MINUTES OF THE
SENATE Committee on Taxation
Seventy-First Session
February 22, 2001
The Senate Committee on Taxationwas called to order by Chairman Mike McGinness, at 2:02 p.m., on Thursday, February 22, 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 Randolph J. Townsend
Senator Ann O’Connell
Senator Joseph M. Neal, Jr.
Senator Michael Schneider
COMMITTEE MEMBERS ABSENT:
Senator Bob Coffin (Excused)
GUEST LEGISLATORS PRESENT:
Senator Terry John Care, Clark County Senatorial District No. 7
Assemblyman P. M. “Roy” Neighbors, Esmeralda, Lincoln, Mineral, Nye Counties, Assembly District No. 36
Senator Raymond C. Shaffer, Clark County Senatorial District No. 2
STAFF MEMBERS PRESENT:
Kevin D. Welsh, Deputy Fiscal Analyst
Rochelle Trotts, Committee Secretary
OTHERS PRESENT:
Ed Gobel, Lobbyist, Council of Nevada Veterans Organizations, and President, Lowden Veterans Center and Museum
Ronald Kruse, Master Chief Petty Officer USN-Retired, Nevada Veterans’ Services Commission
Mark Schofield, Assessor, Clark County
Bill Erin, American Merchant Marine Veterans
Ron Gutzman, Department Commander, American Legion
Tim Tetz, American Legion
Frank Perna, Concerned Citizen
Juanita Clark, Charleston Neighborhood Preservation - Veterans in Politics
Carole Vilardo, Lobbyist, President, Nevada Taxpayers Association
Kit Carson Weaver, C.N.A., Assessor, Assessor’s Office, Carson City
Lucille Lusk, Lobbyist, Cochairman, Nevada Concerned Citizens
Chairman McGinness:
Senate Bill 39 has been withdrawn from this agenda by the sponsor and will be addressed at a later date. We have Bill Draft Request (BDR) 32-138 for committee introduction.
BILL DRAFT REQUEST 32-138: Makes various changes relating to tax on transfer of real property. (Later introduced as Senate Bill 238.)
SENATOR TOWNSEND MOVED TO INTRODUCE BDR 32-138.
SENATOR O’CONNELL SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR COFFIN WAS ABSENT FOR THE VOTE.)
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Chairman McGinness:
We will open the hearing on Senate Bill (S.B.) 156.
SENATE BILL 156: Makes various changes concerning exemptions from property and vehicle privilege taxes for veterans. (BDR 32-124)
Chairman McGinness:
The fiscal note is unavailable due to time constraints, however, it will become available at a later date.
Ed Gobel, Lobbyist, Council of Nevada Veterans Organizations, and President, Lowden Veterans Center and Museum:
This resembles Senate Bill (S.B.) 33 of the Seventieth Session.
SENATE BILL 33 OF THE SEVENTIETH SESSION: Makes various changes concerning exemptions from property and vehicle privilege taxes for veterans. (BDR 32-1180)
This is the Forty-eighth anniversary of Senate Bill 182 of the Forty-sixth Session, which established the veterans’ property tax exemption in which to express the gratitude of a grateful state and a grateful nation to those who served in time of war.
SENATE BILL 182 OF THE FORTY-SIXTH SESSION: To provide revenue for the support of the government of the State of Nevada and its political subdivisions; fixing the duties of certain officers; defining certain crimes and providing penalties therefore, and other matters properly connected therewith, and to repeal certain acts in conflict herewith.
It has been 48 years since then, and it has not been increased. This bill increases the veteran’s property tax exemptions by doubling it for all veterans who now receive it. Doubling it for those who were less than 60 percent disabled and doubling the increase for the 60, 80, and 100 percent gradations that are included therein. We ask that in the future a COLA (Cost of Living Allowance) be added, so we do not have to keep coming back. We have provided a handout (Exhibit C), page 2 shows you the price differences since 1953 and how they have changed in the ensuing years to 2001. Since then there was no change in the veterans property tax exemption. Looking at the present value of the property tax exemptions, in 1953 that would be the equivalent of $1600 today for those who currently get the $40 or $50; we are only asking for it to be doubled. Those who have served in time of war have earned these benefits. Nevada has the highest concentration of veterans of any state in the nation by far since before 1990, with the least amount of benefits and services of any state in the nation. The time has come to change that and honor the veterans before they are gone. This will not cost a whole lot of money because in 15 years from now, the way we have treated our veterans in this state, there will be virtually no veterans left who served for a prolonged time in combat, including those who served in World War II, Korea and Vietnam.
