Las Vegas Sun

August 18, 2019

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Water authority may seek to turn its money tap on permanently

Temporary’ quarter-cent sales tax has been in effect since 1998

Southern Nevada Water Authority Facility

Beakers contain water samples in one of the many labs within the Southern Nevada Water Authority’s massive testing facility near Lake Mead on Wednesday, July 9, 2014.

Updated Wednesday, July 17, 2019 | 11:40 a.m.

The Southern Nevada Water Authority will discuss a request this week to make permanent a temporary countywide quarter-cent sales tax that’s been in place since the late 1990s and raised more than $1 billion.

The water authority’s board of directors, which meets at 9 a.m. Thursday at its downtown Las Vegas headquarters, will consider asking the Clark County Commission to make the tax permanent. The tax has drawn concern from some quarters, including at least one county commissioner, about where the money raised is being spent.

As a result of a 1997 state law, county commissions are allowed to raise sales taxes by a quarter-cent to fund infrastructure. In Clark County, the law requires all of that sales tax revenue be earmarked for the SNWA. The quarter-cent tax went into effect in 1999.

The law includes a sunset provision, canceling the tax whenever it raises $2.3 billion or on June 30, 2025, whichever comes first. But the law also allows the county commission to make the tax permanent with a two-thirds majority vote.

Since its inception, the tax has raised over $1.4 billion for the SNWA, according to Kyle Roerink, executive director of the Great Basin Water Network. State officials have estimated that a quarter-cent sales tax currently raises about $108 million annually.

SNWA officials were not immediately available, so it could not be determined why the authority would ask to make the tax permanent at this time, since neither of the sunset provisions is on the immediate horizon.

While the statute requires the proceeds be used for “acquisition, establishment, construction, improvement or equipping of water and wastewater facilities,” County Commissioner Tick Segerblom said the language essentially allowed the SNWA to spend money on anything it worked on.

“It literally just goes in the pot,” Segerblom said.

Roerink said he had filed an open records request with the SNWA to determine how the money had been spent. He wants to be sure, he said, that the money is not going toward a pipeline to carry water from Northern to Southern Nevada — a contentious fight pitting the rural North vs. the urban South.

“What we’re saying is that none of this money should be used for the water authority’s continued pursuit of the pipeline,” he said.

Debate over a water pipeline has long simmered in the background of water discussions in Nevada. A SNWA-proposed project, the pipeline has been opposed by many in the North and by environmentalists around the state who worry about its effects.

Another concern that environmentalists have expressed is the use of the money for ranching operations the SNWA owns in eastern Nevada. In the past, the SNWA purchased millions of dollars’ worth of ranching real estate as a means of obtaining water rights for the pipeline project.

Corey Enus, a spokesperson with SNWA, said revenue raised from the sales tax was not spent on ranching operations.

The sales tax does help fund SNWA’s major construction and capital plan. Among the projects that have been paid for from the fund were the Brock Reservoir, which captures more Colorado River water for Nevada, and a third intake shaft into Lake Mead, which helps ensure the authority’s access to the water supply if the lake's level continues to drop.

Timeliness

Commissioners are required to review any sales tax extended under the 1997 law once every decade, though the law does not list any ramifications for failure to do so. The last time Clark County commissioners reviewed the tax was in 2008.

Roerink said the lack of timely action by the county raises responsibility issues.

“They blew past deadline, so it just raises the questions of accountability and transparency,” Roerink said.

The sales tax was scheduled to be discussed in January, but it was removed from the agenda before discussion.

Possible change in revenue use

Segerblom said revenue generated by the sales tax may have a better use. While he didn’t propose a singular use, he said it was worth looking into alternative uses.

“The power structure sees an easy way to do something, and they do it and nobody ever seems to question,” he said.

Changing the revenue’s use is beyond the power of the commission, though. Because of how the law is written, the commission would have to get permission from the Legislature to enact any changes not earmarking the funds for the water authority.

“If we didn’t make (the tax) permanent, we could start that conversation with the legislators and the governor,” Segerblom said.

The existence of the tax keeps water rates low, Segerblom noted, essentially providing a revenue boost to the hotel industry in Las Vegas. Without the tax revenue, hotels would have to pay more for the water they use. He brought up the potential of raising water rates to make up for any hypothetical decrease of sales tax revenue.

“There’s nothing that water rates couldn’t be used to do the same thing,” he said.

This version corrects the year in which the sales tax went into effect.