MINUTES OF THE
SENATE Committee on Taxation
Seventy-second Session
April 29, 2003
The Senate Committee on Taxation was called to order by Chairman Mike McGinness, at 1:43 p.m., on Tuesday, April 29, 2003, 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 Sandra J. Tiffany
Senator Joseph Neal
Senator Bob Coffin
GUEST LEGISLATORS PRESENT:
Assemblyman Peter (Pete) J. Goicoechea, Assembly District No. 35
Assemblyman John C. Carpenter, Assembly District No. 33
Assemblyman John W. Marvel, Assembly District No. 32
STAFF MEMBERS PRESENT:
Rick Combs, Fiscal Analyst
Mavis Scarff, Committee Manager
Gale Maynard, Committee Secretary
OTHERS PRESENT:
Shaun Carey, City Manager, City of Sparks
Michael Alonso, Lobbyist, Harrah’s Entertainment, Incorporated
Dino DiCianno, Deputy Executive Director, Department of Taxation
Dave Dawley, Assessor, Carson City
Gaylyn J. Spriggs, Lobbyist, Nevada Taxpayers Association
Chairman McGinness:
We call this meeting of Senate Taxation to order and open the hearing with Assembly Bill (A.B.) 208.
ASSEMBLY BILL 208 (1st Reprint): Authorizes imposition of sales and use tax in certain counties for operation and maintenance of county swimming pool. (BDR 32-805)
Assemblyman Peter (Pete) J. Goicoechea, Assembly District No. 35:
I am here in support of A.B. 208. This bill allows White Pine County to impose an additional $0.25 on sales tax presently at 6.75 percent. This increase will take the current tax to 7 percent. Seven percent of the quarter-cent sales tax will be used for the maintenance and operation of our county swimming pool. This ballot question went to the voters November 6, 2002, and passed 54/43 percent. It is a good bill and should generate $180,000 on an annual basis.
Chairman McGinness:
The county commission would have to pass an ordinance in order to do this, correct?
Assemblyman Goicoechea:
The ballot question reads, “Shall White Pine County request the Nevada Legislature authorize … ,” therefore, I believe they do not have to pass an ordinance.
Senator O’Connell:
Can you give us any information about the first swimming pool in White Pine County? Do you think it would be necessary to have the bill require we take another look at this in a few years?
Assemblyman Goicoechea:
The original pool constructed in the late 1950s was utilized quite a bit, but unfortunately it cracked and this was the reason they raised the pool ballot question. I do not believe White Pine County, at the time, had the funds to tear the pool out and rebuild, therefore they pursued the ballot. I think White Pine County is becoming more and more of a tourist destination community and this is why the voters approved the swimming pool.
Senator O’Connell:
Would there be any problem looking at language to require us to review the sales tax again? Are you planning to use the tax after the pool is built for pool maintenance, or is this tax forever?
Assemblyman Goicoechea:
The sales tax is for maintenance and operation, not for the construction of the pool. Grant funding will cover the actual construction of the pool. This tax money would be strictly for pool operation and maintenance and would generate about $180,000.
Senator Rhoads:
Are there any other counties under 15,000 residents the bill would affect?
Assemblyman Goicoechea:
I do not believe so. Assembly Bill 208 was specific to White Pine County.
Senator Rhoads:
What about Lincoln and Esmeralda Counties?
Assemblyman Goicoechea:
Lincoln and Esmeralda Counties are outside the population parameter of 9000 to 15,000.
Senator Rhoads:
On page 2, it says population of less than 15,000.
Chairman McGinness:
This committee indicates that any county below a population of 15,000 can do this, but they would have to go to the voters. White Pine County has already gone to the voters and if you look on page 2, line 11, the commissioners would have to enact an ordinance in order to support the operation and maintenance of a county pool. There is going to be another opportunity for the people to express their opinion; at least before the commission vote.
Assemblyman Goicoechea:
I read the bill text “may enact” as being enabling rather than mandatory, but if these are the wishes of the committee, I do not think White Pine County would have any problem with a public hearing process to enact the ordinance. Assembly Bill 208 as crafted would include a number of counties such as Lincoln, Lander, Eureka, and Esmeralda.
Senator Neal:
How many pools are we talking about maintaining?
Assemblyman Goicoechea:
We are talking one pool.
Senator Neal:
There is only one pool?
