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November 25, 2014

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MEMO FROM CARSON CITY:

In North-South battle, who’s robbing whom?

Image

Steve Marcus

A view of the Nevada State Legislature building in Carson City on Monday, Feb. 11, 2013.

Greedy Northern Nevadans are hoarding the state’s money while Southern Nevada’s families and children go without.

Ever heard that one before?

For years, observers have noted how the state seems to operate a hypothetical conveyer belt that redistributes southern wealth in a way that favors northern road construction, schools and universities.

At the same time, some northern lawmakers are certain they’re donating to the south.

Wait. They can’t both be right, can they?

“They’re both right on the surface,” said John Restrepo, an economist with RCG Economics in Las Vegas.

Huh?

Well, here’s how this works:

GOP Assemblyman John Ellison of Elko said rural counties subsidize urban counties through the “net proceeds of minerals” taxes that mines pay to the state.

“Mining is paying a large portion,” Ellison said. “A lot of net proceeds of minerals goes back to the general fund, which helps the state.”

Translation: Mining counties are less like Scrooge and more like Santa.

It is true; mining money does flow southward from the north.

Meanwhile, southern legislators have been quick to note that the south has the bulk of the population — 72 percent to be exact — and generates most of the tax revenue in the state.

This is also true. A 2009 study from Applied Analysis quantifies what might appear to be common sense: Clark County’s tourism economy generates most of the state’s gaming and sales tax money.

“Today, Clark County’s economy is generating a disproportionate share of state general fund revenues, a substantial share of which is spent in other parts of the state,” the study’s authors concluded.

So, depending on what you’re measuring, both sides are right.

But it just so happens that southern boosters are more right. The study also notes that “Clark County does heavily ‘subsidize’ the remainder of the state” to an extent that is “beyond credible rebuttal.”

But here’s where the question of equality bumps up against the question of equity. The state has ordered multiple studies that show rapid growth in Clark County has resulted in an inequitable distribution system for public schools and universities.

But suppose the state were to equalize tax redistribution based on counties — Elko would keep its mining money and Clark would keep its gaming money. That ignores other realities.

To say every county gets a fair shake, legislators have to ask how fairness is measured.

Should they measure dollars per person? How about a county’s total economic activity as a percentage of the state’s total economic activity? How about the number of people who use state programs and services?

“It’s not really north vs. south,” said Assemblywoman Maggie Carlton, D-Las Vegas. “It’s population and what the actual needs are. Depending on the issue, it bounces back and forth. There needs to be adjustments in equity because the state has changed.”

These are difficult issues to sort out. The authors of the 2009 study note that it is only a “preliminary analysis,” not a solution for the problems.

The complexity of how the state moves money around adds to current difficulties — and opportunities to exploit a confusing situation — in implementing more equitable ways to pay for public schools and universities. Economists familiar with Nevada’s state government say there has never been a study using a consistent measurement to compare money counties contribute to the state and dollars they get back.

“Beware of anyone bringing you a simplistic answer,” Restrepo said. “The problem is we don’t have a measurement that equalizes everything.”

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  1. This always seems like a pointless argument. The discussion should always be about whether money is being spent well by government since it is never spent evenly. Should the state of Nevada be concerned that it generally sends more money to Washington than it gets back? Studies from the early 2000's put the return at around 75 cents on the dollar. If you want to pursue that logic far enough down the chain, you end up with each person trying to make sure they only pay for exactly what they get from government. Government is a joint proposition and we are supposed to be doing certain things for the greater good. At the national level we have some pretty huge disparity with some states only getting about two-thirds of their tax money back in spending and others getting over two times their money. Washington DC gets over six times its money.

    Part of it is that more heavily populated and wealthier areas end up supporting less populated and poorer areas. This is what you see in the state of Nevada in some respects. Should Las Vegas worry that perhaps Sloan or Moapa gets more out than they pay in? Should I worry that I pay more much more in taxes than my neighbor for roughly the same services? It makes the most sense to start with making certain that the money is spent effectively and efficiently.

  2. The North-South battle will continue. People are people, who have their positions and opinions, and "...that's their story and they are sticking to it," mentality. Not much wiggle room there. As a resident of both North and South, I remain conflicted about the equity issue. To resolve the issue, we must look at how each Nevada Citizen is affected in government services, and be careful not to lump the baby with the bathwater, so to speak.

    Tax revenue is what funds the necessary infrastructure for our nation, state, and local community. That is the BIG picture. Financial and operational transparency provides the accountability we all so desparately insist on. The informational age with technology has helped with bringing transparency, where we have demanded it to be there. That is the key: requiring transparency with all agencies in government, so that we can determine whether or not those charged and trusted with its care are doing a good job. It won't happen unless the People ask it to be done, and that is what some organizations and agencies hope never happens! Ha!

    Without exception, every budget out there has its little secrets, hidden places for money that will get distributed in a different place than intended. The accountability for such money may never see the light of day.

    It all boils down to: are the needs of the People who pay into the system (via taxation) being met? Let's go there.

    Blessings and Peace,
    Star