Nevada Lawmakers on Safe Ground to Cancel Tax Breaks

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CARSON CITY, Nev. (AP) - Nevada lawmakers were advised Wednesday that they'd be on safe legal ground in revising - and even scrapping - big "green" construction tax breaks approved in 2005.

An opinion from the legislators' chief legal counsel, Brenda Erdoes, states that the tax abatements can be amended or repealed "at any time ... regardless of whether any person has incurred expense to comply with the tax abatements or exemptions."

Erdoes said in her 13-page legal opinion that such a move by legislators wouldn't violate the Contract Clause of the U.S. Constitution. She said the 2005 law that created the tax breaks does "not create any contactual or vested rights."

The lack of any vested rights applies both to applicants for the tax abatements and to anyone who already has been approved to get the breaks, Erdoes said.

Legislators are considering AB621, a new bill that gets rid of the sales tax exemptions and reduces property tax breaks. A key question, which prompted the opinion request, was whether the new bill will be retroactive.

Lawmakers started looking into the financial effects of the old law after being told by state Budget Director Andrew Clinger that the incentives could cause a big budget revenue hole.

Clinger's boss, Gov. Jim Gibbons, then vetoed a bill to suspend the tax breaks, upsetting some legislators who said the initial concern about the incentives came from the Gibbons administration.

Earlier this week, legislators disclosed a letter from the state Taxation Department to the governor's legal advisers that shows the agency acted to finalize several applications for the tax breaks in April, after lawmakers already were questioning them.

The letter shows the agency moved to finalize applications for sales tax breaks by MGM Mirage and Fontainebleau on April 16, and by the Las Vegas Sands Resort on April 23. Assemblywoman Debbie Smith, D-Sparks, said lawmakers started inquiring about the tax breaks in late February and early March.

The letter shows what critics describe as disarray involving the tax breaks. Some companies got tax deferral certificates while others got "opinion letters" stating they're eligible. Only two, MGM Mirage and the Molasky Corporate Center, applied for the tax break during the window allowed by a 2005 law, October through December 2005.

One company asked for an opinion as late as May 2, the day the Senate passed the bill to suspend the tax breaks.

(Copyright 2007 by The Associated Press. All Rights Reserved.)