Senator Terry John Care, Clark County Senatorial District No. 7:
I introduced the same bill last session, not knowing Senator Shaffer was doing the same with the identical language and numbers. At that time I withdrew my bill and went with Senator Shaffer’s. The overwhelming feeling of equity here and adjustment for equitable purposes is present.
Assemblyman P. M. “Roy” Neighbors, Esmeralda, Lincoln, Mineral, Nye Counties, Assembly District No. 36:
I also represent the Assembly on the Veterans’ Services Commission committee. I have a bill with some differences that I am introducing in the Assembly. In the past if the veterans wanted to, they could take their $40 on their vehicle and send it to the nursing home. It is my understanding that money built up to $30,000 or $40,000 and rolled over into the General Fund because they did not have a use for it. There will be an amendment to hopefully take care of that so the money will stay in there.
Chairman McGinness:
The language on the bottom of page 2, line 47, and proceeds to the top of page 3, addresses waiving the exemption.
Senator O’Connell:
What was the amount and when was it rolled over to the General Fund?
Mr. Gobel:
Veterans Home Account, budget line 101-2561, says $36,920. According to this, they are claiming it was not reverted back to the General Fund.
Senator O’Connell:
How many years ago was this?
Mr. Gobel:
This occurred in 1993, when there was the ability to send your property tax exemption to the license plate fund. According to this state budget on Veterans Home, 2561, they did not do a reversion of funds.
Senator O’Connell:
I want to know how much interest that money should have received over the years. When we talk with Finance about this, we are talking about the correct amount of money.
Mr. Gobel:
There is no mention of interest in the budget, just the carry forward of $36,920. We do not have any idea of the interest level.
Senator O’Connell:
If we know the year that it rolled over, then we can calculate the interest and make sure it gets put back.
Mr. Gobel:
We can get to the committee those figures, from the last three budgets, for the amounts accrued according to the state budget.
Assemblyman Neighbors:
There are almost 200,000 veterans currently in the state of Nevada. I am aware that last time NACO (Nevada Association of Counties) sent a letter to the counties, they asked what would be the effect of this loss of evaluation. Response was split right down the middle. The response was that there is a cost to the counties and they had a concern of the evaluation.
Ron Kruse, Master Chief Petty Officer USN-Retired, Nevada Veterans Services Commission:
Changes we would like to see in this bill include: anything referring to wartime service changed to all veterans; any terms, for example, on page 2, line 27, in the bill that says an “honorable discharge or certificate of satisfactory service” be changed to “discharge other than dishonorable” everywhere it may appear within the text. I am a member of Fleetwood Reserve, the Vietnam Veterans, and VFW Organizations. We correlate our information from the VA (Veterans Administration), which does not cover the amount of retired people. The figures on the handout (Exhibit D), which are broken down in thousands of how many people live in Nevada in comparison to the rest of the United States. These numbers reflect a veteran by himself, but a veteran can be more than one, for example with a family anywhere from two on up. Even though one veteran is registered, it may carry more than one person with it. The Veterans Commission wholeheartedly supports this legislation.
Senator Townsend:
The recommendation of the changes you are presenting in terms of word changes, to the best of my understanding, would substantially increase the eligibility.
Mr. Gobel:
In having negotiated with the counties, with the five counties in or almost in bankruptcy right now, we would like to have supported this measure which would multiply it by fifteen times. Right now approximately 45,000 veterans are getting the property tax exemption either through DMV/PS (Department of Motor Vehicles and Public Safety) or real property in the state. That is why we have suggested, because the counties would oppose it as changed and leave section 1, which defines the various periods of war. That is why we have not suggested the fifteen multiple, although we think all veterans who donned the uniform of the Armed Forces of the United State of America are worthy of it. This was done in 1953 for those who served in time of war. There are approximately 257,000 veterans as of July 1, 2000, in the state of Nevada. We certainly think it is a great idea to give it to all the people but that is not our agreement with the counties to get them not to oppose this property tax exemption. We do not favor this language, although we would certainly like to have it, but given current financial constraints, I do not think we could ever expect the counties to go along with this.
