On Politics: Legislature looks to eliminate property tax protections(opinion)
Holy smokes, they’re at it again folks. Two new measures to increase property taxes are coming down the pike and we haven’t even finished up the Village League “tax revolt” litigation over the last property tax dustup.
Nevada Senate Joint Resolution 14 (SJR 14) is a sneaky back door measure that would amend the state constitution to require county assessors to increase property assessments. Close behind, the Truckee River Flood Control Project would increase our property tax rate and eliminate the protection of the annual cap on tax increases.
SJR 14 has passed the Legislature once and must be voted on again before it goes to voters. I will deal with SJR 14 first because legislative candidates want your votes right now. Stay tuned next week for an analysis of the Truckee River tax rip off.
Washoe County Assessor Mike Clark (no relation to this writer) says: “SJR 14 could result in the largest property tax increase in Nevada’s history.” Strong words from someone who should know. How did we get to this point? In 1978 California residents approved Proposition 13 which limited property taxes to 1 percent of value.
In 1979 Nevada’s Legislature, fearing the tax revolution would spread to the Silver State, approved a ceiling on property tax rates of $3.66 per $100 of assessed valuation. Rising property values soon emasculated that limit so in 1981 the Legislature mandated that property improvement assessments be reduced (depreciated) 2 percent per year from the date built. In 1983 lawmakers reduced that to 1 ½ percent per year where it stands today.
How does this work? Let’s say a new $150,000 house consists of $50,000 in land value and $100,000 in cost of improvements for a taxable value of $150,000. By statute assessed values are 35 percent of taxable value so it would be assessed at $52,500.
If the consolidated tax rate for the home’s location is $3.00 per $100 of assessed valuation, taxes would be [$3.00 X 52,500] $1,575. In year 10 the assessed value would be [$100,000 less 1.5 percent per year X 10 years] $85,000 plus land value of $50,000 or $135,000 X 35 percent assessment ratio equals $47,250. If the tax rate is still $3.00, taxes would be $1,417.
In a time of spiraling property values the present system protects owners on fixed incomes who just want to stay put. Yeah, but what happens if the tax rate goes up to $3.50? Would taxes jump to $1,654? Yep, but in 2005 the Legislature went a step further and approved a 3 percent maximum annual increase in taxes on owner occupied residential properties regardless of valuation and tax rate changes. So a $1,417 tax bill couldn’t exceed $1,459 the following year.
SJR 14 would remove all those taxpayer protections. Taxable value would be the most recent sale price. Year over year tax increases would be unlimited.
Washoe Assessor Mike Clark, a Republican and hence inherently reliable, gives the following examples of the effect of SJR 14: (1) current taxes of $677 on a 1,200-square-foot home built in 1964 would go to $2,264; (2) current taxes of $8,344 on a 3,900-square-foot home built in 1991 would go to $13,699; (3) current taxes of $7,706 on a Washoe County parcel would go to $21,165.
Considering typical property values in Incline/Crystal Bay, SJR 14 could result in a serious financial pinch. Across the state line in California property tax increases cannot exceed 2 percent per year. California is going to want to build a wall to keep Nevadans from immigrating to the Golden State.
Assessor Mike advises: “If your (legislative) candidate is voting for SJR 14, ask him or her why!”
It’s a fair question.
Jim Clark is president of Republican Advocates. He has served on the Washoe County and Nevada State GOP Central committees. He can be reached at email@example.com.