Crossfire - February 2009

State the Issues

Should the state constitution be amended to include an annual property tax cap?

YES

Nevada’s current tax law effectively nullifies our constitutional guarantee of the right to the pursuit of happiness which our founders clearly understood to include the right to own property.

Property owners bear unequal tax burdens because the system lacks uniformity in both method and value. The current “tax abatement” program established by the 2005 Nevada Legislature just aggravates this problem, as some taxpayers enjoy a 3% annual tax cap, while their neighbors pay 8% property taxes because their homes are not their primary residence. In addition, there is a 2009 Bill Draft Request by the rural counties that would totally remove this abatement.

Nevada is the only state in the nation that assesses property taxes separately for land and improvements. The current system is a gimmick designed to make property owners believe their taxes will remain stable, but that is not fact.

The current law fails to define what portion of real property value belongs to land versus improvements. Assessment methods vary widely, and are often based upon statistical guesswork and subjective speculation, rather than verifiable appraisal. Current tax rules are too complex to be understood by most taxpayers.

The system is being challenged in the courts. If declared unconstitutional, taxpayers will be at the mercy of politicians under pressure form money hungry lobbyists with little sympathy for property owners.

It is clear that the only permanent protection for taxpayers is a constitutional amendment. A constitutional amendment will end the defective, complex, subjective assessment system, and replace it with one based mainly upon the purchase price of property, making it easy to understand and provide a reliable, predictable and uniform standard to establishing values.

Determining property taxes based upon “acquisition value” has been upheld as constitutional by the U.S. Supreme Court. It is fair to buyers of property, because they make an informed choice to accept a higher assessment. It is fair to property owners, who can rest assured their taxes cannot increase by more than 2% annually.

The constitutional amendment would provide relief for seniors, cases of eminent domain and other adverse conditions, including economic downturns. It balances taxpayers’ need for security and stability with government’s need for revenue, ends the complexity and inequity of the current system, and establishes verifiable, reliable, uniform, and constitutional taxation that can only be changed by a vote of the people.

Sharron Angle is a former Nevada State Assemblywoman.

NO

The shrill demands of anti-government zealots, led nationally by Grover Norquist and statewide by Sharron Angle, who want to reduce Nevada state revenue by slashing property taxes, continue even though we can plainly see the bitter harvest of anti-tax policies. The country’s schools and infrastructure are falling apart and the epicenter of their efforts, Nevada, may be in the worst condition of all.

As of 2005, the state had the lowest percentage of people working in state and local government in the country. As University of Nevada economics professor Elliott Parker noted in December, some people are opposed to any government services, including public education (where Nevada is 49th in the percentage of population working in the schools) and state higher education (50th, again). As a result of short-sighted tax policies, Nevada historically comes at or near the bottom of all the states when it comes to funding education, essential social services and health care for children. The economic downturn of the last 18 months has only exacerbated the funding shortfalls.

Since most property taxes go to schools – along with police and fire protection, libraries and other needs – primary education would take an inordinate hit from this initiative.

Ms. Angle’s initiative is based on California’s Prop 13 of 1978, when rapidly rising property values and growth-related funding needs were squeezing many homeowners in our neighbor state. A few years ago, one could argue that Nevada’s homeowners were in a similar bind. But today is hardly the same situation. First, Nevada in 2005 already limited property tax increases to 3 percent annually, providing substantial relief to homeowners. Second, in Clark County, property values are down 40 percent over their high point of 2006, and are still falling. And finally, cutting revenue means cutting schools, public health and safety, and cutting the quality of life that we need to attract new investment.

Prop 13 in California has had significant negative impacts. It strongly discourages sales of existing homes, leading to a lack of affordable housing close to worksites. That means a greater need for bigger roads, sprawling housing developments many miles from jobs, more air pollution and all the negative impacts of forced growth, which we are all too aware of in Southern Nevada. Ms. Angle’s proposal is a boon to housing developers, but a blow to smart development and the environment of the Silver State.

Launce Rake is Communications Director for Progressive Leadership Alliance of Nevada