Senator Townsend:
Mr. Kruse has expanded language and Mr. Gobel disagrees because he thinks he has an agreement with the counties that the expanded language would break. Where are you on this, Assemblyman Neighbors? Where are you on your bill? Is this a third version?
Assemblyman Neighbors:
The major difference between my bill and this bill is additional veteran exemptions going from $1000 to $2000. I programmed it over a 2- to 4-year period so the impact is not that great to the counties.
Senator Townsend:
I am trying to get a sense of what the various veteran organizations and representatives, and members of veterans organizations who are here and being represented want. The consensus you have built to try to get the support necessary by the effective parties would give us a chance to help.
Assemblyman Neighbors:
We have had several meetings on this issue and it has been discussed by the Veteran Service Commission. This 1923 exemption, with the numbers showing that information on Exhibit E, it is time we increase that benefit.
Mark Schofield, Assessor, Clark County:
I fully support S.B. 156. There is similar language in the assessors omnibus bill, but more closely relates to what Assemblyman Neighbors was referring to in the inclusion of all veterans. We know the counties would strenuously oppose the inclusion of all veterans regardless of whether they serve in a period of conflict, simply because of the fiscal impact. An inequity we have been dealing with just after the Korean War, what we refer to as the notch veterans, are those veterans who have served, even though the police action in Korea was over. They still served overseas in the service and were honorably discharged, yet were not eligible for the exemption. I receive over two to three phone calls per month relative to the fact that these individuals do not qualify. It is very difficult to explain to them that in order for them to qualify we have to put the period of time in statute. We wish you would consider it. The figures from the 1999/2000 fiscal year, we had on record 42,023 veterans that were eligible and signed up for the veteran exemption in Clark County. Based upon the figure of 257,000 veterans is accurate, then it is safe to assume there is approximately 180,000 veterans in Clark County that would be eligible for this exemption as it currently is crafted into the statute. Clearly, not all those that are eligible have taken advantage of the exemption. Last year out of the 42,000 that signed up for the exemption, 7460 of them did not use it in the 1999/2000 fiscal year. There were 24,202 veterans who elected to use the exemption on their vehicle privilege tax.
I encourage all veterans that enjoy this exemption to apply it to the motor vehicle privilege tax because the tax rate is higher. It is up to $50 off of the motor vehicle privilege tax and up to on an average of $29.37 if you apply it to your real or personal property stick-built or manufactured home. The cost to the county for the motor vehicle is about $1,210,000. If these same numbers of veterans were to apply for DMV/PS, you could expect a fiscal impact of twice that amount if you were to apply the $2000 figure. Spread across the county in the various entities, I do not believe they would have a difficult time absorbing that. There were 9,222 of our veterans that were eligible and applied the exemption to their real property, which cost $270,850. One thousand of our veterans applied it to their manufactured home, which cost $29,370. The grand total cost of the exemptions, minus those individuals that applied to the veteran’s home, which again is another section of the statute that we advocated many years ago; those that applied it to DMV/PS, their real or manufactured home, total cost is $1,510,320. An approximate fiscal impact if all these figures remain the same, a little over $3 million. I cannot recall whether of not the veterans home account was seeded with state money initially. An ironic statistic, we only had 214 of our veterans apply the veteran’s home donation to DMV/PS through the DMV/PS process. They took the money they ordinarily would have applied to their motor vehicle and they essentially said send that to the veteran’s home account. There were 178 veterans who applied it to their real property, but did not take the exemption; they sent that to the veteran home account, and thirteen applied it to their manufactured homes. The current revenue figure for 2000/01 has generated $16,403 to be directed to the veterans home.
Senator Rhoads:
The figures you have given us are all Clark County.
Mr. Schofield:
Yes. It represents approximately 65 percent of the statewide impact.
Bill Erin, American Merchant Marine Veterans:
I would like to talk about the cost-of-living impact from personal experience. I retired to Nevada in 1983, am now 82 years old and in that period my income has not increased. The cost of a breakfast at a nearby casino then was 79 cents and now is up to $1.75, prime rib was $2.95 and now is up to $6.95. Another impact on veterans in Nevada occurred through the VA (Veterans’ Administration) clinic. I went to the VA clinic to get a prescription, which is much cheaper, but requires an annual checkup in order to issue the prescription. Last fall when I went, my checkup showed some difficulties and I had to return. I received a bill for the clinic for over $150. I inquired about the bill and was told that Congress made some adjustments and now it would cost me $50.58 for each visit to the VA clinic to where in the past, it was free. I told the clinic I could do the same thing with my local doctor through Medicare and it would be free. I then realized if I went to my local doctor to get my prescriptions the cost of the prescriptions at the local pharmacy would be much more than at the VA clinic. I try and balance whether it is worth paying for the VA visits versus the local doctor; free, but paying much more for the prescriptions. These kinds of scenarios are impacting thousand of veterans in Nevada.
Ron Gutzman, Department Commander, American Legion:
We lean to include all veterans. We feel a veteran is a veteran and it is pretty hard to say which veteran deserves something more than another. The bill looks good and we support it as it is.
Tim Tetz, American Legion:
On behalf of the American Legion, I echo the sentiments of our commander in supporting this bill as written. We understand there are other bills with other interest, whether to phase this over a number of years or whether this needs to include all veterans. Our sentiment is to try to include all veterans, but first and foremost we need to push on this as it has been pushed in past sessions and finally get this passed for the veterans.
Frank Perna, Concerned Citizen:
I propose S.B. 156 be adopted. I would think the economic impact of including all veterans would be onerous on the northern counties. It should stick with the active duty dates as written in this bill. Suppose we had a veteran who does not own real estate and who owns an older car with no privilege tax to be paid. Under this bill they would not get anything because they can only apply it two ways. If there is a low-income veteran, he should be able to get a voucher and get the money that way.
Juanita Clark, Charleston Neighborhood Preservation – Veterans in Politics:
I wanted to make sure the affirmation of the people during your roll call here in Las Vegas expressed support for this bill. I would like to restate there was not a change for section 1, page 2, line 27, “a discharge other than honorable discharge.” I feel strongly that it is important to keep the bill as is and to pass as soon as possible. Every day, every hour is important to each of us and especially for a veteran as stated in section 1, lines 1 through 8.
Senator Raymond C. Shaffer, Clark County Senatorial District No. 2:
I am in support of this bill. I sponsored this bill for the veterans and am a veteran myself. We need some money for the veterans home in southern Nevada and believe this will generate additional funds for veterans throughout the state.
Carole Vilardo, Lobbyist, President, Nevada Taxpayers Association:
With the exceptions of exemptions dealing with personal property, we have normally relied on the fact of the judgment of the committees not to grant exemptions or expand them. Because collectively, when you look, all you really do is cause a shortage of revenue someplace. Ultimately, in the long run, somebody else is going to have to make up the exemption. The bill deals with three types of exemptions; the first exemption is an individual exemption and we have asked for those to be means tested. This exemption being raised from $1000 to $2000, which appears to be a sizeable increase of everybody applied at $100, which you would get on motor vehicle registration. It is extensive. Before considering increasing this exemption, there is a matter of equity. You want to include those notch veterans that have been discussed. At the very least, there is no means test to it, it is not fair to have a notch group in there that is not covered. Another one to address is the exemption relative to the personal property of post and veterans homes. It is ironic that the personal real property which normally appreciates, at least from the purpose of the land, has a full exemption but the personal property is only granted a $5000 exemption. You have personal property that actually gets depreciated, and I do not think there should be a limit, it should be treated the way real property is. Section 501 (c) (3) of the Internal Revenue Code allows them, the other exemption, under the charitable provision.
Chairman McGinness:
I would like to recognize Assemblyman Neighbors as being in World War II, a top-notch veteran, and a jet pilot in Korea. Mr. Welsh notified me the fiscal request went out to Department of Taxation, DMV/PS, the local assessors, and NACO. We will be getting that information soon. We will close the hearing on Senate Bill 156 and open the hearing on S.J.R. 11 of the Seventieth Session.
SENATE JOINT RESOLUTION 11 OF THE SEVENTIETH SESSION: Proposes to amend Nevada Constitution to authorize abatement of property tax for certain owners of single-family residences. (BDR C-1435)
Senator O’Connell:
Senate Joint Resolution 11 of the Seventieth Session provided abatement to property tax for a single-family owner with severe economic hardships. Article 10, section 1 of the Nevada Constitution requires that there be an equal assessment of taxation on property. Subsection 8 of section 1 allows the Legislature to define charitable purpose in order to give an exemption on property tax. Should the Legislature decide to pass S.J.R. 11 of the Seventieth Session, then this measure would go on to the voters for a third time. The Legislature will then have control of the issue, because it would come back to the Legislature to tailor the exemption by spelling out this specific criteria for an economic hardship and put it into the law. Currently, the assessors do not have a mechanism to address these hardship cases and the requested law is not aimed at any particular population. A young family, as well as seniors, could find themselves in need of this assistance. There have been several cases from constituents who needed the help and the assessor was in a jackpot, but did not have anything by law that actually allowed them to give assistance. This would set up something in the law and have it applied uniformly, if homeowners can meet the criteria. The Legislature will determine whether or not it is a hit by the criteria that is set up.
