Passed and signed into law in the barest nick of time, the Nevada Legislature's new property tax formula probably has something to displease everybody. The hysteria-prone Mamelukes on the Las Vegas Review-Journal's editorial board have already soiled their Depends, ranting in typical John Birch fashion about "commissars" in Carson City. (In other news, the sun rose in the east this morning.)
Leaving aside those who are still inveighing against the League of Nations, war with Kaiser Wilhelm and suffrage for women, there is still a sizable amount of controversy and displeasure surrounding the Lege's quick fix to escalating Nevada property tax rates—even among some who voted for it. Much as one might like to leave talk of formulas and constitutional validity aside and cut to the dollars and sense, it's not so easily done.
"I haven't been able to figure it out yet," confesses the Nevada Taxpayer Association's Carole Vilardo, and if she's struggling there's not much hope for the rest of us. Although, she says, "the main thrust of the bill is there," a trail of enabling legislation to clarify and tweak the new law is expected.
For home owners, the bottom line is that property tax increases are now capped at 3 percent—unless voters approved an override last November or do so in a forthcoming election. This was accomplished by defining all householders as victims of economic hardship, a rather sweeping declaration that puts Bob Stupak in the same put-upon class as Joe Sixpack.
The Valley's many renters will—so long as they're paying no more than $775 a month—enjoy the 3 percent, too, under the Lege's invocation of a preferential "charitable" rate that it has also applied to veterans. Home-based businesses also fall under the 3 percent ceiling, thanks to an 11th- hour amendment shepherded by Sen. Bob Coffin—who conveniently neglected to mention that he would directly benefit. (Ethicists may frown but Coffin will reap the votes of grateful Avon ladies.)
Using a formula that makes point spreads seem simple, businesses get either a rate predicated on the average property tax increase over the last decade or a simple 8 percent, whichever is lower. "That section," Vilardo complains, "is driving me nuts because it's so cumbersome."
Taxes make strange bedfellows, as evinced by both Nevada Concerned Citizens' Richard Ziser and Senate Minority Leader Dina Titus taking the "half a loaf is better than none" perspective. Ziser says he is not unsympathetic to the various rocks and hard places lawmakers find themselves between, saying "something temporary needed to happen ... as a compromise it was the best they were able to do."
That's not high praise but it's ecstatic compared to Titus' gloomy, "I voted for it because I thought I had no choice; people needed relief." Review-Journal capitol correspondent Erin Neff says Titus has come a long way from being semi-pro-tax freeze to having "loved that thing like it was her baby," to now damning the finished bill as a giveaway to corporations and millionaires. But, Neff says, "she doesn't dare vote against the bill because that's political suicide."
She's not the only one acknowledging the realpolitik of the moment. A Reno-Sparks Chamber of Commerce spokesman who kvetched to solons about the supposed inequity of an 8 percent increase for businesses as opposed to 3 percent for individuals, admitted (when pressed by a legislator) that he had no better ideas to offer. Although there has been some rhetoric, mostly from the media, about ginning up a lawsuit to have the new tax formula thrown out as unconstitutional, the Las Vegas Chamber of Commerce has already poured cold water on the idea.
Even Sen. Warren Hardy, who donned the metal-studded dog collar and leash that denote his adopted role of Big Business' Carson City Bitch, has indicated that the business community got a good deal and should go with the flow. (Politicians are wont to go down for corporate moolah but few pimp themselves out with such gleeful candor as Hardy.)
One of the perils of taking the rejiggered tax rates to court lies in what might happen if opponents of the new law win. It could be a Pyrrhic victory if judges toss out the whole formula (as opposed to using "severability" to amputate constitutionally noxious clauses here and there) for assessors who would be compelled to reinstate the previous property tax model—which could quadruple some tax collections, according to a legislative study.
Of course, if politicians like tax-rollback proponent Sharron Angle are exceptionally Machiavellian, that could be precisely their endgame. What better way to accelerate taxpayer revolt than by dangling a rate cap in front of property owners, then have the courts snatch it away, followed by fourfold assessment increase? Since Angle voted against the new tax package, too, her fingerprints would be nowhere on the dagger.
Although Ziser thinks the Lege's actions were "a backdoor way of accomplishing [relief]," addressing rates instead of looking at spending curbs, he prefers reform via initiative and referendum, rather than through the courts. Titus says the law is "likely unconstitutional on several fronts," but notes that nothing is definitive until the gavel falls—and that judges facing re-election in two years may steer clear of this hot potato.
The minority leader adds that the economic consequences of the property tax reform remain unforeseen (although they would be even more pronounced had Titus' own one-year tax-increase moratorium been enacted). "The best number-crunchers cannot predict growth of assessed values beyond" 2006, she says, and "no one wants to open this all up again and possibly force assessors to have to start over."
Vilardo adds that all the implications of the bill won't shake out for several weeks, as the legislative beauty treatment continues. Beyond that, she says, unintended consequences are impossible to prevent, especially shortfalls in local government funding.
As for taxpayer revolt, Vilardo thinks the jury is still out, pending the next round of assessments. Instead, "I would almost bet" that spending curbs will be written into the state constitution either by voters or lawmakers, a movement "that carries more steam" right now.
That would suit Ziser just fine. The current revenue stream to Carson City is, he maintains, "a windfall to government ... without any vote of any legislative body and without a vote of the people."