Wednesday, Feb. 16, 2005 | 11:02 a.m.
CARSON CITY -- A 6 percent property tax cap would leave a $44 million hole in school funding over the next biennium, an official from the Nevada Department of Education said Tuesday.
Those losses, however, are only funds for operations and don't include the amount school districts would lose to repay debt for their local building projects, said Douglas C. Thunder, deputy superintendent of the Nevada Department of Education.
Districts could be forced to raise the local rate they charge for capital projects -- ensuring they stay within the state cap of $3.64 per $100 of assessed value -- or they could renegotiate their bond payments, which could affect their credit ratings, Thunder said.
Thunder said he based his estimates on Gov. Kenny Guinn's proposed budget, which assumed revenues would grow at more than 6 percent each year of the biennium.
Educators told legislators about the complicated property tax formulas that drove about 20 percent of school funding in fiscal year 2003.
Some districts, especially rural districts, said they are already struggling to find funds to build new schools or maintain their old ones, and a property tax cap could cut into their ability to float bonds for school buildings.
But Assembly Speaker Richard Perkins, D-Henderson, made it clear at the hearing that home assessments have increased so much in the state's growing areas that the Legislature needs to do something about rising property taxes.
"Few people want to put more money in education than I do, but I can tell you there's going to be property tax relief," Perkins said. "Trust me when I tell you we need to find a relief mechanism because we're going to price people out of their homes. We've got to find the proper relief mechanism and make that meld with the school districts."
Walt Rulffes, chief financial officer of the Clark County School District, said districts are concerned that if property tax increases aren't mitigated somehow, then voters will be less likely to pass upcoming bonds.
Clark County, for example, could ask voters in 2008 to extend bond sales originally passed in 1998 that would build schools for the booming student population.
"We recognize that if there are runaway taxes, then the public won't vote for bond issues," Rulffes said.
One thing districts know they don't want is a similar measure to California's Proposition 13, which would roll back tax levels to those of three years ago and cap them.
Proponents of putting a similar measure in Nevada almost gained enough signatures last fall to put a constitutional amendment on the ballot.
"It would be devastating and it would be ridiculous to go with a retro three years back basis," said Gary Kraemer, chief financial officer of the Washoe County School District, referring to the measure's attempt to roll back property taxes. "It would take 10 years to catch up to where we are now."
Kraemer suggested that the proposal to allow homeowners to claim some sort of hardship exemption might be a place to start.
"That narrows it in if you want to focus on people who have a hardship paying their taxes," he said.
An automatic exemption -- such as the $50,000 exemption Perkins suggested -- could be devastating to rural counties that have lost assessed value anyway, said Marty Johnson, a bond consultant for several Nevada school districts.
Perkins said he has staff researching ways to implement the exemption without hurting rural counties.
Also on Tuesday, Sen. Bob Coffin, D-Las Vegas, said he proposed a bill that would allow homeowners to defer payments of any property tax increases of more than 6 percent per year.
"It would be like an interest-free loan," he said.
The homeowner would not have to pay the taxes he or she owed until the home was sold and the homeowner realized the value of the home's appreciation, Coffin said.
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