Collins: Cave ceiling on property taxes

By Joe Schoenmann

Wednesday, April 1, 2009 | 2 a.m.

Clark County Commissioner Tom Collins is urging his former colleagues in the Legislature to ditch the property tax caps they adopted in 2005.

The limits of 3 percent annual increases on property tax bills for homes and 8 percent for businesses have outlived their usefulness, Collins contends. They were sold as a way to protect people from huge increases in property taxes caused by skyrocketing property values. Those values, however, have been plummeting for more than a year. And if the caps were eliminated, both Clark County and the state of Nevada would see large infusions of property tax revenue that would take care of many budget problems.

Collins is, in effect, arguing for what will amount to a property tax increase for some.

“It doesn’t make sense anymore to have the caps, and we and the state would be much better off if they were eliminated altogether,” Collins says.

In a report sent Friday to the state Legislature, the Clark County treasurer reported that property tax collections are expected to be $82.5 million lower this year than last year. This will be the first time since the 1993-94 fiscal year that property tax collections have decreased in Clark County.

The report also notes that without the caps, Clark County would take in $918 million more in property taxes. That’s because for the past couple of years tax caps kept tax payments artificially low. Most property owners would have been hit with property tax increases of 20 percent to 50 percent in 2006 if not for the caps.

Collins argues that everyone now needs to pay his fair share so that the county gets its fair share. The state benefits enormously from Clark County’s economy, he says, citing the recently approved hotel room tax, the benefits of which will come largely from Strip hotels. Also, Gov. Jim Gibbons has proposed taking an additional 4 cents from every $100 in property taxes, which would cull about $90 million from Clark County over two years.

“If they are going to take these local dollars, they need to let us find a way to recover that and one way would be to get rid of some of the stringent property tax caps,” Collins says. “It’s time to get rid of it.”

The Legislature has the opposite opinion regarding the timing, however. Sen. Bob Coffin, D-Las Vegas, chairman of the Senate Finance Committee, says property taxes are “untouchable” this legislative session.

“Considering the increases we are likely to make (in other taxes), no one is going to want to hear about those caps,” Coffin says. “The only way it would happen would be if the governor was successful in getting the extra 4 cents (per $100 valuation) from the counties. And I don’t think he’s going to get that.”

Collins, who served seven years in the Assembly, says when he talks now to legislators about the idea “they all get that look in their eye” — a look that says they would like to do something but can’t.

“But that’s now and it’s still early in the session,” Collins says. “We’ll see what happens later on when everyone starts getting a little more desperate.”

Collins says a measure to change property tax collections could still be added to a bill as long as that bill is related to taxes.

One person who agrees that the caps should be abolished is Guy Hobbs, Clark County’s former comptroller and chief financial officer who was chairman of a 2003 state blue ribbon committee to study taxes. Hobbs was against the caps when they were proposed.

Had the state not adopted the caps, Hobbs contends, any local politician who wanted to be reelected would have had to have worked to lower property tax rates.

To refuse to have done so would have been “political suicide,” he says. “County reserves back then were stocked.”

But the caps were politically palatable because they created a fairly normal stream of revenue and kept politicians “from having to make hard decisions,” Hobbs says.

“If they had control of property taxes, then they’d be able to decrease them when times were good, but they’d also have to increase rates when times were bad,” he says.

County Commission Chairman Rory Reid says the county’s Taxpayer’s Bill of Rights prevents the county from enacting higher tax rates without a vote of the people.

Collins has a comeback for that though: The Taxpayer’s Bill of Rights isn’t law, it’s just a policy. Under an emergency situation, he says, the policy does not prevent the county from increasing its tax rate of $2.50 per $100 of assessed value to match the highest level in the county, which happens to be in North Las Vegas at about $3.36 per $100.

“We could do it,” he says.