Give me your money

Two decades ago, the state shook up the way it distributed tax dollars to Nevada cities and counties. Some called it the “tax shift.” Local governments had a different term: “tax shaft.”

Thus was born a battle between the state and Nevada’s local governments, a clash over tax revenue and power that endures to this day.

As Morse Arberry, a Democratic state assemblyman from Las Vegas, said so crisply earlier this year when describing the revenue going to Clark County: “They’ve got more money than God.”

This week, with pressure mounting to save money in the face of declining state revenue, Gov. Jim Gibbons stoked the feud by suggesting that cities and counties can yield some money to the state.

Word of his comment rippled to localities across Nevada. Old tensions broke into the open.

“Gibbons didn’t create that tension,” state archivist Guy Rocha said. “All he did, perhaps, was inflame it.”

Gibbons’ spokeswoman Melissa Subbotin downplayed the remark, saying the comment that created “widespread panic that has grown legs” was just something the governor tossed out in a meeting with the editorial board of the Las Vegas Review-Journal.

“There’s no official proposal at this time,” she said. “The idea we’ll be taking money away from them tomorrow, nothing could be further from the truth.”

So everyone can relax?

Turns out, not really.

State officials are indeed talking about the issue. Senate Majority Leader Bill Raggio, R-Reno, told the Sun he suggested to Gibbons last week that the state study its entire tax structure, including how it distributes revenue to cities and counties.

Raggio said the review should ask: “Are we using existing revenues in an appropriate fashion? Are we adequately funding what we’re talking about? Do we need additional revenues?”

Raggio said he doesn’t know the answers to those questions.

But, he said, “there’s a perception out there that some of the local governments are flush with money.”

County and city officials say they have their own financial problems caused by the slowing economy. On top of that, the state has ordered counties and cities to take on more responsibilities, without always giving them extra money to pay for them.

An example: When the Legislature decides to add a judge to handle increased caseloads, the state pays the judge’s salary. But the cost of the bailiff, the secretary, the courtroom and everything else is picked up by the county.

Some critics of that system question the wisdom of taking money from local governments to ease the state’s financial problems.

“What you’re looking at, in my impression, is a governor who pledged no new taxes, and he’s looking at how he can get revenue to accommodate the challenges of running the state,” said Carole Vilardo, president of the Nevada Taxpayers Association. “You might mitigate running a shortfall, but in so doing, you’re just doing it on the backs of the local governments.”

Clark County Commissioner Bruce Woodbury acknowledged the state was in a tough financial situation.

“I don’t know what route the state should take,” Woodbury said. “I do know it’s not to rob Peter to pay Paul, and say you solved something.”

County and city officials said they suffer many of the same problems as the state.

Gibbons has ordered 4.5 percent cuts, largely across the board, to state agencies.

Clark County and Las Vegas say they are also feeling the budget crunch and are making adjustments that include delaying capital construction projects.

Jeff Fontaine, executive director of the Nevada Association of Counties, said many smaller governments have cut budgets.

But clearly, Clark County is regarded as the cash cow. As of last July, the county had $288 million in its general fund reserve — more than half the $540 million Gibbons has been trying to cut from the state budget over the next two years.

The county says its financial affairs are sound because it is more conservative than the state when it projects its budget, preferring to underestimate revenue. The county should not be penalized for managing its money well, Clark County Commission Chairman Rory Reid said.

“We swim in the same revenue stream that the state does,” he said. “We are not anybody’s slush fund.”

But Reid and other local government officials said they welcome dialogue with the governor.

They also said Gibbons’ suggestion caught them by surprise.

Assembly Speaker Barbara Buckley, D-Las Vegas, said legislators had been making strides to communicate better with local elected officials.

Assemblyman John Oceguera, D-Las Vegas, as well as Buckley have been holding informal lunches with local elected officials, including Las Vegas Mayor Oscar Goodman, Woodbury and Reid, to talk about issues.

“I think some legislators have some good relationships with members of local government,” she said. “But we’re all very busy, all very busy dealing with issues regarding the positions we hold. It’s not always time for good communication.”

She said a communication lapse — as she sees Gibbons’ recent comments — often “leads to mistrust, which leads to bitter feelings, which leads to more distrust. This opens up old wounds.”

Subbotin pointed to the governor’s summit late last year on the budget cuts, in which he invited city and county elected leaders to Carson City to discuss budget shortfalls.

“We have a strong working relationship with them,” Subbotin said. “Before any proposal progresses, they’ll certainly be included in the process.”

Sun writer Tony Cook contributed to this report.