Wrapup: Lawmakers Use Taxes to Balance Budget

CARSON CITY, Nev. (AP) - Faced with a historic revenue
shortfall, Nevada lawmakers balanced the budget by raising several
state taxes - and also by approving a "tax grab" of existing
levies that had been going to local governments.

Representatives of cities and counties, who faced serious
shortfalls of their own, lobbied against it, but there was little
they could do to stand in the way.

That's because the counties and cities are governed by state
law, and any change they proposed would have to be approved by

"We're disappointed, we're very concerned," said Jeff
Fontaine, director of the Nevada Association of Counties. "There
is going to be an impact, and of course the Legislature will be
long gone when these impacts really start to hit home."

The biggest blow came with the passage of AB543, which takes
property taxes from Nevada's two largest counties, Clark
encompassing Las Vegas and Washoe which takes in Reno.

The original plan in Gov. Jim Gibbons' budget proposed
redirecting 4 cents of every $100 of assessed property value from
the counties to the state.

In a hearing on the bill, Clark County lobbyist George Stevens
asked a money committee to consider an alternative, to impose a tax
for capital improvement projects. He said the levy, which amounted
to 5 cents of every $100 of assessed property value, would bring in
more money for the state and would be less painful for counties
that could find other ways to fund those projects.

The legislators liked the idea - so much that they decided to
take both the 4-cent levy proposed by the governor and the 5 cents
that Stevens had suggested as an alternative.

"You can argue about what's right or wrong," said Sabra
Smith-Newby, lobbyist for Clark County. "I don't know that fair
matters - it's within their purview to do it."

Clark County faced a $120 million shortfall in its budget, even
before the "tax grab" measures were approved.

Other proposals included sweeping an indigent accident account
which is used to pay counties' hospital costs for patients who lack
funds, increasing fees for tax levies, and reducing hospital
reimbursement rates. Together, Clark County estimated a cost for
the new laws of about $120 million over the next biennium.

"It's like death by paper cuts," Smith-Newby said. "Things
are continuing to decline. It's going to be a challenge to
determine how to deal with the cuts and fiscal impacts."

Assemblywoman Sheila Leslie, D-Reno said she and other
legislators held several meetings with the counties to look ask for
suggestions. But after the property tax debacle, lobbyists were

"I think a lot of us feel very badly about trying to take the
county's money," Leslie said. "We looked and looked for ways to
help them. But the cities and counties are creatures of the
Legislature, and we are responsible for providing the state

Leslie said she met with representatives from Washoe and Clark
counties to ask them for ways that the state could help them. She
praised Washoe County's decision to request an increase to its
property tax rate, which the Legislature granted. Clark County
already was at the property tax cap, so it could not request a
similar change.

"We've already cut 16 percent across all our departments, so
we've already approached this coming year very conservatively,"
said John Slaughter, lobbyist for Washoe County, adding that the
county would probably have to make additional cuts to its budget.

At a press conference organized by the Nevada Association of
Counties, Reno Councilwoman Jessica Sferrazza proposed an advisory
question for the 2010 ballot to address "home rule," which would
give counties more power in relation to the state. She said she'd
like to take the issue to the voters to decide how their tax
dollars should be spent.

Voters in Clark County approved a similar measure in 2004
stating that the Nevada Legislature shall not enact laws that
provide "unfunded mandates" to local governments, and that the
legislature also shall not enact laws that would divert county
revenue to the state.

Although the measure was passed by 61 percent of voters, it was
an advisory question, and the Legislature is not bound to follow
the suggestions.

While local jurisdictions may want to have more authority over
revenues, that could be a long way off.

"You're talking about going from one far end of the spectrum to
another," said Lorne Malkiewich, director of the Legislative
Counsel Bureau. "There are incremental changes that could be made
to give the locals more authority, but taxing and giving them
authority to raise their own revenue, that is a pretty big bite."

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