Kit Carson Weaver, C.N.A., Assessor, Assessor’s Office, Carson City:
When we are assessing property, we have no control over the value or the amount of taxes that are due because of that value. The only thing that has been given to us, is the ability to waive penalties under these same types of hardship situations; an inability to pay, a hospital stay, et cetera.
Chairman McGinness:
Can you give us an example of how this might be used?
Mr. Weaver:
Absolutely a means testing. We have a senior citizens’ tax rebate program right now that works very well. We have thousands of people statewide that bring in their income records for the prior year and when the income does not meet a certain threshold, they get a percentage of their taxes refunded to them. The fact they do not have the income to pay the taxes because they are strapped financially, this I would imagine would apply to them.
Chairman McGinness:
The means testing would be something the Legislature has said, Legislature may provide by law, those means testing would be described in future legislation.
Senator O’Connell:
If it were to pass the voters, we could accommodate whatever criteria we thought would be necessary. One of the cases that brought this to my attention, to give you an example, we had an elderly woman who had lost her husband (died), who was literally dying of cancer and the county had set up a special district. The special district was going to assess the individual taxpayers so much for putting in sidewalks and curbing, et cetera. The woman simply did not have any funds to pay for that and she was going to lose her home over this. The doctor had told her son if she were to be moved, it could cause a stressful situation that would shorten her life. It was a dilemma for the assessor to try and help in this situation, so the woman was not literally thrown out of her home. She was in a position that she had no means whatsoever; paying the assessment was going to be done by the neighborhood.
Mr. Schofield:
What Senator O’Connell was referring to are special improvement districts and are collected by the respective treasurers in the various entities. In Clark County, we are dealing with five different entities that have special improvement districts. I am very familiar with the situation the Senator cited because I did speak to that individual. People are under the mistaken impression that the assessors are responsible for the special improvement district assessment and we are not. I wanted to clarify that and also indicate that I wholeheartedly support this resolution, this constitutional amendment. The last thing that we as assessors want to see is someone lose their home because of the inability to pay property taxes or the inability to pay the special improvement district assessment. I suggest when this does come back to the Legislature, to add into the statute that deals with special improvement districts language that would provide relief for those types of situations.
Ms. Vilardo:
This resolution was first introduced and passed by the Senate in 1991. It was defeated in the Assembly. One of the issues at that time was raising the property tax, given how much we had raised the sales tax from the original tax shift. With the economy going down, we had some very serious potential hardship situations on property tax. Including Lake Tahoe, we had people testify they bought homes 30 and 40 years ago, when they were at very low value. By nature by having stayed in the home so long, being retired on Social Security income, they could not take the hits on that property tax without selling their homes. That is a severe economic hardship. The bill was originally crafted in this language, so it would be a legislative authority, so you could create means testing. In fact, you could address this situation specific to a county without having it apply statewide. Those situations that occur, like Eureka, which is dependent on mining, close the mines, have most everyone out of work and do not have the ability to pay those taxes. It is much cheaper to do this kind of abatement than see people who have the ability to have a home suddenly become street people, people living in their cars, go on welfare or receive rent assistance.
Chairman McGinness:
We will close the hearing on S.J.R 11 of the Seventieth Session and open the hearing on S.J.R. 20 of the Seventieth Session.
SENATE JOINT RESOLUTION 20 OF THE SEVENTIETH SESSION: Proposes to amend Nevada Constitution to provide requirements for enactment of property and sales tax exemptions. (BDR C-709)
Senator O’Connell:
This bill is intended to set forth the criteria for enacting exemptions from property or sales tax. Currently, we do not have a uniform way of qualifying tax exemptions, nor do we have a law that defines charitable donations. This resolution requires a review of the exemptions at least once every 6 years, which is probably the most important part of this resolution.