Assemblyman Goicoechea:
Yes, but again, the sales tax in White Pine County is at 0.25 cents and only creates $180,000. I am very familiar with the facilities in Eureka and we put almost $380,000 per year into maintenance.
Senator Neal:
How would the money be used besides operations? How many employees would you have?
Assemblyman Goicoechea:
When open to the public, normal staffing would require at least two lifeguards, a supervisor, and possibly a basket person.
Senator Neal:
Will there be any other charges other than what we would receive from taxes?
Assemblyman Goicoechea:
I am sure there would be an admission fee charged for pool use by the school district or some other local government entity.
Senator Neal:
Do you have any idea how much the admission fee would be?
Assemblyman Goicoechea:
Though I have no idea what White Pine County would charge for the admission fee, I do know the Eureka area has monthly dollar admissions and annual passes.
Senator Coffin:
On page 3, section 4, lines 34 and 35 of the bill, you have language not relating to swimming pools. There is mention of the maintenance of a public transit system. Was this in the initial printing of the bill or is this something new?
Assemblyman Goicoechea:
This was not in the White Pine County request.
Senator Coffin:
How did it get there?
Assemblyman Goicoechea:
I assume it is some housekeeping by the Legislative Counsel Bureau.
Senator Coffin:
The Legislative Counsel Bureau puts maintenance of a public transit system in a swimming pool bill without the consent of the sponsor?
Assemblyman Goicoechea:
I was never asked about it Senator Coffin.
Senator Coffin:
Was the maintenance of public transit system in the amendment or the original bill?
Assemblyman Goicoechea:
It had to be offered as an amendment on the Assembly side.
Senator Coffin:
It was put in the amendment?
Assemblyman Goicoechea:
Yes. The only amendment I was aware of established the affectivity at July 1, 2003.
Senator Coffin:
This raises my curiosity. Does this have general application?
Chairman McGinness:
I believe Mr. Combs can address this issue.
Rick Combs, Fiscal Anayist:
Senator Coffin, lines 39 through 42 of section 4 make an exception to the section for the swimming pool tax. With this exception, in the previous lines, the Legal Division felt it necessary to identify the other taxes for which the exception would not apply and that includes the public transit tax already in place. This has to do with the contract between the State and the county in regard to collection of the taxes and whether or not an amendment is necessarily dependent on voter approval of an adoption of a new tax. It is a technical change that has been made necessary by the addition of the optional swimming pool tax to the provision.
Senator Coffin:
Is the exception to be imposed on all counties for the installation of a swimming pool in White Pine County?
Mr. Combs:
The exception would be for all counties that imposed a tax for a swimming pool and only applies when this tax is imposed. If a county did not have the authority to impose a tax, obviously this provision would not apply to them.
Chairman McGinness:
Is there anyone else to testify on A.B. 208? We will close the hearing on this bill and open the hearing on Assembly Bill 205.
ASSEMBLY BILL 205: Increases tax on rental of transient lodging within City of Sparks to pay certain costs related to promotion of tourism. (BDR S-256)
Assemblyman John W. Marvel, Assembly District No. 32:
I am here in support of A.B. 205, which is the City of Sparks’ answer to the problem created over the hill. A lot of work has been done putting this bill together with the consensus of the hotel and motel owners in Sparks, the Sparks City Council, the Reno-Sparks Convention and Visitors Authority (RSCVA), and the Nevada Resort Association (NRA).
Today in the audience we have the Ascuaga family, members of the NRA, Shaun Carey who is the city manager for Sparks, and Michael Alonso who is representing Harrah’s Entertainment, Incorporated. We have a broad spectrum of support for this bill.
Shaun Carey, City Manager, City of Sparks:
I will walk you through this PowerPoint presentation to emphasize the importance of this bill to our community and all of northern Nevada.
The City of Sparks is trying to meet the challenge of the coming century. We are doing this in cooperation with Reno, Washoe County, the RSCVA, and all of our businesses. In northern Nevada, we face some challenges. Our region in Nevada must confront these challenges, and we believe we are well on the way to doing this.
Our visitors’ count in northern Nevada has actually fallen and we are concerned about this trend. Indian gaming has been talked about and certainly the spread of gaming devices in other states is something we must overcome in northern Nevada.
Reno-Sparks gaming has fallen behind Las Vegas over the last 15 years and we believe we need to take advantage of our current position and move forward with some projects to reverse this trend. Our gaming revenues are down and our hotel occupancy is down or very flat. We feel the coming challenges must be met by a unified regional game plan.
What we can show you is a graphical representation (Exhibit C) of how Nevada and Washoe County have faired with gaming employment. We are firmly committed to the RSCVA game plan which we believe is well thought out. It includes input from all of the stakeholders in Reno, Sparks, and Lake Tahoe, and allows us to meet the challenges facing us today.
We have a beautiful, diverse geographic center and this center provides an ample opportunity to make northern Nevada America’s adventure place. We think the theme Reno-Tahoe and America’s Adventure Place will allow us to reverse those numbers and trends.
We need to add new venues and through prior legislative actions northern Nevada has responded very positively. We have completed an expansion to our convention center and the City of Reno, working with the RSCVA, is getting ready to start an additional convention venue in downtown Reno that is very important to our economy.
We need to build our visitor count by adding unique and dynamic casino environments, retail, and entertainment venues. We must have a variety of activities in addition to gaming to keep people coming and taking advantage of our community. The number one activity desired by visitors besides the gaming is in the retail area.
Expanding the value to the visitor is what we are trying to do. If the casinos can get visitors to stay a half day or another day more, it would have a very robust effect in all areas of our economy.
One project we want to add to the Nevada game plan is Victorian Square. This has been a well-thought-out project in our community of Sparks for a number of years. Centered in downtown Sparks, Victorian Square is the heart or the living room of Sparks. We were fortunate to bring a multiplex theater in and want to surround the theater with additional unique retailing and entertainment opportunities.
There is the Best of the West Cook Off sponsored by the Sparks Nugget, Incorporated for many years. The cook-off brings over 300,000 visitors to downtown Sparks the last weekend in the summer and is a great opportunity. Such events show we have the solid foundation from which to add retail and entertainment venues.
Mr. Carey:
We brought in the Urban Land Institute, made up of experts in the development business, to advise us what to do with downtown Sparks. They have given us a blueprint to follow and we believe it is a redevelopment opportunity. This project would be located in old Sparks, where our community started in 1905, with small narrow parcels in rectangular blocks, laid out by the railroad, which do not afford the opportunity to build a center that can fuel our northern Nevada economy. This is a good opportunity to use redevelopment, and Sparks was the first city in the State to use the tool of redevelopment.
In 1977 we had an assessed valuation of $27 million, today we have over $200 million of additional private investment. The health in Reno and Sparks is vital to our region’s economy and I support the activities underway in the greater city to make the downtown vital and attractive. There has been a lot done as the two cities look to our downtown areas to provide visitors with attractive and innovative venues to bring people back.
The RSCVA has accomplished a lot and we feel it is time to move forward with a specific project for Sparks to help us create the anchor or the third component of the regional game plan. The Urban Land Institute panel looked at this project and confirmed it will work in today’s market. This is not a traditional shopping center, nor a strip mall; the project will not typify what you find on any street corner in a commercial district. This is designed to meet the needs of visitors who would come to northern Nevada by being unique and providing entertainment. When we add this component to our downtown, we believe the traditional business market will quickly follow.
Victorian Square is ideally located and convenient to the trade area on Interstate 80 with two interchanges and we have the space available. Our city has had a master plan for this six-block area, completed all the public review processes and received input from all of our stakeholders to create Victorian Square while the community stood solidly behind it. The Urban Land Institute recommended we use the town center strategy because we are a family-oriented community; creating a town center and maintaining our identity is very important and can make this project successful.
We have defined our goals as a community and these goals were developed with the private sector. We can meet each of these goals by your passage of A.B. 205 that will allow Victorian Square to come onto the landscape of northern Nevada and add to our future. In Exhibit C are some artist’s drawings of the envisioned Victorian Square. This private investment needs your help in making our downtown overcome its blight conditions to create these types of wonderful spaces where any visitor from across the country would want to come.
We have a strong gaming presence with the Sparks Nugget, Incorporated and the Silver Club as two great anchors that have served our community well and we have a great foundation of special events. These special events attract over 700,000 residents and visitors to our downtown every year. They provide those peak days, and with the implementation of Victorian Square, will add the day‑to‑day traffic that makes the town center and a community like ours work.
We are not trying to divide the pot, rather this project will grow the revenues for all of northern Nevada and provide an anchor of which we can be proud. Victorian Square will be the catalyst for all neighborhood businesses: a beautiful place, a well-thought-out plan, and part of our future with your help and passage of A.B. 205.
Mr. Carey:
Our bill is now here in the Senate for consideration and we are asking you to begin consideration of the first amendment to this bill (Exhibit D). This amendment was sought by the City of Sparks for the purposes of ensuring all of northern Nevada’s important stakeholders needs were met. In the original bill, we are making three very substantive and important changes to strengthen and balance the bond between the business coalition and the private sector say-so on fund usage.
The second change to the bill concerns the use of a tourism facility revitalization-steering committee. The same approach was used in downtown Reno via the bill that appeared before this committee in the last session. We believe this provides a strong anchor for stakeholder input. By using this new room tax, our stakeholders in the RSCVA and in the NRA will continue to be the type of partners they have been to date with these funds used to build the market in northern Nevada. Assembly Bill 205 establishes a five-member committee. This is a small committee, but this is a project with strong support from all segments of our business economy. We also think a small committee makes sense in this case, because it provides for very loud voices to be heard. The committee would be made up of one representative of the NRA, two members of the RSCVA, and two members of the City of Sparks. The balance placed is necessary to ensure our stakeholder voices are clearly heard and these funds are used for the right purposes.
The final amendment maintains our current investment. In the last session we were fortunate enough to win support to direct a portion of the new room tax proceeds to the Sparks Tourism and Marketing Committee. We used these funds to build our special events and to market the City of Sparks. This amendment will maintain our current investment and allow us to continue those programs that add value to northern Nevada. We do want to cap that investment at its current level of $200,000 per year and return any growth in the room tax increment from the last session back to the RSCVA so they can do the critical job of regional marketing.
All three amendments have been done jointly. I want to thank Mr. Alonso for his stewardship in working with properties in downtown Reno, and extend continuing thanks to Mr. John Ascuaga and his Sparks Nugget, Incorporated for building the business coalition that brought this project to you today.
This is a good bill for my community and allows us to complete the game plan the RSCVA has laid out for northern Nevada to meet the challenges.
Senator Rhoads:
How much money does it raise per year?
Mr. Carey:
At 2.5 percent, the room tax increase would raise just under $800,000 per year and this would be the estimate based upon the year 2002.
Senator Rhoads:
What could this money be used for?
Mr. Carey:
We intend to bridge the gap in this project meeting a positive pro forma with a private developer. We believe we need to acquire property and use this tool to make this blighted area stand on its own and be competitive.
Senator Rhoads:
You would buy property and then lease it to private participants?
Mr. Carey:
I would hope we could sell it. My community has a proud tradition of not wanting to be a property owner. We want to use the redevelopment tool to reenergize our private sector. Starting in 1977 with $27 million in our downtown to over $200 million today, our focus has always been to put this property and these efforts into the hands of the private sector. This retail and entertainment complex will be developed by the private sector. We must be partners in this process in order to take the devastated downtown conditions and turn this around. Our community has a strong tradition of doing just that.
Michael Alonso, Lobbyist, Harrah’s Entertainment, Incorporated:
In addition to Harrah’s Entertainment, we have conferred with the Eldorado Resorts LLC in downtown Reno, the Silver Legacy Resort and Casino, and Circus-Circus. Those of you who sat on this committee last session and the previous session know Senator Tiffany was on the Assembly Committee on Taxation when we had the battle last session over the downtown event center.
We are happy to be here today past that battle and supporting Sparks in their attempt to redevelop the downtown. We would support A.B. 205 with the amendments as laid out by Mr. Carey.
Senator Neal:
Did we have the room tax measure, for the City of Sparks, come to this committee once before?
Chairman McGinness:
I believe the room tax issue was last session, except it was for the City of Reno. Is there anyone else to testify on A.B. 205? Since there is no further testimony, we will close the hearing on A.B. 205.
SENATOR RHOADS MOVED TO AMEND AND DO PASS A.B. 205.
SENATOR TOWNSEND SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
*****
Chairman McGinness:
While we wait for Assemblyman Carpenter, I believe Mr. Combs may have a further explanation for Senator Coffin on A.B. 208.
Mr. Combs:
Currently, chapter 377A of the Nevada Revised Statutes NRS allows a sales and use tax for two different purposes to be enacted. One would be to establish and maintain a public transit system or to construct, maintain, and repair public roads. The other would be a tax to promote tourism. This bill would add a third purpose to impose a tax under the chapter for the creation of the county swimming pool. Lines 34 through 37 of section 4, on page 3, of the bill is the Legal Division’s attempt to clarify something that should have been drafted in the first place. Namely, the county is required to contract with the Department of Taxation anytime they impose one of these types of taxes pursuant to this chapter for the administration of the tax. When they contract with the Department of Taxation, and then go in and change the taxing ordinance in any manner, the county is required to work with the department to determine whether or not the contract needs to be amended as well.
In the case of a tax to establish or maintain a public transit system or a road before the county determines that it is not necessary to change the contract with the Department of Taxation, they have to get the concurrence of the Regional Transportation Commission (RTC). If the county wants a tax to promote tourism, then concurrence has to come from the county fair and recreation board. The way the statute is currently written, before the county can decide whether or not to change the contract with the department, they have to confer with one of those two groups. The NRS clarifies in the case of a public transit system, the county consults the RTC, and in the case of a tax promoting tourism, they approach the county fair and recreation board. Therefore, there is no confusion which of the two bodies the county sees to get concurrence in each instance. For the swimming pool provision, A.B. 208 specifically states the consent of another body is not required if the contract is not amended with the department.
Senator Coffin:
It does seem to affect other counties.
Mr. Combs:
The bill would affect other counties; the provision would apply to every county that has imposed a tax under this chapter. It just clarifies which body the county would concur with before deciding the contract with the department did not need to be amended.
Senator Coffin:
With that clarification in the record, I no longer have a problem; it is not the typical rephrasing of old language to a new application.
SENATOR NEAL MOVED TO DO PASS A.B. 208.
SENATOR RHOADS SECONDED MOTION.
THE MOTION CARRIED UNANIMOUSLY.
*****
Chairman McGinness:
We will now open the hearing on Assembly Bill 346.
ASSEMBLY BILL 346 (1st Reprint): Revises provisions governing operation or maintenance of vehicles on highways in this state using dyed special fuel. (BDR 32-180)
Assemblyman John C. Carpenter, Assembly District No. 33:
This bill authorizes a person who has dyed fuel in his or her vehicle the ability to cross the highway from one parcel of the land he or she owns or controls to another parcel of land he or she owns or controls. Just going across the highway, maybe 20 or 30 feet, he or she is illegal, and may be fined up to $1000. This amendment would allow a person to cross the road with a vehicle to their parcel.
Chairman McGinness:
Last session, we had an onion farmer in Mason Valley who had, let us say, fields in the north valley and his onion sheds were on the south end of the valley. I thought we had amended a bill to take care of this problem. Is this a different and separate issue?
Assemblyman Carpenter:
That particular bill spoke to farm implements and agriculture where they could go to the one field and pick up their crop and bring it back to the feeder. In the case of the onion farmer who was taking produce from the field to their processing plant, A.B. 346 would specifically cover crossing the road. In regard to the agricultural exemption, farmers were able to travel along the road for 10 or 20 miles.
Chairman McGinness:
I think Senator Neal made the motion to take the mileage out; therefore, you could haul onions all over the State if you wanted to.
Assemblyman Carpenter:
That would be fine, but I do not think we would want to try it.
Senator Rhoads:
We should amend the bill to allow cattle to cross the road. Two years ago a highway patrolman stopped a rancher from taking his cattle across the road, from one piece of private property to the other. Assemblyman Carpenter and I met with the Department of Transportation and got that changed.
Chairman McGinness:
Are there any other questions or comments for Assemblyman Carpenter?
SENATOR RHOADS MOVED TO DO PASS A.B. 346.
SENATOR NEAL SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR TOWNSEND WAS ABSENT FOR THE VOTE.)
*****
Chairman McGinness:
We are closing the hearing on A.B. 346 and opening the hearing on Assembly Bill 348.
ASSEMBLY BILL 348 (1st Reprint): Revises provisions governing development of certain factors used in determination of taxable value of improvements to real property for assessment of property taxes. (BDR 32-1121)
Assemblyman Carpenter:
Assembly Bill (A.B.) 348 is a little more complicated. Properties were appraised every 5 years in the rural areas of all counties except Clark County. When these appraisals were done, the tax was increased and people got upset because the valuation went up 20 percent or more. In order to prevent this from happening, we thought it would be better if there was a factor the counties could use to review the valuation each year without such a variance in the valuation.
Because of the decline in valuation, we have a lot of homes on the market in our area and, as you know, the mining industry is down. My county assessor and I think a lot of the other assessors feel these factors are not taken into consideration; our area includes Elko, Eureka, Lander, and White Pine Counties. This year the factors were bumped up over 3 percent and we do not believe there was a real consideration of the market.
In another area Humboldt County is coupled with Churchill County and the factors came down. Our assessor said he was unable to get a good answer from the tax commissioners as to why these factors were elevated so high in our area.
This bill provides we establish a procedure for the Nevada Tax Commission before they adopt those factors applied annually to the taxable value of improvements for property that has not been reappraised. In the rural areas we only have the staff to conduct reappraisals every 5 years. These procedures in the bill will allow a county assessor to object to the factors developed by the tax commission and then the tax commission would hold a public hearing if the assessors were not satisfied with the factors. The bill sets forth specific dates when the tax commission provides the factors to each county, gives them a couple months to look at these factors, and then the assessors either approve or object the factors. If the assessors object, there will be a hearing so the assessor can come in and give his argument and the tax commission can present their case.
Our assessor had some problems determining exactly what kind of calculations or figures the Nevada Tax Commission used for factoring. We discovered contractors were asked the cost of a new home and this was used as part of the factoring. I believe the contractors consulted were not in the business of building homes on a regular basis; these contractors were doing repairs. We are not saying the tax commission has to change those factors, this is just a sounding board for the assessors to come in and find out what is happening.
Although the assessors could not be here today, I believe they support this bill, especially the part where the tax commission has to come up with these factors and a hearing date by a specific date.
You may hear from the tax commission this might increase the time when they would have to have a hearing, but I believe they will be able to work it in with their regular meetings. I do not know how often they meet, but I believe it is often and would help us. The way the factors are now, with the 3 percent, some people called to say, “How can you raise our taxes this year, because I have had my house up for sale for a year or two.” The factors raise the rate above what the market can bear; this procedure would help the counties and the assessors.
Senator O’Connell:
You had mentioned they were raised up to 3 percent because they had not been assessed in a 5-year period. Do you see this changing the tax rate at all for the rural counties?
Assemblyman Carpenter:
I think it could if the assessor was able to come in with his facts and figures to show the factor was wrong. If the tax commission believed him, they could raise the rate up or down. It would not affect an assessor who goes out every 5 years, only when the assessment is done on a yearly basis and the commission factors the valuation either up or down. The concern was in those four counties where the year before was not very good. The assessed valuations rose over 3 percent while valuations for communities in the western part of the State actually dropped, and our assessor thought he could not get a handle on it. Assembly Bill 348 would give assessors a way to get a handle on the situation and the Nevada Tax Commission would have to provide a hearing, if there was an objection to the valuation, for both sides to present their arguments.
Dino DiCianno, Deputy Executive Director, Department of Taxation:
After discussing A.B. 348 with the chairman of the Nevada Tax Commission, we are perplexed as to the necessity for these changes. First, all the assessors are afforded an opportunity to come before the commission to explain why they believe the improvement factors being developed by the department would not be correct for that county. They have this opportunity now. After the department develops those improvement factors, there is a process to provide the information to the assessors for their review and concern.
If you look at page 3 of the bill, starting on line 8, we would submit to you that the issue had already been taken care of in the existing language. The reason this is stated there is if the assessor does apply an improvement factor and it increases the value of that property in excess of the full cash value, it must be reduced. Also, if the assessors wish to sit down with the department and work with the commission in developing regulations, we will do so.
Nevada Administrative Code 361.128, allows some discretion for the assessors with respect to the use of Marshall and Swift publications. Subsection 3 states, “If these manuals are not applicable, the county assessor may use the other recognized cost manuals or subscription services with the prior approval of the executive director of the department.”
We are more than willing to work with the assessors. The department and the Nevada Tax Commission is mindful of the sensitivity of this issue because it affects all taxpayers Statewide.
The other concern the department has with A.B. 348 is on page 2, line 8. Maybe this occurred in crafting the language, but normally publishers are separate from those who actually develop the manual. If the legislation is to be processed, we would ask for some clarification with respect to this language. Normally, it is not the publisher who develops those factors for Marshall and Swift, but someone internal to Marshall and Swift.
Senator Rhoads:
For the last 5 years, Elko County has been in a tailspin. What were the factors that drove it up to 3 percent?
Mr. DiCianno:
This is something I would have to look into, but if there was a problem, we should have addressed it.
Senator Coffin:
Do you prepare the packets for the commission for these meetings? Does the department prepare the packets to help them for the meetings?
Mr. DiCianno:
Yes we do.
Senator Coffin:
How much more work is this going to create if the commission is mandated to have a meeting to settle any discrepancies with the assessor?
Mr. DiCianno:
Currently, the Nevada Tax Commission meets the first Monday of every month. Clearly some of these sessions would probably fall under the standing meeting; however, this would be an addition to their existing workload. I would think the commission would want to have a separate meeting specifically for these particular issues. Normally, they are adjudicating cases that are either appeals for audits, revenue appeals, exemption appeals, and things of this nature.
Senator Coffin:
Do these meetings last all day or do they run longer?
Mr. DiCianno:
We have had 2-day meetings and sometimes there are just full-day meetings. This is dependent upon the workload.
Chairman McGinness:
As you have indicated, the assessors could come to the Nevada Tax Commission anytime. In other words, there should not be a timing problem if you meet every month?
Mr. DiCianno:
This is correct.
Senator Neal:
Would you give me an indication as to what a factor is that would be used in this case?
Mr. DiCianno:
The factor is much like an inflation factor. It increases the cost associated with the construction of an improvement and tries to bring it to current market value each year.
Senator Neal:
In communities where you have had a decrease in the value, would it affectthe property if you came in and raised the valuation?
Mr. DiCianno:
Let us not confuse what it costs to construct versus the value of an existing structure. It may cost you “x” amount of dollars to construct a particular improvement, but because of the market conditions in that area you would have to apply certain obsolescent factors to bring the cost back down. It may not sell for what it cost you to build.
Dave Dawley, Assessor, Carson City:
Speaking for the Nevada Assessors Association, we are for A.B. 348. The problems are in the larger counties. For example I believe the City of West Wendover is booming and Elko County is not. One factor is applied to the entire county. Whereas part of the county could absorb that 3 percent, the other part could not because of the declining values. It is my understanding Assemblyman Carpenter tried to talk to the commission and had problems explaining the values to them. Therefore, we believe this legislation with specific dates would be good, and we support the legislation.
Senator Neal:
How would you propose to handle the situation where you have the City of West Wendover, which is booming, and Elko County which is not? Let us say you apply a factor of 3 percent; what do you do, apply zero to the rest of the county and average it out?
Mr. Dawley:
Factors are not a good way for assessment. I know most of the counties are going toward a re-costing program where we would re-cost all of the improvements every year. It is just going to take us some time to get there. We currently have a program that is going to take us about 5 years to implement. If you could do individual areas of different counties at different rates, this would be better than one overall factor, but currently there is just the one factor.
Senator Neal:
Does the Nevada Tax Commission understand that you want to go into re‑costing?
Mr. Dawley:
Yes they do. The factor itself is difficult and like Assemblyman Carpenter said, everyone on the west side of the State, Carson City, Washoe, Douglas, and Lyon Counties saw their factors go down; we were less than 1 percent. I got more calls this year, because people wanted to know what happened to their values, than I receive when we raise the values. Trying to explain the replacement cost here is less than the east side of Nevada does not make sense.
Senator Neal:
This bill will essentially give the county assessors a hearing before the tax commission?
Mr. Dawley:
It gives us a little more leverage to defend the values that we see on a daily basis.
Senator Neal:
It says the hearing should be conducted in or before October of that year. This would not necessarily correspond with the tax commission meetings?
Mr. Dawley:
I cannot answer that question. The best person to speak about this would be the Elko County assessor who is not here today. He has lived through the problems and would be the best one to address these issues.
Gaylyn J. Spriggs, Lobbyist, Nevada Taxpayers Association:
We are in favor of the bill and I would like to talk about the taxpayer’s point of view for a moment. I believe we are going the wrong direction. When you apply factors, you raise the overall rate above market value and many times you force taxpayers to go to the State Board of Equalization for relief.
First, the Legislature decided to use factors, and determined assessors would apply as many factors as needed throughout the county to meet market value for their county. Then it was decided this was too much work. The Department of Taxation did not want to take care of this much, so maybe the Department of Taxation could come up with the factors? Now we are getting down to the point where one size fits all. This is the wrong direction. If we have to use factors, we should keep everything more or less at market value so we do not have “sticker shock” for taxpayers.
With the exception of Clark County, which re-costs every year, factoring is used in all of the other counties. We are impacting almost the entire State. At least give the assessor the opportunity to go in and voice concerns these factors are too high and putting the entire county over market, hence, requiring taxpayers to go to the State Board of Equalization. If this is a fix, it is not the right one. I believe we should do something about the Department of Taxation providing the factors, or maybe we should go back to assessors doing factors that make sense.
Senator Coffin:
Have you talked to members of the commission on this bill yourself?
Ms. Spriggs:
Yes, I have. I have not spoken to the chairman, but I have spoken to some of the members.
Senator Coffin:
Are they excited about this new workload?
Ms. Spriggs:
They did not say one way or the other, but that was not the issue we had discussed. In my opinion, it would be whatever is right and not the workload. I would think they would want to do the job properly and if it required a hearing because of a problem, I think they would want to know it.
Senator Coffin:
They are not paid well.
Ms. Spriggs:
I agree with you and maybe we need to do something there also.
Senator O’Connell:
I do not know how many of the committee members are aware of this, but you use to be an assessor for Hawthorne. Do you think it would be best for us to go back and allow the assessors to, if you will, call it as they see it? As it was mentioned earlier, one side of town might need to be at one rate, and another side of town at another rate, depending on what the market is in that area. Maybe you could share some of your experiences with us that would better help us understand what the assessor is going through when they are trying to work within the law.
Ms. Spriggs:
I was the assessor for Mineral County when factors were being applied; I came up with factors and used them in different areas. This worked better for me, but I cannot speak for assessors now. I think it was working out better back then. Sometimes we lose sight of what we start out to do and it becomes a convenience, a one size fits all. I do not know if they want the job of factoring back. I do know they want the input to the Nevada Tax Commission on what the conditions are in their county if they see the factors coming from the department levels are incorrect. I think assessors should have more input, which this bill gives them.
Chairman McGinness:
Is there anyone else to testify on A.B. 348? If the committee wants to take action on this bill today, I see two things we need to talk about. One is the issue Assemblyman Carpenter addressed of having the publishers available. Do you think this is reasonable? Should we take this out?
Assemblyman Carpenter:
Although our assessor could not be here today, he relayed they were not able to get the data used to come up with these factors from Marshall and Swift. I do not know if the assessors would have to be at the meeting or not, but they are the ones putting the figures together to create these factors.
Assembly Bill 348 gives the assessors a sounding board with the Nevada Tax Commission so they can present their problems and maybe have better things evolve out of the discussions. Our assessor tells me he went to the tax commission two or three times and was not able to get very far. I know all of these things are in place and the parties are supposed to work cooperatively, but I do not think this is happening.
Maybe this legislation will make the assessors and commission work together more so everyone knows the problems. Despite a lot of meetings at the tax commission, I would think these meetings could be scheduled. With this bill in place, everyone is going to pay more attention to what is going on. Maybe hearings will not be necessary, but if the Nevada Tax Commission knows the assessor has a complaint, then a hearing would have to be held.
It would be a good thing to have Marshall and Swift come up with the factors, because it is mind-boggling to me. All you have to do is go up and down the highway to see all of the construction and people moving ahead, and in our end of the State we are going down, yet we were raised over 3 percent. There is something wrong and this gives the assessors the right to tell their side of the story.
Chairman McGinness:
Assemblyman Carpenter, we are going to hold A.B. 348 for a work session on Thursday to give us time to take a look at the publishers along with making sure our timing is correct so the Nevada Tax Commission would not have separate hearings, possibly by incorporating factor issues in regular meetings.
Assemblyman Carpenter:
That is a good idea for the meetings to coincide with the hearings. I will talk to our assessor to get some more information as to what the specific problems are and why he felt that Marshall and Swift should be present at the hearings or supplying the data.
Chairman McGinness:
If there is no one else to testify on A.B. 348, we will close the hearing on this bill. There was a bill the committee heard last Thursday, A.B. 530.
ASSEMBLY BILL 530 (1st Reprint): Revises provisions governing certain property taxes. (BDR 32-489)
Chairman McGinness:
Mr. DiCianno was the only one to testify on this bill which was a clean up for the Department of Taxation on centrally assessed property. There was a proposed amendment for section 1, page 2 (Exhibit E).
SENATOR TOWNSEND MOVED TO AMEND AND DO PASS A.B. 530.
SENATOR NEAL SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
*****
Chairman McGinness:
There is no further business to come before the committee, today. This meeting is adjourned at 2:57 p.m.
RESPECTFULLY SUBMITTED:
Gale Maynard,
Committee Secretary
APPROVED BY:
Senator Mike McGinness, Chairman
DATE: