Tax relief inked
April 6, 2005
CARSON CITY (AP) – Describing a property tax relief bill as “the big, big one” he’s been waiting for, Nevada Gov. Kenny Guinn on Wednesday signed into law the plan that caps growth of homeowners’ tax bills at 3 percent a year.
The Republican governor praised state lawmakers for a “give-and-take” effort on AB489, which also caps increases in property taxes for commercial properties at 8 percent a year – and may fend off a developing taxpayer revolt.
Assembly Speaker Richard Perkins, D-Henderson, who along with other legislative leaders joined Guinn at a brief bill-signing ceremony, said he hadn’t heard of any looming legal challenges that could unravel the tax relief measure.
Asked about the prospect of a more drastic, California-style Proposition 13 even with the new law, Perkins added, “We don’t need a California solution for Nevada problems.”
Those problems included property tax hikes as high as 80 percent for some homeowners in high-growth or high-end areas such as Las Vegas and Incline Village that would have taken effect in the coming fiscal year without AB489.
The new law prevents property tax increases of more than 3 percent a year on all single-family, owner-occupied primary residences. Increases on other property – largely commercial parcels and second homes – will be capped at 8 percent or a 10-year average rate of increase.
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The plan will result in about $330 million in lost property tax revenue for local governments and school districts next year.
In developing the relief plan, legislators repeatedly ran up against constitutional limitations, and some – including Senate Minority Leader Titus, D-Las Vegas – questioned whether AB489 could withstand a court test.
Titus’ plan to freeze taxes at 2004 levels for one year while the lawmakers study the problem was killed in the Senate. Perkins and Titus both tried to use the tax issue to help with their expected 2006 campaigns for the governor’s seat.
The tax battle in the Legislature largely centered on how to provide relief to urban areas without starving county governments, and whether residential and commercial properties should receive equal relief.
Senators pushed for the 8 percent cap for commercial property – the result of aggressive lobbying from the business community – and the Assembly added a provision to help small business and low-income renters.
Under the Assembly’s amendment, owners of affordable apartments would qualify for a 3 percent cap. The bill also simplifies a process already in place for businesses seeking tax relief.
Legislators are planning “trailer” legislation to clean up any mistakes and create a fund to make up for revenue lost in rural counties where some property values are decreasing.
They also intend to pass a constitutional amendment that could save them from future property tax debates and, many hope, further quiet anti-tax activists. But a constitutional change will take several years.