Chairman McGinness:
Senate Joint Resolution 20 of the Seventieth Session passed the last session of the Legislature and if it passes this session in the same form, it will then go on the ballot in 2002 for a vote of the people. Same applies to S.J.R. 11.
Lucille Lusk, Lobbyist, Cochairman, Nevada Concerned Citizens:
How would S.J.R. 20 of the Seventieth Session affect existing exemptions and the increases that you consider in existing exemptions? Initially, I thought there would be little or no impact on existing exemptions, but, as Senator O’Connell mentioned, there is considerable discussion of review. Under the provisions written in this bill, as I understand them, virtually no exemption would qualify, because all six criteria have to be met, it is an “and,” not an “or.” Page 1, lines 12 through 15 of the bill would always come into play and seems the veterans exemption would not qualify. Virtually none of the exemptions that now exist or that you are currently considering would qualify. There should be a corollary-balancing test to consider the material adverse impact on the citizen that is required to pay the tax. If this were to pass, it would shut down the enactment of exemptions. If the effect is to apply these same criteria to existing exemptions, as you go through the review process, you would be in the process of shutting down exemptions, almost regardless of the merit of the exemption because one of the criteria that has to be met is that there is no material adverse impact on government.
Senator O’Connell:
The “material adverse effect” would mean limiting the ability to pay for something. Did we ever define material?
Kevin D. Welsh, Deputy Fiscal Analyst, Fiscal Analysis Division, Legislative Counsel Bureau:
I can get the drafters’ notes and see what thoughts they had in terms of the definition of that. When we go back to come up with the definition of material, it is going to be legislative intent that is going to determine how that is defined for this bill.
Senator O’Connell:
I thought it had to be something that would prevent them from meeting some commitment they already had.
I think you have to read the full effect of the language in order to get the force of what it means. Along with the ”material adverse effect”, which is the modifier of the qualifying language that follows in the last sentence “…that otherwise receive revenues from the tax from which the exemption would be granted”. If you start with the material adverse effect you are going to miss the full import of that particular statement. The language is there to make a judgment as to where the exemption is coming from, whether or not those monies would materially affect something else.
Ms. Lusk:
I understand it says “material adverse effect on the finances of….the government that would otherwise receive revenue…” Material has been discussed many times and I do not know if it has a legal definition, apparently not, as Mr. Welsh indicated. In the discussion you had with the discussion of the veterans’ exemption, it was discussed that be a material effect. Unless you choose to define it as the inability to pay for obligations already undertaken, a loss of money always affects the inability to pay for something. That is why we want money on either side whether it is for government or for citizens.
Senator Neal:
You cannot read it in a futuristic sense. You have to look at it in terms of the time in which you are considering the exemption.
Ms. Lusk:
I understand, but this is to affect the entire future, that is the goal. If the committee would see fit to clarify the effect on existing exemptions or increases that would be appreciated. I agree with the review on a periodic basis and would think the Legislature could, without needing to pass a constitutional change. In the event you decide not to move this or the voters do not approve it, I would hope you would perceive to do that by legislative enactment.
Ms. Vilardo:
I passed out a memo (Exhibit F) authored by Guy Hobbs and myself. This amounts to 77 exemptions between sales tax and property tax in statute. The 253 committee (established via S.B. 253 of the Sixty-ninth Session), during the 1998 period, had a working group that included the assessors, on exemptions to try to figure out what we could do and what the parameters were.
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)
The more exemptions you put in, the more you erode the base, the more somebody is left on paying the taxes and is going to pay a higher rate. We found one, when we went through every sales and property tax, exemption on private theatres that was put into the law in 1955 on property tax. As we can figure out, nobody ever used it, but the records are not that definitive that far back. The original suggestion that went before the legislative members was to work over the next couple of years systematically taking every exemption, looking at the history of the exemption and seeing if it should be modified, sunsetted, or done away with. In the discussion with the full legislative committee during 1998, legal counsel was brought into the discussion as to what you could or could not do. The original discussion was to run a bill, legal counsel advised the full legislative committee, if it is your intent to be able to get a handle and do systematic reviews and try to set up some criteria when you are considering these new exemptions, you are going to have a problem with the statute because any future session of the Legislature can come in and change this statute. If there is absolutely the desire to create some mechanisms, to force a dialogue on these issues for each exemption, so everyone is aware of what we are dealing with and how to evaluate them. This has been a major concern for my association because it is very nice politically to come in and say we can do this for a group or a person. The intent was not to eliminate exemptions it was to get some consistency and criteria. When an exemption was no longer needed, get it off the books to keep statutes clean.
Ms. Lusk:
In looking at the material Ms. Vilardo provided (Exhibit F), the balancing test that I mentioned is referenced on page 2, under “A Number of Questions Can Arise Regarding Tax Exemptions,” the last bullet point is, “Do the benefits of the exemptions outweigh the costs?” It seems to me that the language that I previously brought to your attention, again reminding you the language is an “and,” it is not an “or,” there is no balancing test that says we will weigh one against the other. It says every one of these criteria must be met. I could not be in more agreement with the intention that Ms. Vilardo has articulated and the intention in the bill. It has often been the case in dealing with bills at the Legislature and sometimes constitutional proposals, you agree with the intent but the devil is in the details. Unfortunately, there are a lot of little devils in dealing with these details. The language I pointed out cannot reasonably be concluded to mean only the inability to existing obligations because item d deals with that. Paragraph (d) of section 6, subsection 1, deals with, if you “determine the exemption will not impair adversely the ability to… pay all interest obligations…”, et cetera. From a logical prospective those two items seem to address two different things and both criteria have to be met. If this bill will have those kinds of effects, that it appears to me, or if in fact it can be interpreted that they will, then it will be necessary for some citizens to oppose it on the basis of the potential loss of charitable exemptions.
Senator Neal:
I do not have a problem with the standards and that is what they are. It says to me, that if this is passed and these standards (paragraphs (a) through (e) of section 6, subsection 1 of the bill) are in effect, this is what you have to consider if you are going to act upon an exemption. If it does not meet that, then the exemption is not put into law. Assuming you did have an exemption and you passed it and subsequently the exemption did not meet these standards, then what happens? Does it terminate the exemption?
Senator O’Connell:
I believe that was the intent, as with what Ms. Vilardo has stated with the theatre. If circumstances change and they do not meet the intent, then it is gone.
Chairman McGinness:
We will close the hearing on S.J.R. 20 of the Seventieth Session. Is there any opposition to S.B. 59?
SENATE BILL 59: Changes designation of privilege taxes on motor vehicles to governmental services taxes. (BDR 32-39)
SENATOR NEAL MOVED TO DO PASS S.B. 59.
SENATOR O’CONNELL SECONDED THE MOTION.
THE MOTION CARRIED. (SENATORS COFFIN, RHOADS, AND SCHNEIDER WERE ABSENT FOR THE VOTE.)
*****
Chairman McGinness:
Senate Bill 64, which came from the 253 committee (S.B. 253 of the Sixty-ninth Session), would allow people with property taxes in excess of $10,000 to pay them quarterly instead of at one time.
SENATE BILL 64: Authorizes payment of taxes assessed upon personal property under certain circumstances. (BDR 32-889)
SENATOR O’CONNELL MOVED TO DO PASS S.B. 64.
SENATOR TOWNSEND SECONDED THE MOTION.
THE MOTION CARRIED. (SENATORS COFFIN, RHOADS, AND SCHNEIDER WERE ABSENT FOR THE VOTE.)
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Chairman McGinness:
Senate Bill 70 amends Senator Amodei’s manufactured homes bill from last session.
SENATE BILL 70: Revises provisions governing classification of manufactured homes as real property. (BDR 32-337)
The amendments are in your folder and say additions to S.B. 70. The first amendment talks about a manufactured home being placed as real property; the owner would have to submit the certificate of ownership. The second amendment talks about exempting the area in Washoe County that they have determined to be a manufactured home overlay. The amendment also changes subsection 6 to subsection 7. There was no opposition to the bill. Everyone, including the Nevada Manufactured Association and Washoe County, was in favor of the amendment.
SENATOR O’CONNELL MOVED TO AMEND AND DO PASS S.B. 70.
SENATOR TOWNSEND SECONDED THE MOTION.
THE MOTION CARRIED. (SENATORS COFFIN, RHOADS, AND SCHNEIDER WERE ABSENT FOR THE VOTE.)
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Chairman McGinness adjourned the meeting at 3:32 p.m.
RESPECTFULLY SUBMITTED:
Rochelle Trotts,
Committee Secretary
APPROVED BY:
Senator Mike McGinness, Chairman
DATE: