Senate Bill No. 123–Committee on Government Affairs

 

(On Behalf of the Interim Study Concerning Distribution
Among Local Governments of Revenue From
State and Local Taxes (NRS 218.53881))

 

February 13, 2001

____________

 

Referred to Committee on Government Affairs

 

SUMMARY—Makes various changes concerning municipal obligations and procedures of debt management commissions. (BDR 30‑699)

 

FISCAL NOTE:            Effect on Local Government: No.

                                    Effect on the State: No.

 

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EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted.

 

AN ACT relating to municipal obligations; requiring a municipality to notify certain entities before incurring general obligation debt or levying a special elective tax under certain circumstances; requiring a debt management commission to resolve conflicts between certain municipalities over the use of any remaining allowable increase of ad valorem taxes and establish certain methods relating thereto; authorizing a debt management commission to establish a procedure for allowing a municipality to reserve a percentage of the remaining allowable increase of ad valorem taxes within a certain geographical area; and providing other matters properly relating thereto.

 

THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN

SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:

 

1-1    Section 1.  Chapter 350 of NRS is hereby amended by adding thereto a

1-2  new section to read as follows:

1-3    1.  If, based upon the factors described in subsection 4 of NRS

1-4  350.004, the approval of a proposal submitted to the commission by a

1-5  municipality pursuant to NRS 350.004 may affect the ability of an entity

1-6  that overlaps the municipality to increase ad valorem taxes because of

1-7  the limitation on ad valorem taxes set forth in NRS 361.453, the

1-8  municipality, before submitting the proposal to the commission, must

1-9  notify in writing each entity that overlaps the municipality whose ability

1-10  to increase ad valorem taxes may be affected by the municipality’s

1-11  proposed increase.

1-12    2.  A notification sent pursuant to subsection 1 must include, without

1-13  limitation, a description of:

2-1    (a) The proposal and the estimated amount the proposal would

2-2  increase ad valorem taxes; and

2-3    (b) The potential effect of the increase on the entity.

2-4    3.  The governing body of an entity that receives a notification

2-5  pursuant to subsection 1 shall, by resolution, approve or object to the

2-6  proposal described in the notice. If the entity approves the proposal, the

2-7  entity must state in the resolution approving the proposal that the entity

2-8  has no intent to levy ad valorem taxes which, if combined with the

2-9  increase proposed in the proposal, would cause the combined property

2-10  tax rate for the area containing the municipality and the entity to exceed

2-11  the limitation on ad valorem taxes set forth in NRS 361.453.

2-12    4.  If an entity objects to a proposal pursuant to subsection 3, the

2-13  municipality which provided notice pursuant to subsection 1 shall

2-14  provide the commission with notification in writing of the objection and

2-15  the entity’s reasons for objecting when submitting the proposal to the

2-16  commission pursuant to NRS 350.004.

2-17    5.  If the commission receives a proposal to which an objection has

2-18  been raised pursuant to subsection 3, the commission shall resolve any

2-19  conflict between the municipality and the entity over the use of the

2-20  remaining allowable increase in ad valorem taxes and determine whether

2-21  to approve, in whole or in part, or reject the increase in ad valorem taxes

2-22  set forth in the proposal.

2-23    6.  If the commission approves an increase in ad valorem taxes for

2-24  the proposal that is less than the amount of increase set forth in the

2-25  proposal, the municipality must revise its proposal to reflect the amount

2-26  of increase approved by the commission.

2-27    7.  The commission:

2-28    (a) Shall establish a method for resolving conflicts over the remaining

2-29  allowable increase of ad valorem taxes between municipalities whose tax-

2-30  levying powers overlap which must be based upon the highest and best

2-31  use for the remaining allowable increase of ad valorem taxes;

2-32    (b) Shall establish a method for determining the highest and best use

2-33  for the remaining allowable increase of ad valorem taxes for

2-34  municipalities which must be based upon a comparison of the public

2-35  needs to be served by the proceeds from the proposed debt or tax levy in a

2-36  proposal submitted pursuant to NRS 350.004 and the public needs to be

2-37  served by other possible debts or tax levies by other municipalities whose

2-38  tax-levying powers overlap; and

2-39    (c) May establish a procedure for allowing a municipality to reserve a

2-40  percentage of the remaining allowable increase of ad valorem taxes for

2-41  use in the future and a procedure for determining whether to grant such

2-42  a reservation. If established, such procedures must:

2-43      (1) Allow all municipalities whose tax-levying powers may be

2-44  affected by such a reservation to enter objections to such a reservation;

2-45  and

2-46      (2) Provide a method for resolving conflicts over the remaining

2-47  allowable increase of ad valorem taxes between municipalities whose tax-

2-48  levying powers overlap, which must be based upon the highest and best

2-49  use for the remaining allowable increase of ad valorem taxes.

3-1    8.  As used in this section, “remaining allowable increase of ad

3-2  valorem taxes” means the difference between the maximum combined

3-3  tax rate allowed for a geographical area pursuant to NRS 361.453 minus

3-4  the total combined tax rate currently levied on that area by all

3-5  municipalities whose tax-levying powers overlap in the area.

3-6    Sec. 2.  NRS 350.001 is hereby amended to read as follows:

3-7    350.001  As used in NRS 350.001 to 350.006, inclusive, and section 1

3-8  of this act, unless the context otherwise requires:

3-9    1.  “Commission” means a debt management commission created

3-10  pursuant to NRS 350.002.

3-11    2.  “General obligation debt” means debt which is legally payable from

3-12  general revenues, as a primary or secondary source of repayment, and is

3-13  backed by the full faith and credit of a governmental entity. The term

3-14  includes debt represented by local government securities issued pursuant to

3-15  this chapter except debt created for medium-term obligations pursuant to

3-16  NRS 350.085 to 350.095, inclusive.

3-17    3.  “Special elective tax” means a tax imposed pursuant to NRS

3-18  354.59817, 354.5982, 387.197, 387.3285 or 387.3287.

3-19    Sec. 3.  NRS 350.004 is hereby amended to read as follows:

3-20    350.004  1.  Before any proposal to incur a general obligation debt or

3-21  levy a special elective tax may be submitted to the electors of a

3-22  municipality, before any issuance of general obligation bonds pursuant to

3-23  subsection 4 of NRS 350.020 or before any other formal action may be

3-24  taken preliminary to the incurrence of any general obligation debt, the

3-25  proposed incurrence or levy must receive the favorable vote of two-thirds

3-26  of the members of the commission of each county in which the

3-27  municipality is situated.

3-28    2.  Before the board of trustees of a district organized or reorganized

3-29  pursuant to chapter 318 of NRS whose population within its boundaries is

3-30  less than 5,000, borrows money or issues securities to evidence such

3-31  borrowing, other than securities representing a general obligation debt, the

3-32  proposed borrowing or issuing of securities must receive the favorable vote

3-33  of a majority of the members of the commission of each county in which

3-34  the district is situated.

3-35    3.  When any municipality other than a general improvement district

3-36  whose population within its boundaries is less than 5,000, issues any

3-37  special obligations, it shall so notify in its annual report the commission of

3-38  each county in which any of its territory is situated.

3-39    4.  The commission shall not approve any proposal submitted to it

3-40  pursuant to this section by a municipality:

3-41    (a) Which, if the proposal is for the financing of a capital improvement,

3-42  is not included in its plan for capital improvement submitted pursuant to

3-43  NRS 350.0035, if such a plan is required to be submitted; [or]

3-44    (b) If, based upon:

3-45      (1) Estimates of the amount of tax revenue from ad valorem taxes

3-46  needed for the special elective tax, or to repay the general obligation debt,

3-47  and the dates that revenue will be needed, as provided by the municipality;

3-48      (2) Estimates of the assessed valuation of the municipality for each of

3-49  the years in which tax revenue is needed, as provided by the municipality;

4-1       (3) The amount of any other required levies of ad valorem taxes, as

4-2  shown on the most recently filed final budgets of each entity authorized to

4-3  levy ad valorem taxes on any property within the municipality submitting

4-4  the proposal; and

4-5       (4) Any other factor the municipality discloses to the
commission,

4-6  the proposal would result in a combined property tax rate in any of the

4-7  overlapping entities within the county which exceeds the limit provided in

4-8  NRS 361.453, unless the proposal also includes an agreement which

4-9  complies with NRS 361.457 and which is approved by the governing

4-10  bodies of all affected municipalities within the area as to how the combined

4-11  property tax rates will be brought into compliance with the statutory

4-12  limitation[.

4-13    5.  If] ; or

4-14    (c) If, based upon the factors listed in subparagraphs (1) to (4),

4-15  inclusive, of paragraph (b), the proposal may affect the ability of an

4-16  overlapping entity to increase ad valorem taxes, unless:

4-17      (1) The proposal includes resolutions approving the proposal

4-18  pursuant to subsection 3 of section 1 of this act from each municipality

4-19  in the area whose ability to levy ad valorem taxes may be affected by the

4-20  commission’s approval of the proposal; or

4-21      (2) The commission has resolved all conflicts between overlapping

4-22  entities and has approved the increase in ad valorem taxes resulting from

4-23  the proposal pursuant to section 1 of this act, and, if necessary pursuant

4-24  to subsection 6 of section 1 of this act, the municipality has revised its

4-25  proposal to reflect the amount of increase in ad valorem taxes approved

4-26  by the commission.

4-27    5.  Except as otherwise provided in subsection 6, if general obligation

4-28  debt is to be incurred more than 36 months after the approval of that debt

4-29  by the commission, the governing body of the municipality shall obtain the

4-30  approval of the executive director of the department of taxation before

4-31  incurring the general obligation debt. The executive director shall approve

4-32  the proposal if, based on the information set forth in paragraph (b) of

4-33  subsection 4 that is accurate as of the date on which the governing body

4-34  submits its request for approval to the executive director:

4-35    (a) Incurrence of the general obligation debt will not result in a

4-36  combined property tax rate in any of the overlapping entities within the

4-37  county which exceeds the limit provided in NRS 361.453; or

4-38    (b) The proposal includes an agreement approved by the governing

4-39  bodies of all affected municipalities within the area as to how the combined

4-40  tax rates will be brought into compliance with the statutory
limitation.

4-41  The approval of the executive director is effective for 18 months. The

4-42  governing body of the municipality may renew that approval for successive

4-43  periods of 18 months by filing an application for renewal with the

4-44  executive director. Such an application must be accompanied by the

4-45  information set forth in paragraph (b) of subsection 4 that is accurate as of

4-46  the date the governing body files the application for renewal.

5-1    6.  The executive director of the department of taxation may not

5-2  approve a proposal pursuant to subsection 5 which, based upon the

5-3  factors listed in subparagraphs (1) to (4), inclusive, of paragraph (b) of

5-4  subsection 4, may affect the ability of an overlapping entity to increase ad

5-5  valorem taxes, unless:

5-6    (a) The proposal includes resolutions approving the proposal

5-7  pursuant to subsection 3 of section 1 of this act from each municipality

5-8  in the area whose ability to levy ad valorem taxes may be affected by the

5-9  commission’s approval of the proposal; or

5-10    (b) The commission has resolved all conflicts between overlapping

5-11  entities and has approved the increase in ad valorem taxes resulting from

5-12  the proposal pursuant to section 1 of this act, and, if necessary pursuant

5-13  to subsection 6 of section 1 of this act, the municipality has revised its

5-14  proposal to reflect the amount of increase in ad valorem taxes approved

5-15  by the commission.

5-16    7.  If the executive director does not approve a proposal submitted to

5-17  him pursuant to subsection 5, the governing body of the municipality may

5-18  appeal his decision to the Nevada tax commission.

5-19    Sec. 4.  NRS 350.0051 is hereby amended to read as follows:

5-20    350.0051  1.  In determining whether to approve , conditionally or

5-21  provisionally approve, or disapprove a proposal to incur debt or to levy a

5-22  special elective tax, the commission shall not, except as otherwise provided

5-23  in paragraph (d)[,] and section 1 of this act, initiate a determination as to

5-24  whether the proposed debt or special elective tax is sought to accomplish a

5-25  public purpose or to satisfy a public need. The commission shall consider,

5-26  but is not limited to, the following criteria:

5-27    (a) If the proposal is to incur debt, the amount of debt outstanding on

5-28  the part of the municipality proposing to incur the debt.

5-29    (b) The effect of the tax levy required for debt service on the proposed

5-30  debt, or of the proposed levy of a special elective tax, upon the ability of

5-31  the municipality proposing to incur the general obligation debt or levy the

5-32  special elective tax and of other municipalities to raise revenue for

5-33  operating purposes.

5-34    (c) The anticipated need for other incurrences of debt or levies of

5-35  special elective taxes by the municipality proposing to incur the debt or

5-36  levy the special elective tax and other municipalities whose tax-levying

5-37  powers overlap, as shown by the county or regional master plan, if any, and

5-38  by other available information.

5-39    (d) If the information set forth in paragraph (b) of subsection 4 of NRS

5-40  350.004 indicates that the proposal would result in a combined property tax

5-41  rate in any of the overlapping entities within the county which exceeds 90

5-42  percent of the limit provided in NRS 361.453:

5-43      (1) The public need to be served by the proceeds from the proposed

5-44  debt or tax levy; and

5-45      (2) A comparison of that public need and other public needs that

5-46  appear on the statements of current and contemplated general obligation

5-47  debt and special elective taxes submitted pursuant to paragraph (a) of

5-48  subsection 1 of NRS 350.0035 that may affect the combined property tax

5-49  rate in any of the overlapping entities within the county.

6-1    2.  If the commission approves the proposal, the amount received from

6-2  the sale of the general obligation debt or from the special elective tax may

6-3  be expended only for the purposes described in the proposal.

6-4    Sec. 5.  1.  The amendatory provisions of this act do not apply to any

6-5  general obligation debt or special elective tax approved by a debt

6-6  management commission created pursuant to NRS 350.002 on or before

6-7  the effective date of this act.

6-8    2.  As used in this section, the terms “general obligation debt” and

6-9  “special elective tax” have the meanings ascribed to them in NRS 350.001.

6-10    Sec. 6.  This act becomes effective upon passage and approval.

 

6-11  H