrence as you see in that section 17. They may be consistent here, we will just have to find and sort that out for you. As a member of this committee, I am determined to get to the bottom of this.
Senator McGinness:
If you could research that and be here when we get the bill back in work session, then you can answer those questions.
Virginia (Ginny) Lewis, Deputy Director, Motor Vehicles, Department of Motor Vehicles and PUBLIC Safety:
(Ms. Lewis presented her written testimony [Exhibit D] and summarized its contents.) The motor vehicle branch supports S.B. 59, which changes the designation of privilege tax to governmental services tax. The focus of our branch is to improve our services to customers as well as the overall image of DMV/PS. A change of name would better educate the public about this tax. The current reference to privilege tax presents confusion and resentment, much as what Senator Coffin has said, from our registration customers. These taxes represent the majority of the cost to register or renew a vehicle registration. The technician at our service windows is unfairly on the receiving end of this frustration. We collect and distribute the privilege and supplemental tax for the state. For fiscal year 2000, we distributed over $164 million in basic privilege tax and over $34 million in supplemental privilege tax. Unfortunately from the customers’ perspective, this equates to a very high cost to register a vehicle. What the public generally does not understand is that the taxes are distributed to the local governments. As a suggestion after meeting with the staff in the department, maybe we could discuss enhancing the name to address and call it local governmental services tax. That designation would clarify that these taxes are collected on behalf of the local county governmental entities. A constituent with comments or questions about the use of those taxes and revenues would know to contact their local government entity.
Senator O’Connell:
How much of a problem would it be for DMV/PS to list all of the taxes?
Ms. Lewis:
My first thought is, how much breakdown would each county have? In my mind, the privilege tax goes to the schools and road projects. If we could limit the amount of designation by each county, I do not think we have a problem. We had thought about including that on the registration receipt, again, because the public does not understand. From our perspective, we are trying anything to educate the public. That is something we were planning on doing to identify the two entities, school districts and road projects, or something that is general. Now, getting into specifics for each county, that might impose a problem. Now you are getting into each county and specific distributions for it. Certainly we could take the one tax and do a generic breakdown that would satisfy every county need.
Senator O’Connell:
I had a complaint from very angry constituents. They had registered their vehicle and were turning in the registration on one car and had purchased a new car. They had $300 left on the old registration and there was no way they could receive a credit for the old registration, or receive a refund. That money was gone and they were very upset. Why can we not credit that money to the new registration?
Ms. Lewis:
Unfortunately, what your constituent was told was incorrect, because we do apply credit from one vehicle. If an individual cancels that registration, that credit remains on the system and can be applied to another vehicle. A bill that was passed out of the 1999 Legislature requires that we refund to customers any unused portion of a registration, which went into effect January 01, 2001. Both of those provisions are in place, and we apologize for any confusion that occurred.
Senator O’Connell:
Can my constituent bring it back and get a credit or refund now?
Ms. Lewis:
If you could get me some information, I will certainly look into that to see if they have reregistered a vehicle, and to see what we can do.
Senator Coffin:
I requested this in the fall of 1999. What I wanted to do is call the tax the education or local government tax. The people in our building insisted you really could not get that specific because of the money that went to the DMV/PS. Even though you have explained it to me privately, I think you could go on the record about your feelings on this. You do get some money, therefore he felt you had to be very careful on how you phrased it, rather than saying “local government,” it had to be “government.” Education and local government services obviously were as close as you could get. Tell me a little about your feeling on why you consider the share of DMV/PS to be a commission, instead of a share of the tax.
Ms. Lewis:
By statute, the department receives a commission for the collection role that we have in this tax. Fiscal year 2000, we collected, as a commission, about $12 million, which is a significant amount of revenue that helps fund our budgets. I believe just a “governmental services tax” still leaves it a very high level. It still has a connotation —it is the state; it is the department. I think some kind of qualifier should be in there to get it back down to the county level. Where this tax really goes is critical, from our perspective, as far as trying to help the motoring public understand what this tax is for. We will always take a hit because we collect it; anything we can do to help educate the public will help minimize the frustration.
Senator O’Connell:
What percent is that commission?
Ms. Lewis:
Six percent.
Senator Coffin:
In counties where the DMV/PS does not collect, in other words the assessors, it is 1 percent.
Ms. Lewis:
That is correct.
Barbara Byington, Assessor’s Office, Douglas County:
Up until a portion of last year, I collected the taxes. The problem being, in the last Legislature, it was decided privilege taxes would no longer be sent directly to the county, they would go into a pot and be distributed, along with other taxes, other than the DMV/PS taxes. To be able to expense those out on each DMV/PS bill, I think would be difficult. In Douglas County, each one of the taxing entities that had a tax distribution, back when they came from property tax and sales tax, each got a portion. That would mean if the people lived in Cave Rock, you would have to tell them part of their taxes were going to Cave Rock, whereas in Clark County, if part of their taxes were going to the City of Henderson, you would have to split that out. Making it an overall government tax is fine. I think you do need to make it clear that 1 percent goes to the state in the counties where the assessors collect and 5 percent goes back to the county for doing that, and then in all other counties 6 percent goes directly to DMV/PS, as an expense, to cover the cost of what DMV/PS is doing.
Chairman McGinness closed the hearing on S.B. 59, and adjourned the meeting at 3:16 p.m.
RESPECTFULLY SUBMITTED:
Rochelle Trotts,
Committee Secretary
APPROVED BY:
Senator Mike McGinness, Chairman
DATE: