MINUTES OF THE
SENATE Committee on Taxation
Seventy-First Session
March 27, 2001
The Senate Committee on Taxationwas called to order by Chairman Mike McGinness, at 2:00 p.m., on Tuesday, March 27, 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 Bob Coffin
Senator Michael Schneider
GUEST LEGISLATORS PRESENT:
Senator Bill R. O’Donnell, Clark County Senatorial District No. 5
STAFF MEMBERS PRESENT:
Kevin D. Welsh, Deputy Fiscal Analyst
Rochelle Trotts, Committee Secretary
OTHERS PRESENT:
Matthew Wallace, Colonel, Commander, Nevada Wing, Civil Air Patrol
Jack Schofield, Major, Government Relations Advisor, Nevada Wing, Civil Air Patrol
Carole Vilardo, Lobbyist, Nevada Taxpayers Association
Mark Schofield, Assessor, Clark County
Kit Carson Weaver, Assessor, Carson City
Robert McGowan, Assessor, Washoe County
Janelle L. Kraft, Lobbyist, City of Las Vegas
Robert E. Campbell, Lobbyist, The Walters Group
Thomas J. Grady, Lobbyist, Nevada League of Cities and Municipalities
Chairman McGinness:
We will open the hearing on Senate Bill (S.B.) 389.
SENATE BILL 389: Revises provision concerning amount paid to Civil Air Patrol account. (BDR 32-1157)
Matthew Wallace, Colonel, Commander, Nevada Wing, Civil Air Patrol:
The handout, Nevada Wing, Civil Air Patrol (Exhibit C), explains what we are doing and why we are here today. The Civil Air Patrol has received state funding for many years. The last increase was in 1989 when it was increased from $45,000 to $85,000. Looking at a Consumer Price Index (CPI) roll-up over that period of time it would be, in today’s dollars, about $125,000. In addition our youth programs have particularly grown from 95 cadets in those days to about 265 cadets today. These young people receive leadership training and receive orientation flights. We have a golden opportunity; the U.S. Air Force Academy is willing to donate to us two gliders for soaring. We want to establish a glider program for the cadets in the north, at Minden, which is one of the finest glider soaring areas in the world, and one in the south at Jean. We are proud to tell you, last year we were credited by the Air Force with saving eight lives in Nevada and we do this through our volunteers who are unpaid, donate all their time, money, and equipment; well over a million dollars in volunteer time. What we would like to do is come up to speed with the funding we think we deserve for the service we provide for the state, a CPI catch-up. We encourage your support.
Senator Rhoads:
Are you statewide?
Colonel Wallace:
Yes. We have nine aircraft stationed throughout the state and a few more units which do not have aircraft. We have three aircraft in the south, one at Henderson, two at North Las Vegas. The other six airplanes are up here; essentially, Reno has two, the others are at Elko and Yerington. One of our squadrons is the South Lake Tahoe squadron, even though it is in California.
Senator Rhoads:
How many rural areas have a squadron?
Colonel Wallace:
We have 13 squadrons, they are in Ely, Yerington, Elko, Truckee, California, and we are establishing a new one in Fallon.
Jack Schofield, Major, Government Relations Advisor, Nevada Wing, Civil Air Patrol:
The Civil Air Patrol has done such an outstanding job of saving lives on search and rescue. Primarily, I have been interested in the cadet program with students from ages 12 to 18 who come into the program. It prepares them for the academies. The kids learn protocol and discipline and how to wear the uniform. It is another side of the Boy Scout program only in the CAP (Civil Air Patrol). It would help us a great deal to get this augmentation of money because of the amount of sorties we fly regularly.
Senator O’Connell:
How exactly is the money distributed to the CAP funding? I do not know if this comes out of the counties’ budgets.
Colonel Wallace:
The money comes from the state aviation fuel tax.
Carole Vilardo, Lobbyist, Nevada Taxpayers Association:
The money is a specifically appropriated amount that would be in the appropriations bill that is from the jet fuel tax and the aviation, the gas fuel tax. It was set to that amount in the most recent change when we changed and made the fuel tax a county option. It is a state revenue source.
Senator O’Connell:
Does the money go to the General Fund or go to the state?
Ms. Vilardo:
It is specifically identified by statute, that portion of the money which is collected goes to the Civil Air Patrol. I believe it winds up in the appropriation bill, or at least at one point it used to, because they were allowed to expend it.
Senator O’Connell:
Will the appropriation bill be part of the Governor’s budget?
Ms. Vilardo:
Yes.
Senator O’Connell:
It says nothing about it being a part of the budget on the front of the bill, and it does not say anything about a two-thirds majority vote.
Ms. Vilardo:
It used to be part of the appropriations bill; that may have changed. It may be just because we have it in statute, it is automatically taken out. I would have to look at this year’s budget to see if it still holds.
Senator Townsend:
Senator O’Connell is correct. However, I think what they have now done, because it has an effect on local government, is that portion we allowed local government to have authority over is the way they rebated, so it comes out of the 1 percent allowed. I do not know how many aircraft, personnel or expenses you have in Clark County from the original $85,000 allocated. If it is one-third of that then I would presume because of the way it is being listed there is no effect on the state budget. But, there is an effect on a local budget that would come directly out of that portion of the jet fuel tax we allow to be a county option. Otherwise, it would have been listed as part of the state budget because there is a $45,000 difference that either is not voted on or part of the effect on the state budget. It either says it is in the appropriation or it is not in the appropriations and this does not affect it, as it has to come out of that 1 percent.
Ms. Vilardo:
When we changed it to a local option, the fuel tax is still remitted to the state so it, in effect, withheld the amount of money in the aggregate that went to the Civil Air Patrol. Then it was remitted to those levying counties the portion which they were levying, but I do not think the Civil Air Patrol has any obligation to spend it in the same proportion with any of the squadrons they have throughout the state.
Senator O’Connell:
I am interested in whose budget we are going to impact.
Kevin D. Welsh, Deputy Fiscal Analyst:
The “gas” is gasoline, it is not jet fuel. The aviation gas tax is collected at the airport and after the amount of money is appropriated to the Civil Air Patrol, the remaining is divided among the counties proportionally and goes back for airport maintenance. It is local government revenue, it does not impact the state at all.
Senator O’Connell:
I realize it does not affect the state, but I am wondering who is going to be impacted. It is the local counties’ budget that is going to be impacted?
Mr. Welsh:
Local airport maintenance will be impacted.
Senator Coffin:
The volume of money is so great, what this would do is subtract $45,000 from that gross amount. It does not come out of the General Fund. It is one of those paragraphs you added to the appropriation act, if I am not mistaken, which does not include all General Fund items.
Senator Rhoads:
Do you get federal funding also?
Colonel Wallace:
Yes, we do. The airplanes we own, and we own eight airplanes, Cessna 182s, worth about $100,000 apiece. We have a brand new Cessna206 worth about $200,000, which was given to us by the U.S. Air Force. The reason we earned that ninth and newest airplane is because the amount of work we have done in lifesaving search and rescue. If there is a search and rescue operation, the U.S. Air Force rescue and recovery center funds that operation. They will say there is an airplane missing, all available Civil Air Patrol airplanes, which includes not only the ones I mentioned to you, but we also have about 50 member-owned airplanes, will go out and fly the missions and the U.S. Air Force will reimburse for those missions. That is where our Air Force funding comes from and we also get a considerable amount of money from the United States Customs Service for flying missions for them. When we do those types of things, they are funded by the customers who refer them, customers being the Air Force or another government agency.
Senator Bill R. O’Donnell, Clark County Senatorial District No. 5:
The Civil Air Patrol has not had an increase in quite some time and I think it is overdue for the amount of volunteerism they perform for the state. We appreciate them from the state’s perspective. I appreciate them, being a pilot and knowing if I have a mechanical problem and happen to put the aircraft down someplace, I know these guys will come looking. The one saving grace we have for all pilots is knowing they will find you; it might take some time, but they will always continue to search for you.
Colonel Wallace:
We have also found hunters and we have delivered blood products around the state to save lives. The $85,000 runs out every year, right now, because over the 12-year period of time it is not the same amount of money. Before coming to this meeting, I spoke with my finance officer and he said we have $4 in the bank account, so now we cannot do any training until the first of October.
Senator O’Donnell:
If you want to increase the amount of money, we would appreciate that as well.
Chairman McGinness:
We were talking about the financing prior to your arrival and I think we have figured out this comes off of the top of the local fuel tax on aviation gas. In section 1, subsection 1 of S.B. 389, it says, “not to exceed $130,000 or the total amount in the account, whichever is less.” Is that to account for the time the fund may come up short and they were not able to reach that $130,000 threshold?
Senator O’Donnell:
I think that is the jet fuel account, if you have no money in the jet fuel account, you cannot spend $130,000.
Senator O’Connell:
It should be effective on passage and approval instead of waiting until July.
Senator O’Donnell:
We did not get the information about their financial situation until just now.
Chairman McGinness:
We will close the hearing on S.B. 389 and open the hearing on S.B. 376.
SENATE BILL 376: Makes various changes relating to taxation. (BDR 32-187)
Mark Schofield, Assessor, Clark County:
We are pleased to present to you today the 2001 County Assessors Association omnibus bill. As you are well aware, we come before you each and every session with corrective measures to make the laws more user-friendly and to make them easier on taxpayers. We have two major deletions in the bill that I think will save you a lot of time and we have two minor amendments to the bill. Section 1 will be discussed in section 27 of the bill (S.B. 376) and is an accounting procedure simplifying something we have to do which creates an administrative nightmare for the assessors as it relates to overages and shortages. Sections 2 and 3 we will deal with again in section 27.
Kit Carson Weaver, Assessor, Carson City:
Throughout chapter 361 of Nevada Revised Statutes (NRS) there is reference to “mobile home” and we have had a district attorney’s opinion that mobile homes are not sold anymore, they are called “manufactured housing.” You will see many places where the words “manufactured home” have been added where it originally just said “mobile home”; we have left mobile home in there and added manufactured home. Section 5 refers to the definition of manufactured home as in NRS 489.113.
Mr. Schofield:
We would request you omit section 6 from the bill, delete it entirely from the bill. This language represents to be a noble cause on the regional transportation commission’s part, it allowed for a reduction in business personal property tax, based upon the amount of bus passes employers provided their employees. Originally it was supposed to affect only Clark County, Washoe County, and Carson City, but upon discovery of what the worst-case scenario, fiscal impact would be, a member of the RTC (Regional Transportation Commission) in Clark County approached me and thanked the association for allowing them to tag onto our bill, however, they felt out of deference to the fiscal impact to the school districts and the local governments. It probably would be a good idea to revisit this the next session to give them some more time to tout the idea. The major premise behind this bill was to alleviate some of the pollution those communities are experiencing by encouraging employees to take the buses rather than their own vehicles. So at this time, we would respectfully request you omit section 6 from your bill.
Section 7 (S.B. 376) further clarifies the Senior Citizens Property Tax Assistance Act and would enable us to prorate the amount of assistance given to a senior if the senior lived in a home part of the time and then sold the home and moved into a rented dwelling, whether it be a manufactured home or an apartment. Section 8 already exists in statute, however, if it is rewritten to have a global impact on the various boards of equalization, both the county boards and the State Board of Equalization, it requires a letter of authorization to be presented to the assessor upon the appeal if the individual representing the property owner has no interest in the property, and it assures us the property owners are aware their assessment is being appealed.
Mr. Weaver:
Section 9 is another reference to manufactured housing as it is added to the several sections in chapter 361 of NRS.
Mr. Schofield:
Section 10 (S.B. 376) is a result of a Nevada Supreme Court settlement which emanated from a lawsuit filed by a company in Clark County against the Clark County Assessor related to time-shares. A part of that settlement to settle the case altogether was to allow time-shares owned by the time-share owners to prorate those time-shares, as opposed to assessing them for a full year if they rent out those time-shares. There are some counties in the state doing that currently. What this does is put into law and treat the time-share of personal property just as you would household goods. If you own your home, the furniture in your home would not be assessed, this has also been approved by the Nevada Tax Commission. It went before them and the settlement was approved by them as well.
Section 11 deals with surviving spouses, it changed the term “widow” to “surviving spouse” so it would encompass all individuals, male or female, who would be eligible upon the death of their spouses for the surviving-spouse exemption. The Department of Taxation provided a fiscal impact which was approximately $69,000, however, that amount represented only the amount that would be applied towards property tax, real and personal, but did not include motor vehicle privilege tax. I was trying to gather the information as it related to the impact for those to whom the motor vehicle privilege tax for that particular exemption would apply. My best estimate statewide would be between $169,000 and $185,000 for the Department of Motor Vehicles and Public Safety (DMV/PS), for property it is $67,945. I used the same factors the Department of Taxation used to calculate the property tax, I used the same factors as it related to the DMV/PS. Section 12, we request you omit this portion of the bill. This portion of the bill deals with the veteran’s exemption and essentially what we were attempting to do is allow all veterans regardless of the time they served to be eligible for the veteran’s exemption. It did not provide for an increase in the amount allotted towards the veteran’s exemption, but it did incorporate all veterans regardless of the time they served. We wish to delete that section primarily because you have two bills, one of which you have heard and the other one is in the Assembly now, dealing with the same subject and we would prefer to avoid the redundancy.
Mr. Schofield:
Section 13 deals with the surviving spouse; and at this point, I would suggest an amendment. It was an oversight on our part when we wrote this language, we took it to the Legislative Counsel Bureau (LCB) and we failed to include the surviving-spouse exemption for the motor vehicle privilege tax with DMV/PS in NRS 371.101. We would have to change the term “widows” to “surviving spouses,” we would request that as an amendment. Section 14 is basically clean-up, it is a change we made the last session but failed to go in and make it to the other part of the statute it applied to, we changed NRS 361.157, we did not however change NRS 361.159, which deals with possessory interest, all of it is conforming language.
Section 15, the RTC language, was deleted. Section 16 of S.B. 376, essentially, requires us to mandate legal descriptions be provided to us on all documents related to the transfer of property. We currently do it now. All we are doing is embedding it into the law because we have several people who question why we will not change the name on property records when there is no law indicating we can refuse it if they did not provide an adequate legal description. This language is to protect the taxpayers and those who deal with the transfer of property.
Mr. Weaver:
Sections 17, 18, and a portion of 19 deal with adding manufactured housing to the language with mobile homes. There are also two other changes, one in subsection 1 of section 17 requiring the running gear to be removed; that does not happen anymore, you do not leave the running gear with the manufactured home when it is placed. The running gear is removed by the installer. Also, it is very difficult to verify because a lot of times, the older mobile homes and manufactured homes are being converted to real property. The building department had to find out if the running gear had been removed. After opening up all of the skirting, there could be all kinds of things down there and may not have included the running gear. So that part is being taken out; it is not required to be proven or verified the running gear has been removed. The other part is in subsection 3 of section 17 of S.B. 376, and deals with security interest. The assessor was to receive documentation the security interest had been removed and had been agreed to in writing by the lender. Now we have taken it out and put back in there it has to be converted to real property. The conversion takes place with the Manufactured Housing Division, so they will determine if the security interests have been taken care of.
Mr. Schofield:
On page 12, line 18, this language deals with the standards we use for the appraisal of land. We use sales, however, the sales we use by Nevada Administrative Code (NAC) are cut off 18 months in arrears of the actual start of the fiscal year in which they will be billed. What we are asking you to do is push that up an additional 6 months to give us a more accurate database with which we can value land. Section 20 deals with the letter of authorization for the appeal I spoke about earlier.
Section 21 (S.B. 376) is something some counties require, but in Clark County and Washoe County it would be an absolute must to administrate the appeal process. What we require now is for the taxpayers, before they receive the appeal form, provide us with the parcel number of the subject property they wish to appeal. It is a tracking mechanism we use to tell us how many appeals are out and how many have not come back in yet, otherwise we could be put in a situation where someone called and wanted 150 appeals, we would have no way to prepare for them because we do not know which properties they represent.
Section 22 is now in section 8, the letter of authorization and the language I indicated to you earlier was already in the statute; subsection 2 requires the parcel numbers. Section 23 is payment under protest, which was discussed in S.B. 253 of the Sixty-ninth Session, how we make the process for payment under protest a little bit easier on the taxpayer. Currently, they are required to file three letters, in triplicate, indicating they wish to pay under protest which is an element of the appeal process they must go through to maintain their remedy in court. Rather than requiring them to file three separate letters, we are only requiring them to file one. We are also changing the term “county treasurer” to “tax receiver.” On line 30 is a clarification put in by the LCB. Section 24, we are changing “county treasurer” to “tax receiver.”
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 18-193)
Mr. Weaver:
Section 25 is in reference to manufactured housing, “manufactured home” being added to the mobile home language.
Mr. Schofield:
Section 26 (S.B. 376) is clarification and language with the exception of lines 45 and 46, which is another clean-up measure that escaped the last bill we presented. We changed the $3 penalty, actually eliminated it, but we failed to do it in this particular section of the statute. Currently, in Clark County, I have to sign hundreds of documents a year which refund taxpayers overpayments of their property taxes. Many of these refunds constitute cents, 3 cents, 10 cents, sometimes it is dollars but nonetheless the smaller amounts cost us more to produce those refunds to administrate this process than the actual refund provided to the taxpayer. What we are asking you to do, in section 27, is do the same thing we do with personal property as it relates to the average cost of collecting property taxes. There is a de minimis amount, which is currently $15, that we use. If the bill is $15 or less we do not bill the property. If it is a manufactured home we send them a letter and decal stating there is no property tax due which was approved by two sessions of the Legislature and by the Nevada Tax Commission.
We are asking this same logic be applied to people who underpay and overpay their taxes. I am astounded at the people who do overpay and underpay, a lot of people overpay because they do not like the few cents they may receive. In order to balance their checkbook, they use whole numbers and hence the reason for the cents we have to refund. Section 28 (S.B. 376), we are adding a grace period very similar to what the respective county treasurers have on their quarterly payments, they have a 10-day grace period before the taxes actually become delinquent. We believe the 10 days will eliminate a lot of paperwork for us in that we have a lot of people coming to us requesting a waiver of the penalty because they have rather legitimate excuses. We think this additional 10 days may eliminate a lot of that. On line 47 is a clarification inserted by the LCB.
Mr. Weaver:
The language in section 28, page 18, of S.B. 376, was requested by the Washoe County treasurer’s office and deals with excess proceeds from a sale in the real property section. It is used quite often so when the county has to sell property for delinquent taxes and there is an overage, it can go back to the owner of the property who was unable to pay his taxes. This section, on page 18, deals with personal property, right now when there is a spirited bidding for a mobile home or aircraft, the excess proceeds are returned to the state as unclaimed properties. So, this would allow the treasurer to try to find the owner and try to refund or return some of the excess proceeds from the sale, to the previous owner.
Mr. Schofield:
Section 29 deals with what Mr. Weaver indicated, the excess proceeds. Section 30 refers to section 7 of this bill, dealing with senior citizens, home ownership versus rental and incorporating both, and prorating based upon the facts. Section 31, again conforming language of surviving spouse appears there again. Section 32 basically requires anyone who conveys any property or has any document related to the conveyance of property provide a tax mailing address upon recordation of the document. This language will help county treasurers more than it would help the assessors. What we are hoping this will do is prevent a lot of delinquencies. We are actually requiring them to give us the address they wish to have the tax bill sent to. A lot of people come in to complain because they state, “That is not the address I wanted it sent to.” This requires, upon recording the document, they provide the tax mailing address. We have spoken to our county recorder and she is accepting this with the caveat, if there is a problem or any way that we can help her, if it creates a problem as it relates to workflow, we will assist her.
Robert McGowan, Assessor, Washoe County:
The recorder was not sure it would get us to where we would go if you have a stack of deeds ready for them to give to the office and consequently do not have a man’s tax address. The person there may not have that. The idea of telling people who have waited to come in they would have to go back and get it and come back again, bothered the recorder. Consequently, the recorders were not so much concerned about the added work, they were more worried about the idea that perhaps this would not get us where we want to be. Chances are the person would put, “Send tax bill in care of whoever is there at that time,” so as long as there is no truth in the point they are putting down their question, “Is it going to help us?” I think it will because I do not think everybody comes out to lie to us. “Consequently, I would think it will work for us and will help other counties. Again, this an item the treasurer’s office would be more involved with than our (assessor’s) office.” So far, we have not had trouble in Washoe County with this. We utilize either the mailing list or the situs list or where we send the recorded deed or where they send the recorded deed. I do not think the work flow is a big headache, otherwise, I am sure it would have been discussed. But, I do know I just do not want to say it is fully agreed upon, the recorder did not come today and did worry whether this would get us where we want to go.
Mr. Weaver:
The vast majority of the documents being recorded today do have that information. It has always been requested for the recorded document to say where to mail the original document when it is recorded. We use it as a mailing address. In some cases it was an attorney or a tax person, it was not a person who was paying the taxes in the future. Now, it is very common; and current documents have, when recorded, “Mail this document to . . .” and so on. It is not going to be work for the recorder, except to tell the title companies they need to have two addresses if there are two places: one, to send the document; and two, where to send the tax bill in the future.
Mr. Schofield:
Section 33 of S.B. 376 is the same thing we did in the 1997 Legislature through Assembly Bill 644, requiring state agencies to provide us sensitive confidential information with the requirement or stipulation. We maintain that confidentiality as it relates to that information. It could be income, power hook‑up information, or many things to assist us in the field. We also require the building departments or the respective governing agencies in the various municipalities in the counties, to provide building permits to us in a reasonable period of time. Essentially, this language provides for the recorder to have the documents related to the conveyance of real property or the creation of new parcels reconfiguring real property to us within 7 days, and a duplicate copy, and access to any digital instrument, and any digital supporting documents.
ASSEMBLY BILL 644 OF THE SIXTY-NINTH SESSION: Makes various changes concerning property taxes and county assessors. (BDR 32-1287)
Mr. Schofield:
We have discussed this with our county recorder along with several county recorders throughout the state. Initially, we had a 5-day requirement, and there was a recorder who was very concerned about that time period. They felt it could not be met, so we extended it to 7 days. To my knowledge, that time was acceptable and appears in many sections throughout S.B. 376. I have not heard of any opposition to this language whatsoever, and it conforms with the 1997 legislation as it relates to building permits and other required sensitive information in order to do an adequate job in assessing property, which appears in sections 35 through 42. These are all sections of the statutes dealing with the recording of documents.
The recorders’ offices are very crucial to all of the assessors’ offices. They are the genesis of everything we do, change of ownership, creation of new parcels; everything dealing with property begins in the recorder’s office. It is transferred to the respective assessor’s office throughout the state, and we transfer that data to the treasurer’s office, which creates the billing; it is a very important office to us. Section 43 of S.B. 376 deals with accepting documents reconfiguring property boundaries. Essentially, the law requires compliance with the Division of State Lands statutes, and the rule of thumb is: you cannot split a parcel or create a new parcel unless you have done a survey, which is to protect the taxpayer. What we are doing is embedding that into the statute, and forbidding ourselves from accepting a plat map or any type of subdivision map without compliance with chapter 278 of NRS, also in order to protect the taxpayers. Sections 44 and 45 also deal with the recorder’s language.
Mr. Weaver:
Sections 45 through 58 of S.B. 376 deal with what is known as the head tax or the livestock tax, which is a tax on each animal in Nevada. All these years the assessors have been collecting this money for the State Department of Agriculture and have been turning it in to them. A few years ago the department agreed it would be better if they collected the money because they were dealing with these people on a yearly basis. In Douglas County, Lyon County, and Carson City, this past year they have done the billing and the collecting of livestock tax. Sections 45 to 58 (S.B. 376) address turning over the responsibility for the livestock tax to the State Department of Agriculture. Section 49 adds a person to the livestock committee, which meets every year to review the lists of livestock and compare notes to account for everybody.
Mr. Schofield:
We have discussed this with the State Department of Agriculture. People there indicated they could take this over, but they needed time, hence the reason for a 2002 implementation date. This, as a favor to the department of agriculture because they do not have the resources to collect the money and we are not responsible for the collection, we are only responsible for billing. I get numerous checks to transfer to the agriculture department that have expletives written across them relating to the collection of this tax. Of course, we are not responsible for this tax, we are collecting it for another agency and when we changed the amount to a minimum of $5, many people with horses received a $5 tax bill who had never received a tax bill before. There was controlled outrage within the livestock community as it relates to this particular assessment, so we wish to get this out of our administrative domain; we have enough to contend with.
Mr. McGowan:
Many years ago, the Washoe County assessor got rid of collecting taxes, moving the responsibility to the county treasurer’s office.
Mr. Schofield:
Section 59 of S.B. 376 also deals with the recorder’s language.
Mr. Weaver:
Section 60 shows NRS 575.100 is hereby repealed, as shown on page 33, which would complete that section on transferring responsibility to the State Department of Agriculture.
Amendment No. 123 (Exhibit D) is a result of concern about the word “situs” as it applies to property and the language we have submitted and wish to submit now says, “All personal property,” of whatever nature, “that is owned by a person who is not a resident of this state; and located in this state solely for the purposes of a display, exhibition, convention, carnival, fair or circus that is transient in nature,” is exempt from taxation under NRS 361.186. This is personal property only, this would be for circuses and would be for farmers’ markets, carnivals, et cetera, because if it is going to be there for weeks or months, we would have some type of responsibility to collect taxes. We are suggesting if it is solely for temporary display, exhibit or amusement purposes, it would not be taxable.
Senator Townsend:
I am reading this to include exemption. There are many entertainment venues throughout the state with contracts anywhere from a week to 10 years in which many of these personal property items would be affected. Is it your intent to capture those as exempt, because many of these shows appear for a long period of time that are not based here, but sign long-term contracts?
Mr. Schofield:
Those particular examples would have to be decided on a case-by-case basis. In each case, for example, you can have a roving exhibit that may or may not be on-site in Clark County for 6 or more months. Would this language affect that? Yes, it would. Production shows and things of that nature are long-term. Anything over a year would be reviewed by the district attorney, which we do now. For example, the Russian art exhibit at the Rio Suites Hotel and Casino a couple of years ago, it was deemed that property was exempt because it was owned by the country of Russia. After thinking about this, then what about all of the equipment brought in by vendors at the Comdex convention, what about the Consumer Electronics Show (CES), what about art museums and rotating art, what about carnivals and the circus? It is impossible to capture all those things. There is no assessor in this state with the resources, and anything over a year is what this language is meant to address. It is something to be discussed with the district attorney and the exhibitors as to the tour intent. Certainly, anything over 2 years definitely would become taxable, but anything over a year, I would immediately refer to the district attorney for an interpretation. There are varying circumstances surrounding these exhibits. For example, exhibits coming to various counties that are essentially household goods. I have a district attorney’s opinion which says, “Regardless of what is done with that household good, once it is a household good, it is a household good, and the exemption remains in effect for that household good regardless of its use. Even if it is used to exhibit and someone charges admission, it is still a household good.” These things are very complicated, and because of previous deliberations related to fine art exemptions and the complications surrounding it, people are very sensitive about this, therefore, this language is for clarification.
Senator Neal:
Where in the statute do we define temporary display?
Mr. Schofield:
There is no definition for temporary and that is the dilemma. We had conversations with the LCB regarding “Where do you stop?” Whether you use the word “temporary” or you use the word “impermanent,” or you use the word “situs,” where do you draw the line? This is why we frequently ask the district attorney for opinions which turn into exhaustive research as they relate to ownership of the property, the vesting of the property, where it came from, was it exempt in the jurisdiction it came from, was it paying taxes in the jurisdiction it came from. I have been advised to define temporary could pose problems down the road.
Mr. McGowan:
One worry we have would be the time you have to increase the staff in the assessor’s office way beyond what local budgets could afford to do, and for little amounts of money. In our case, the outdoor stage at the Hilton used to get taken down, but stays assembled there now, and we will have to refer to the district attorney’s office. We have all used 6 months or less as a rule of thumb, but it would be nice to see something where we are covered. Now, if somebody wanted to make case, we may be exposed.
Senator Neal:
Why are you asking to put this in the statute if it does not add clarification?
Mr. Schofield:
It does clarify something. The statute, NRS 361.505, provides for assessing any property located within any county where the assessor feels the property may not be there at the beginning of the following fiscal year. The amendment is further defining property assessment. There are some exceptions as it relates to personal property, and the exhibits would be exceptions. For example, you own art, you are a corporation, you are a resident of the state of Nevada, you elect to exhibit the corporation’s art, and charge admission. There is already a statute providing for exemption of that art if you meet certain criteria. If you did not meet the criteria and you were a resident and you owned the art, the art would be taxable.
Senator Neal:
You presently have the authority to tax property present within the fiscal year, and you would not tax the property if it were not there the following fiscal year. Is that what you are saying?
Mr. Schofield:
No. I will give another example. The building cranes brought into Clark County are considered migratory property. If they do not pay taxes in their resident jurisdiction, then they pay Nevada taxes, on a prorated basis, based upon the amount of time they are in Clark County. That is a for-profit company using the crane as part of their business. The company is not paying taxes in another jurisdiction, or only paying a portion of the tax, whereby we pick up the remaining amount. Let us cite a carnival, for example. A carnival could locate in Clark County for 15 days. Technically, the migratory property statute indicates we should pick up their equipment if they are not paying taxes in other jurisdictions. There is no humanly possible way any assessor’s office in this state can do that administratively, and this language covers such situations. However, if you own the carnival, live in this state and are a resident, you would pay taxes in some county, probably your home county. Since there is reciprocity between the counties, you would only pay taxes in the county where you reside.
Senator Neal:
Your fiscal year is July 1 to June 30. How come temporary display could not be for 1 year?
Mr. Schofield:
It could be, again, temporary is defined. If you wish to define “temporary,” it is certainly within your purview and certainly acceptable to us. We provided this language only as a starting point. When this language is presented to the lawyers in the Legislative Counsel Bureau, they can refine it any way they wish. But this language clearly spells out the intent, and you may modify it in any way you see fit.
Senator Neal:
What do you mean by all personal property of whatever nature?
Mr. Schofield:
It is property solely for temporary display, exhibit or amusement purposes.
Senator Neal:
Whatever nature modifies all personal properties, so what are we talking about?
Mr. Schofield:
All business personal property that would ordinarily be business personal property, such as office equipment, carnival rides, things of that nature.
Senator Neal:
Are we talking about anything we cannot foresee at the present time?
Mr. Schofield:
Not to my knowledge, we have tried to capture everything within this language. But, as with all law, there is always after the fact. If this created a crisis for us or for you, we could modify it the following session. Again, this is just a starting point. It would have to be reviewed by the Legislative Counsel Bureau for any caveats we have not captured in this language to be incorporated into the new language provided.
Senator Neal:
Just a couple years ago, we had the art tax exemption which did not cover personal property because we specifically named the art. Is that why this would not apply?
Mr. Schofield:
The exemption passed by the previous legislature dealing with art, the owner of the art was also a resident. In that particular case, the owners had to meet very stringent criteria in order to avail themselves of not only a personal property tax exemption, but a sales tax exemption as well.
Senator Neal:
Let us look at an individual who purchased art and put it on display, would he come under this?
Mr. Schofield:
Would the individual be a resident of the state?
Senator Neal:
He is not a resident of this state.
Mr. Schofield:
If they are not residents of the state, they purchased art and decide to bring that art here for display, yes, they would fall under that. If they are residents of the state, they would have to meet the criteria in the language passed a session ago relating to fine art.
Senator Neal:
What if they subsequently sell the art? What happens?
Mr. Schofield:
That is a discussion you would have to have with the Department of Taxation; our area of expertise is not sales tax.
Ms. Vilardo:
One point on the bill is, we have consistently asked for widows to be removed, because it is an exemption. However, if you are not going to remove widows, at least include “surviving spouses.” Another point is on page 17, subsection 3, section 27, of S.B. 376, about the overpayment of taxes for personal property. There is a 6-month time frame where a request for refund should be made. What stands out is any interest on money that might accrue to this account, would accrue only to the county general fund when, in effect, the total rate of the property tax, whatever was a de minimis amount not put through, would have a proportion to county, city, school district, and state. To make it easier, that money should be held on a fiscal-year basis to be returned to the entities if any money has accumulated because of de minimis amounts that have not been returned.
Senator Neal:
What if personal property is brought in on a contract with a resident for display or exhibit or for amusement purposes. How would that affect this exemption?
Mr. Schofield:
If it was brought in from out of state by an out-of-state resident who contracted with an in-state resident to exhibit the property, the way it is currently written, it would be affected. This particular language would essentially exempt it over a period of time.
Senator Neal:
Can you contract for a specific period of time to qualify as a temporary display?
Mr. Schofield:
If this particular language passed, I would have to take it to my district attorney, unless you can clarify it within the LCB.
Chairman McGinness:
We will close the hearing on S.B. 376. We have a few bills for a work session, if we could consider them. Let us go to S.B. 82, which is the golf course bill.
SENATE BILL 82: Establishes circumstances under which certain golf courses located on property of local government are exempt from taxation. (BDR 32-766)
Senator O’Connell:
As I remember, Mr. Leavitt said the city did not have a position on the bill as far as giving or not giving the exemption.
Janelle Kraft, Lobbyist, City of Las Vegas:
Our counsel determined taxes are being paid by the Desert Pines Golf Course that we have in the city. The taxes are almost equal to what we would lose if the other golf course was required to pay property taxes, therefore, they did not take a position on the bill. Right now the lease agreement with Angel Park Golf Club requires the city to reduce the amount of lease payments by any property taxes Angel Park Golf Club pays. Desert Pines Golf Course has no such provision in its lease agreement. Due to the redevelopment of that area, and improvements to surrounding lands resulting from construction of the Desert Pines Golf Course, the lease agreements almost offset each other.
Senator O’Connell:
It is not going to be affected by the other two golf courses? I know we have the Angel Park Golf Club that does not pay the tax. Is it two or three that we have besides Desert Pines Golf Course?
Robert E. Campbell, Lobbyist, The Walters Group:
To my knowledge the only additional course affected by this bill would be Desert Pines Golf Course.
Senator O’Connell:
Mr. Schofield, I know your goal is to do all or none.
Mr. Schofield:
If this bill were to pass it would affect Desert Rose Golf Course, which is in the county, Desert Pines Golf Course which is in the city, the municipal golf course also in the city, and a golf course in Boulder City; a total of four additional golf courses.
Senator O’Connell:
Would this address the concern you have as the assessor.
Mr. Schofield:
Our issue, as it relates to this particular statute, is one of equity. We, in no way, shape, or form, are attempting to remove anyone’s exempt status. But we are trying to promote equity as it relates to the treatment of properties similarly situated. I know some arguments have been advanced about various nuances to all the contracts; that is not our interest. The contract negotiation takes place between the entity involved and the operator of the golf course; our interest is only upholding Article 10 of the Nevada Constitution.
SENATOR RHOADS MOVED TO DO PASS S.B. 82.
SENATOR TOWNSEND SECONDED THE MOTION.
THE MOTION CARRIED. (SENATORS NEAL AND SCHNEIDER VOTED NO.)
*****
Chairman McGinness:
Let us look at S.B 124. This bill came out of the “253 committee” (Senate Bill 253 of the Sixty-ninth Session) and would eliminate the middle person.
SENATE BILL 124: Requires allocation and remittance of money collected from certain taxes to be made directly to incorporated cities. (BDR 32-894)
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)
Chairman McGinness:
There is a note from Sweinseid & Stern (Exhibit E), with highlighted language. They indicated if this language were placed in this bill, it would address a problem Elko County has because of a bond. They felt if the money went directly to the city, then the county would not have their money. There was no opposition to the bill. Also, on the final page of the memo (Exhibit E), the provisions of this act do not apply to contracts in effect as of the effective date of this act. So, what would happen at the end of the bond with this language, is the motion would be to amend and do pass.
SENATOR TOWNSEND MOVED TO AMEND AND DO PASS S.B. 124 TO INCLUDE LANGUAGE SUGGESTED IN EXHIBIT E.
SENATOR RHOADS SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
*****
Let us look at S.B. 203. This language was set up to assist the regional juvenile facility put together by Churchill, Lyon, and Douglas Counties, and Carson City. There was no opposition and no amendments proposed for the bill.
SENATE BILL 203: Makes various changes relating to ad valorem taxes to pay for operation of regional facilities. (BDR 31-890)
SENATOR TOWNSEND MOVED TO DO PASS S.B. 203.
SENATOR COFFIN SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
*****
Chairman McGinness:
Let us look at Senate Joint Resolution 20 (S.J.R.) of the Seventieth Session. Senator O’Connell brought this bill. There were a couple of questions on the bill after the hearing, and the questions were answered, so there was no opposition to the measure.
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 MOVED TO DO PASS S.J.R. 20 OF THE SEVENTIETH SESSION.
SENATOR TOWNSEND SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
*****
Chairman McGinness:
Let us look at S.B. 222, this bill came from the City of Reno.
SENATE BILL 222: Authorizes Nevada tax commission to exchange with certain local governmental entities information concerning businesses that are subject to business tax. (BDR 32-618)
SENATOR RHOADS MOVED TO DO PASS S.B. 222.
SENATOR TOWNSEND SECONDED THE MOTION.
Senator Coffin:
The only question I have is the possibility of the sharing of information in a willing fashion. I want to know what the penalties are, since we could have what has been essentially, at this point, pretty confidential information at every local government level. Do we have the same penalties attached to the local government person as attached to a state employee?
Thomas J. Grady, Lobbyist, Nevada League of Cities and Municipalities:
The cities have the authorization to do an audit the same way the state would do an audit when looking at the sales tax. We would be looking at the figures to set business licenses. We would not be sharing any information we could not acquire ourselves. What it would eliminate is duplication of audit; where the state would audit for sales tax, and we would turn around and audit the same figures for a business license.
Senator Coffin:
What kind of penalties do you have on staff, in the local government statutes, about the sharing of proprietary information with anybody other than someone who has a need to know?
Mr. Grady:
I do not know if there is a specific statute we would follow other than what is in the state statute. There would be the right for termination if this information was given to the general public; it is for the payment of the business license fee only.
THE MOTION CARRIED. (SENATORS NEAL AND MCGINNESS VOTED NO.)
*****
Chairman McGinness:
We are not meeting on Thursday, March 29, 2001, meeting adjourned at 4:00 p.m.
RESPECTFULLY SUBMITTED:
Rochelle Trotts,
Committee Secretary
APPROVED BY:
Senator Mike McGinness, Chairman
DATE: