MINUTES OF THE
	SENATE COMMITTEE ON TAXATION

	Sixty-eighth Session
	June 1, 1995


The Senate Committee on Taxation was called to order by Chairman Sue Lowden, 
at 1:30 p.m., on Thursday, June 1, 1995, in Room 224 of the Legislative Building, 
Carson City, Nevada.  Exhibit A is the Agenda.  Exhibit B is the Attendance Roster.


COMMITTEE MEMBERS PRESENT:

Senator Sue Lowden, Chairman
Senator Kathy M. Augustine, Vice Chairman
Senator Ann O'Connell
Senator Dean A. Rhoads
Senator Randolph J. Townsend
Senator John B. (Jack) Regan
Senator Ernest E. Adler

STAFF PRESENT:

Kathy Cole, Committee Secretary
Kevin Welsh, Deputy Fiscal Analyst, Fiscal Analysis Division

GUEST LEGISLATORS PRESENT:

Senator Raymond D. Rawson, Clark County Senatorial District No. 6
Assemblyman Brian Sandoval, Assembly District No. 28

OTHERS PRESENT:

Bob Hadfield, Lobbyist, Executive Director, Nevada Association of Counties
Michelle Gamble, Lobbyist, Nevada Association of Counties
May Shelton, Lobbyist, Director, Washoe County Department of Social Services
Tom Grady, Lobbyist, Nevada League of Cities
Scott Higginson, Lobbyist, Vice President of Government and Public Affairs, 
Del Webb Corporation
Andrew Gordon, Lobbyist, Sun City Summerlin Community Association
Madelyn Shipman, Lobbyist, Assistant District Attorney, Washoe County District 
	Attorney
Irene Porter, Lobbyist, Executive Director, Nevada Homebuilders Association


Kit Carson Weaver, Assessor, Carson City,  representing the Assessors Association
of Nevada
Sam McMullen, Concerned Citizen
Patricia Justice, Lobbyist, Clark County
Janice Wright, Deputy Executive Director, Department of Taxation
Michael Pitlock, Executive Director, Department of Taxation
Steve Tackes, Chairman, Carson City Airport Authority
Hale Bennett, Concerned Citizen
Barbara Byington, Assessor, Douglas County 
Al Kramer, Treasurer, Carson City
Stephanie Tyler, Lobbyist, Regional Transportation Commission of Washoe County
Lucille Lusk, Nevada Concerned Citizens

The hearing on Senate Bill (S.B.) 486 was opened by Chairman Lowden.

SENATE BILL 486:	Revises provisions governing taxes levied to provide aid, 	
			relief and medical assistance to indigent persons.  
(BDR 38-817)

Bob Hadfield, Lobbyist, Executive Director, Nevada Association of Counties (NACO) 
testified S.B. 486 is a measure that seeks to assist counties in addressing a very 
complex and serious problem confronting the counties.  He presented the 
committee with material containing background and charts for further reference to 
the problem.  (See Exhibit C.)  In order to meet indigent care requirements, county 
revenues must increase substantially.  It is important for the committee to have an 
understanding of the incredible situation the counties find themselves in as a result 
of actions taken during prior legislative sessions.  In 1979 no one could have 
predicted what has happened to county government as a result of some of the 
changes in the law made that year by the Legislature.  The State of Nevada was 
responsible for paying the long-term medical bills of long-term care patients 
receiving  300 percent of Supplemental Security Income (SSI) or less in 1979.  At 
that time, 300 percent related to $714 per month.   County government was 
responsible for any one whose income exceeded that level.  However, in 1979, the 
Legislature decreed a cap on the state's participation in this program at the 1979 
level.  Therefore, anyone entering the rolls after 1979 with an income in excess of 
$714 became the county's responsibility.  


Counties have now picked up 1,000 long-term care patients who would otherwise 
have remained on the state rolls at a projected cost of $32 million by the second 
year of this biennium, continued Mr. Hadfield.  A little over one-half of that money 
is Medicaid-match money, because this is a Medicaid-match program.  The counties 
understand they have a responsibility and accept that responsibility, but they are 
simply unable to afford the escalating costs and the continued transfer of state 
patients to the county rolls.  Although this measure will not help all counties, it will 
give some counties the flexibility, at individual county option, to increase the the 
ad valorem tax they are allowed to levy to pay for indigent medical costs.  The 
amount sought in the measure would allow Clark County, by county commission 
action, to increase the property tax in Clark County by 1 cent.  It would enable all 
of Nevada's counties, at the individual county commission option, to increase their 
present levy by up to 5 cents.

Mr. Hadfield explained this measure has nothing to do with the $3.64 cap.  This 
measure would not address the cap, so it would not help all counties.  To illustrate 
why this problem has reached critical proportions, Lyon County cannot make a 
$200,000 match payment on the Medicaid-match program this year.  The  program 
is structured as a state program.  It was designed by the federal government to be 
operated as a state program for states.  There was an agreement a few years ago 
with the state wherein counties could access the match money, because the 
counties were going broke without it.  The agreement provided for each county to 
enter into an interlocal agreement with the State of Nevada whereby the state bills 
the counties whatever it believes the counties' payments will be.  The counties 
submit payment to the state; the state takes that money, considers it state money, 
and holds it up to the federal government and asks for match money.  If one county 
fails to participate in this program, it is no longer considered a state program by the 
federal government.  This means the entire match program goes away.  If this 
occurs, it costs the state in the neighborhood of $15 million.

Mr. Hadfield continued saying there may be two other counties which will not be 
able to make their payments.  Therefore, there is another measure in another 
committee where NACO will be asking the State of Nevada to help those counties 
pay their bills, so the rest of Nevada's counties will not go down the drain, because 
some counties cannot pay.  Further, NACO will be asking for a pool of money 
during the interim so that any other counties that go down as a result of this 
problem will not take the rest of the state down.

Chairman Lowden interrupted to ask if one county does not make its payment for 
the matching funds, does it involve the entire state?

Mr. Hadfield answered if one county fails to make payment, there will no longer be 
a state program as far as the federal government is concerned.  


Chairman Lowden speculated the worst scenario would be the state would no 
longer have federal money coming in any more.  What would that mean?

Mr. Hadfield replied it would mean approximately 45 percent of the money available 
to counties to pay long-term care bills would no longer be available.

Chairman Lowden wanted to know what it would mean in a human sense?

Mr. Hadfield answered it means the counties would not be able to pay their long-
term care bills.  Other testifiers present will give the committee a better perspective 
on particular counties.  There are some counties which are at the $3.64 cap; they 
would not be able to utilize this legislation.  This bill is an effort to help the counties 
assist themselves.  Counties are working with the administration and the 
Legislature to come up with a solution.  The money committees recommended 
raising the SSI cap for state responsibility of long-term care patients from $714 to 
$750, which will probably save the counties 10 patients.  There is an effort 
underway, which Mr. Hadfield did not want to minimize, by everyone involved to 
see if there is a better way to divide responsibilities in this program to pay for long-
term care.

Senator O'Connell queried whether if the money under discussion pertained to the 
group of people who are at the $714 level, or does it apply to all indigents.  She 
has knowledge from personal experience with constituents that there may be cases 
where people can no longer take care of themselves, so in order to obtain the care 
they need, they must become indigents by turning over to the state all they have. 
 At that point in time she was not sure if they would fall under the SSI cap, or 
would be considered in another category.  How much money is received from 
people who turn over all their assets to the state?  Is that a separate pool of 
money?  If so, what is the balance, and how is the money used?


Mr. Hadfield stated the funding in S.B. 486 is not solely for long-term care.  The 
problem is these monies are now being consumed more and more by long-term 
care.  This measure would  increase indigent  levy and make more money available 
for the indigent programs, not just long-term care.  However, it is the long-term 
care crisis which has pushed the counties over the edge with respect to the amount 
of money available for any of the other programs.  In a previous session legislation 
was passed giving counties permission to put a lien on a person's home.  If there 
is a surviving spouse living in a home and the other spouse is in a long-term care 
facility, once the surviving spouse is no longer living in the home, the county can 
enforce the lien to help replenish some of the money spent on the care of the 
spouse in the long-term care facility.  There were considerable loopholes where 
people were doing estate planning 2 years in advance which shifted all their 
resources out of an individual's name so the person would be totally indigent and 
unable to pay, even though their assets had been put in another family member's 
name.

Michelle Gamble, Lobbyist, NACO, stated in looking at the 1994-1995 maximum 
tax rates throughout all 17 Nevada counties, there are four counties which are at 
the $3.64 tax rate cap, or within a few pennies.  Of those four counties, all four 
of them are levying the total indigent levies allowable by law.  Of the other 
counties, there are five counties levying the total amount of allowable indigent 
levies, but are not at the $3.64 cap.  It is NACO's indication there are presently 
five counties which would benefit from this legislation, Carson City, Clark County, 
Lyon County, Mineral County and Washoe County.  Of those five counties, Lyon 
and Mineral Counties are experiencing financial difficulty in meeting their 50-50 
match payment.  Those counties would, at the county commission option, have a 
remedy to the problem by being able to bring in more revenue for indigent care.  
The third county experiencing problems is White Pine County.  That county does 
not have any capacity to level additional taxes.  There are other counties such as 
Pershing County which will be at the $3.64 cap next fiscal year.  They are only 
levying 2 cents of the current 4-cent optional taxes, but because they are at the 
maximum tax rate allowed by law, they cannot levy additional taxes.  NACO is 
greatly concerned with Pershing County because there is a new prison coming on- 
line next year, and NACO believes this will significantly impact the county's 
indigent problems.  This bill will only be able to help some counties, not completely 
address the problem faced by the counties.

May Shelton, Lobbyist, and Director, Social Services Department, Washoe County, 
 presented  material  to the committee (Exhibit D) which contained graphs showing 
the amounts of expenditures for indigent health programs being spent in Washoe 
County.  Ms. Shelton said S.B. 486 proposes to make some amendments to 
Chapter 428 of Nevada Revised Statutes (NRS), which governs indigent health care 
and indigent financial assistance.  Counties need these changes in order to be able 
to pay indigent health care bills in the next year.  As the committee has been 
apprised, some counties are already having problems this year.  If the state, in the 
coming biennium, does not assume more responsibility for nursing home patients 
under Medicaid, counties will be faced with increasing financial problems.  If 
national and state reform efforts become reality, the counties will be impacted.  If 
Congress implements block grants, as it appears they will, counties will most 
certainly be affected.  


Ms. Shelton referred to Attachment A of Exhibit D.  The number of accepts in 
Washoe County's Health Care Assistance Program has increased by 333 percent 
in the past 9-year period.  This is disproportionate to the population growth which 
has been approximately 2 percent per year.  For the 9-year period it works out to 
about a 22 percent per year increase in health care assistance accepts.  Revenues 
in the county indigent health program come from the general fund and the indigent 
health levy.  The indigent health levy was first passed by the  Legislature in 1985. 
 The levy was 3 cents.  In 1989 the indigent health levy was increased to 10 
cents.  One penny of the 10 cents goes to the state supplemental fund for 
catastrophic bills, which are those over $25,000.  In Washoe County, the Board 
of Commissioners levied the full 10 cents from the very beginning.  

The other graphs and other information in Exhibit D were discussed and explained 
more fully by Ms. Shelton.  She closed her presentation by stating the elderly 
population is continuing to grow, which means this problem is not going to go 
away.  The counties are therefore in need of help.  They would like the Legislature 
to expand Medicaid's responsibility for long-term care patients and to pass 
S.B. 486.

Chairman Lowden shared with the committee the outcome of discussion with Mr. 
Hadfield on whether the bill would pass out of the committee.  As a compromise, 
Mr. Hadfield has offered to amend the bill so that the county commissioners, 
should they go forward with this increase on the property taxes, would have to put 
the matter on the ballot.  

Mr. Hadfield wanted to add during their discussion on the bill they did not discuss 
 the fact there are no longer special elections in the state.  If the bill were to pass 
with that amendment it would not do the counties any good for the next budget 
year.  There would be a delay of a full year before the people could even be asked 
if they would support this increase. The problem is immediate and cannot wait.  It 
is the belief of many county officials the problem is a house of cards which will 
come crashing down taking the counties with it.  The problem cannot be ignored 
as it has been since 1979.  The state at its own option could take the responsibility 
down to $30 per month.  In past times it has been suggested that could happen 
to the counties.  Everyone must work together to find a solution to this growing 
problem.  It is just as important, if not more important, than any other thing the 
State of Nevada does.  The tax base of Nevada's counties does not match up.  The 
tax base has no relationship to how many live in the county and their ages.  This 
is a program designed by the federal government to be a state match-program.  It 
is a program which deserves to be supported by the broadest tax base possible. 
 Nevada's counties are just treading water.  This bill is an effort by the counties to 
get a little bit of breathing room until a solution to the problem can be found.


Senator Augustine asked which counties are the most strapped because of this 
indigent care?

Mr. Hadfield responded the problem is a statewide problem.  Because a penny 
increase in the tax levy in the smaller counties generates so little money, and one 
indigent patient can cost $40,000 per year, even with the match, the small county 
is having to come up with $20,000 per indigent patient per year and the county is 
unable to generate that kind of revenue with a one cent increase in the allowable 
tax levy.  

Senator Augustine inquired about the flexibility given counties with the bill passed 
out of the Senate Committee on Human Resources yesterday.

Mr. Hadfield repeated there are three measures NACO is working on to try to give 
the counties as much flexibility as possible.  The hospitals are working with the 
association.  The hospitals want assurances the counties are not going to get a bill 
passed which will let the counties stop paying hospitals.  NACO is dealing with the 
long-term care industry and the hospital industry.  It is a complex interwoven 
problem.  When one part of the problem is addressed, it affects various entities. 
 The counties want to meet their obligations, but it is impossible with the tax base 
the way it is.  The crack is showing up in the small counties, but it will consume 
even Clark County in the future.

Senator Augustine wondered if the counties could shift other revenue monies from 
their tax base right now to help pay indigent health care costs?

Mr. Hadfield explained ten counties have a different revenue structure.  They are 
on a revenue formula which is driven by population and the Consumer Price Index 
(CPI).  These counties do not share as much in the dramatic economic activity 
which is seen in some of the other counties which are not on that formula.  These 
counties do not have the ability to shift revenues.  

Senator Augustine wanted to know why NACO wanted the Legislature to impose 
a property tax on the majority of the voters rather than put it to a vote of the 
citizens?  She is aware a vote on the issue would put the counties off for a year 
before the question could be voted on, but she represents a very old district in 
downtown Las Vegas, and even a very small increase for many of her constituents 
is a major increase.


Mr. Hadfield said NACO is sensitive to this problem.  The way the bill is 
constructed, the county commissioners are the ones who have to grapple with the 
problem.  The bill does not mandate county commissioners increase the tax levy, 
it only allows them the ability to do so.

Senator Augustine interjected if the ability is there, they will increase the tax.  That 
is the bottom line.

Mr. Hadfield had a different opinion.  The fact there are some counties right now 
which are not at the maximum tax, but are able to handle the measure, shows 
there is restraint.  The way the system works, it is a replenishing pot of money. 
 When you spend the money down, a tax is levied to replenish the account.  
Counties have shown restraint when they have control over the budget.  Budget 
control has been lost due to some of these programs which continue to grow in 
enormous proportions.  It is the local elected officials who will have to make the 
decision whether or not to levy the additional tax and they will have to justify 
whatever decision they make to the local folks.

Discussion ensued on the mood of the constituents regarding new or increasing 
taxes.  The mood becomes increasingly hostile when raises are sought for elected 
county officials and county employees and at the same time the counties say they 
do not have the funds in their budget to pay their bills.  Putting the measure on the 
ballot for voter approval would assure the taxpayers having their say in the matter.

Ms. Shelton referred the committee to the contents of S.B. 486.  On page 1, line 
24, the statute states interfund transfers, short-term financing procedure or 
contingency transfer may not be made by the board of county commissioners to 
provide resources or appropriations to the county indigent fund.  In other words, 
this is a capped budget.  However, there is a contradiction in the bill as it goes on 
to say, on page 2, line 3, if the health of indigent persons in the county is placed 
 in jeopardy and there is a lack of money to provide necessary care under this 
chapter, the board of county commissioners may declare an emergency and provide 
additional money for medical care from whatever sources may be available.

The Washoe County District Attorney's Office, according to Ms. Shelton, has been 
asked to tell the Washoe County Social Services Department what this means.  On 
the one hand the budget for indigent medical care cannot be augmented; on the 
other hand, someone has to decide what a medical emergency is.  


Tom Grady, Lobbyist, Nevada League of Cities, wanted to answer Senator 
Augustine's question.  He had spoken with some folks from the Yerington 
community and they shared with him that because of the shortage of monies, the 
volunteer ambulance crew has a bill of about $7,000 which cannot be collected. 
 Someone has to make up that money to keep the ambulance in operation, which 
has a direct effect on the cities, counties and everyone involved at the local level. 
Yerington has its fair share of retired residents who are on fixed incomes, and the 
up to 5 cents tax would hurt.  It would probably hurt worse if there was no 
ambulance service.  That is what it is boiling down to.  Who gives what to get 
what.  Mr. Grady feels the 5 cents would be well spent in the Yerington community 
to keep these services going.

Chairman Lowden announced the committee was not going to take action on the 
bill today.  The date the bill will be scheduled for action will be posted.

The hearing on S.B. 512 was opened by Chairman Lowden, who announced the 
maker of the bill, Senator Raymond D. Rawson, Senatorial District No. 6, was 
present to testify.

SENATE BILL 512:	Provides separate method of assessment for unit in 
common-interest community.  (BDR 32-1549)

Senator Rawson explained S.B. 512 was put together in response to some 
constituent complaints from the Summerlin area.  These people have bought into 
a master plan community.  It is a nice area which has many things the buyers were 
seeking, for which they paid a premium price.  These people have also paid high 
impact fees to build schools, sewers, etc.  In the process of planning this 
community, there is some common area land.  Their concern over the common 
interest land led them to approach Senator Rawson.  Common interest land could 
include anything from a golf course to a flood plain that is grass, to bike paths and 
green common areas, or even to divided highways.  There are various parts of the 
Summerlin community which are sectioned and considered part of the buyers' 
properties.  However, there are restrictions on the common interest land.  There are 
restrictions on the sale and the use of it, and essentially these buyers feel it is 
driving valuation of their properties higher than it should be.  They have a sense 
they are being doubly taxed.  It is a complex issue.  


Senator Rawson said he would like to point out some things as the Legislature tries 
to come out with a piece of legislation on this issue.  There are common area lands 
which have a public purpose.  It is a purpose greater than for just the homeowner 
themselves.  Communities such as this lend a beauty to the area and also tend to 
drive crime down and there seems to be less of a fire risk.  There may be bike 
paths, flood control channels, etc., that the rest of the city or the county does not 
have to pay for.  Certainly when considering a golf course, it is thought of as being 
only for the very rich, and therefore should not be given any consideration.  But the 
golf courses in this area and in many of the planned communities now being built 
have more than one purpose.  They act as part of the master flood control plan and 
are designed to be able to absorb a tremendous amount of rainfall and flow-through 
water so the extra water does not overburden the rest of the system.  Those 
parkways and green ways have all been planned into the flood control plan.

There are many ways to look at finding relief, continued Senator Rawson.  Many 
of the people in the Summerlin area are seniors.  Senior exemptions could be 
sought. Even though Summerlin is a nice area, many of those who live in the 
community are on fixed incomes and have no active income other than savings 
and/or social security.  The assessor could be instructed to look at the issues of 
what the restrictions on the land are.   Should the land be assessed at full cash 
value when owners can never realize the full cash value or full use out that land? 
Some of the common areas and improvements, such as clubhouses and golf 
courses, have restrictions stipulating they can never be sold.  They will always 
have to be tied to the property.  The property owners need relief from optimum 
valuations on the common areas assessed back to them.

Chairman Lowden stated she has received several complaints on the language of 
the bill.  After the hearing, she will recommend a subcommittee be formed 
immediately to see if the language can be changed to satisfy everyone.  This is not 
just a Clark County issue.  It is a statewide issue.


Scott Higginson, Lobbyist, Vice President of Government and Public Affairs, Del 
Webb's Sun City Summerlin in Las Vegas, and soon to be Del Webb Sun City 
McDonald Ranch in Henderson, testified his company became aware in 1993 of the 
problem which Senator Rawson has been discussing.  As it applies to the residents 
of Sun City, they are paying a double tax.  The homes in Del Webb's Sun City 
Summerlin project are assessed by the county assessor at a higher rate than homes 
of the same size, the same make and the same square footage in other subdivisions 
nearby.  Obviously that higher rate is there because of the amenities Sun City 
Summerlin citizens enjoy, golf courses, recreation center, and other things.  The 
assessor is then sending a tax bill for those amenities to the community 
association.  The community association draws its fees from these very same 
homeowners, who are paying higher association fees in order to pay for the tax on 
the amenities which are the same amenities which are causing their taxes to be 
higher in the first place.  That is just a simple application as to how it applies to 
Summerlin.  In many of the situations throughout Summerlin in general, outside of 
Sun City, and there has to be clear separation in committee members' minds, many 
of the rights of way and the green belts established by Summerlin are assessed at 
zero value because they serve a dual purpose of public streets and flood control. 
 The assessor's office has looked differently upon Summerlin's recreation centers 
and golf courses and has placed a separate tax on them, while the residents are 
already paying a higher tax because of the amenities in the project.  

Mr. Higginson continued saying  an inequity exists.  The residents are concerned 
about it and he appreciates Senator Rawson's willingness to introduce legislation 
which will get discussion going on the inequity.  He believes S.B. 512 attempts to 
address the issue, but is concerned it still leaves open the opportunity for the 
double taxation by the assessor.  The bill basically allows the assessor to take the 
value of the property, divide it by the number of lots and put the tax assessment 
back on the homes.  Summerlin homeowners thus still end up paying a higher tax 
on their homes because of the amenities.

Andrew Gordon, Attorney for the Summerlin Homeowner Association, was 
introduced by Mr. Higginson.  He explained Del Webb Corporation is a separate 
entity from the Sun City community association.  Mr. Higginson is here today as 
a Del Webb Corporation representative simply concerned for their residents who 
make up the association.

Mr. Gordon explained the association is made up of 8,500 residents who live in 
approximately 4,700 homes.  At build-out the numbers will probably approach 
10,000 residents and exceed 7,700 homes.  These residents are senior citizens. 
 Most of them live on fixed incomes.  They cannot afford to be double-taxed and 
overtaxed, which is the situation right now.  As background, Sun City Summerlin 
offers certain amenities to its residents.  There are currently two, eventually three, 
golf courses, and three, eventually four, recreation centers.  All the residents own 
those facilities.  When a person buys a home in Sun City, that person buys an 
interest in the golf courses and the recreation centers.  It is part and parcel of the 
home purchased.  These homes are sold with the understanding these facilities will 
be used and maintained for the benefit of Sun City residents.  In order to protect 
that understanding certain deed restrictions are put on these properties.  The deed 
restrictions say that for the next 20 years the properties have to be maintained for 
the use, enjoyment and benefit of the residents and have to be operated on a not-
for-profit basis.  This is obviously a significant factor.  You cannot operate these 
golf courses or recreation centers like private businesses which can make a profit. 
 Therein lies a distinct difference.


The association faces a two-fold problem, continued Mr. Gordon.  The assessor in 
Clark County has told the association he has to ignore these deed restrictions.  This 
makes no sense.  He is ignoring reality and, therefore, taxing and assessing these 
properties as if they were for profit, commercial enterprises.  The second problem 
is the double taxation.  Residents are being taxed, in some cases, even greater than 
double.  Hopefully, S.B. 512 will correct this problem.  The language of the bill may 
be slightly flawed, but changes can be made to the wording to correct problem 
areas.

Mr. Gordon went on to explain the two problems.  The assessor has told the 
association he cannot take account of deed restrictions when assessing valuations 
because of the way the statutes are set up.  Mr. Gordon and the association 
disagree with this position.  The tools are in the legislation to correct the problem.
subsection 5 of NRS 361. 227 states the taxable value of real property must not 
exceed the property's full cash value.  NRS 361.025 defines full cash value, "the 
most probable price which the property would bring in a competitive and open 
market under all conditions requisite to a fair sale."  This is basically the fair market 
value test.  According to NRS 361.025 full cash value has to equal fair market 
value and according to subsection 5 of NRS 361. 227,  taxable value cannot 
exceed full cash value; so, in a sense, taxable value cannot exceed fair market 
value. The association contends, in determining the taxable value, the full market 
value must be scrutinized.  This means looking at the deed restrictions just as any 
reasonable buyer in the market, setting a fair market value on property, would 
consider deed restrictions.  The assessor ought to take care of that as well.  No 
person is going to buy a property on which no profit can be made.  The assessor 
should do this under the current statutes.  

Mr. Gordon continued saying herein lies the problem.  The assessor says he cannot 
take the deed restrictions into consideration due to the statutes.  He contends NRS 
227.1(a) says, when assessing vacant land, legal and physical restrictions must be 
accounted for, but on improved land it is assessed consistent with its current use. 
 Because those words, legal and physical restrictions, are not included on improved 
property, the assessor has determined those restrictions cannot be taken into 
consideration when assessing value.  In fact, the assessor has gone so far as to say 
his office cannot use generally accepted appraisal standards unless the  statutes 
specifically require it.  Therefore, the assessor is assessing the improvements as 
if they were private clubs and private golf courses making profits.

Senator Adler asked if the golf courses and recreation clubs are open to the public.

Mr. Gordon replied they are open to public now simply to supplement revenues so 
that the properties can operate at a break-even point.


Mr. Higginson interjected the recreations centers, the fitness centers and the pools 
are not open to the public.  The golf courses do have limited public play at this 
point because the project is not completely built.  At the time of complete build- 
out, the golf courses will become private courses.  In order for the association to 
maintain sufficient revenues to pay the taxes as well as other costs of the 
association, a limited amount of public play is allowed on the course.  By deed 
restrictions, the courses cannot make a profit.

Mr. Gordon added the golf course operates as if it is privately owned in the sense 
outsiders can come in to play, but it is not operated like a private club in the sense 
 it cannot make a profit.

Senator Adler queried whether the residents could get together and change the 
deed restrictions to make operation of the golf courses or recreation clubs for 
profit?

Mr. Higginson responded the Del Webb Corporation built the golf courses and the 
recreation centers.  They were then deeded over to the association with the 
restriction which precludes that from occurring.  

Discussion ensued as to whether the deed restrictions could be amended, and who 
had voting privileges.

Senator Adler asked about disclosure on association dues and what portion of the 
dues are attributable to taxes?

Mr. Higginson stated buyers are told what the association dues will be, but the tax 
portion is not separated out.  Buyers are aware the association board is responsible 
for the expenditure of association dues.  The tax portion of the dues is part of the 
association's record and is open to scrutiny at any time.  In fact, that is what 
began the concern about double taxation.  Some of the residents discovered the 
association was paying taxes on the amenities while the residents were paying 
higher taxes on their homes because of the amenities.  This results in a double tax.

Mr. Gordon proceeded to talk about double taxation on Summerlin residents.  The 
double tax works as follows.  Residents are taxed on a higher value to their 
individual homes due to the amenities of the community.  Then there is a separate 
tax on the amenities themselves.  The statistics bear this out.  He referred to the 
packet with all the statistics.  (Exhibit E.  Original is on file in the Research Library.) 
 Mr. Gordon explained what statistics are in the exhibit and why they were chosen 
to make comparisons in rates of taxation.


Senator Augustine wanted to make sure she understood the bottom line.  Because 
a house is located in Sun City, regardless if the homeowner has all these extra little 
private swimming pools, etc., his property value is inflated and the taxes are based 
on that inflated rate because the homeowner happens to live in an area with 
community amenities.  She asked if that is what is being claimed?

Mr. Higginson replied Sun City Summerlin homeowners are being taxed at the 
higher rate because they own the amenities.  Anybody who buys a home in Sun 
City is immediately in the association.  Ownership in the amenities goes along with 
the purchase.  The taxation on the home is higher because the amenities are part 
of the purchase.  Then, the assessor is also taxing the amenities and the same 
people are paying a tax for the same amenities.

Senator Augustine was concerned because the problem does not appear to be 
something that is across the board.  It appears to be in just a localized area such 
as Sun City.

Mr. Higginson explained that is why they used comparable homes in the study 
(Exhibit F).  It shows the difference in the assessed valuation for the same type of 
house in a different location.

Senator Regan stressed S.B. 512 is applicable to any association, other than a 
cooperative, where only the property described by metes and bounds is owned, 
with no community property involved.  It is applicable to any condominium project 
whether it be in Elko County, Clark County or Reno.

Mr. Higginson stated the bill has never been portrayed as a special bill for Sun City 
Summerlin.  He is aware it will apply to everyone, but feel if others are being 
double-taxed as the Sun City Summerlin residents are, the inequity exists for them 
as well.

Chairman Lowden suggested it might be beneficial for Sun City representatives and 
other testifiers to have a dialogue with the assessors present to work on the 
wording of the bill everyone can live with.


Mr. Higginson wanted to make an additional comment about the appeal process. 
 The association has been there.  It has been before the State Board of 
Equalization, the District Court, and currently has a case pending before the Nevada 
Supreme Court to do what the association believes must occur to right this 
inequity.  Unfortunately, the courts and the board are both saying the law currently 
requires the assessment of a separate parcel and does not allow any latitude.  That 
is why the inequity must be solved legislatively as well as pursuing efforts in the 
courts.  
Assembly Brian Sandoval, Assembly District No. 25, testified he is in support of 
S.B. 512, although the problem he plans to describe is not specifically addressed 
in the bill.  He expressed a desire to participate in the subcommittee Chairman 
Lowden mentioned.  Part of Mr. Sandoval's district includes Caughlin Ranch.  
Caughlin Ranch is an exclusive planned unit development in Washoe County.  When 
it was developed, the developer was required to build a park.  This park is located 
next to an elementary school.  The homeowners association is required to do the 
maintenance and upkeep on that park.  It is a very nice park.  It is also a public park 
and is not for the exclusive use of Caughlin Ranch residents.  In the last few years 
the homeowners association has been assessed a very large property tax for that 
property.  The homeowners of Caughlin Ranch feel this is unfair because they are 
being taxed for a public park which is available to everyone.  The park is no 
different from public parks in other parts of town.  Mr. Sandoval is trying to get the 
committee's support in supplying relief and equity to Caughlin Ranch residents 
because this is a quasi-governmental piece of property and it has no value to the 
residents.

Senator O'Connell asked, since the park has no resale value for the Caughlin Ranch 
residents, and since it is a public park, what justification is the assessor using in 
order to charge the residents for its value?

Madelyn Shipman, Lobbyist, and Assistant District Attorney, Washoe County, 
stated it is not just Caughlin Ranch residents who feel a public park should be 
treated at nominal value for tax purposes.  The district attorney's office agrees, but 
the current law does not allow for the property to be treated that way.  The 
assessor cannot reduce the value to nominal value.  The deputy attorney general 
indicated that this bill may be a vehicle to deal with the problem.  The Caughlin 
Ranch Park was a development  agreement between the city and the Caughlin 
Ranch developers.  The developers wanted to maintain it because they felt they 
would be able to maintain it at a higher standard than the city.  This has proved 
true, but the requirement of the agreement was that the park be made open to the 
public.  It is in essence a public park, but the Washoe County District Attorney's 
Office or the attorney general's office could not, from their standpoint, find a basis 
in the law for placing nominal value on that park.

Senator O'Connell asked about the agreement between the developer and the city?


Ms. Shipman said the developer originally received credit on the residential 
construction tax for the development of the park.  In essence, the park was paid 
for initially through a credit agreement for residential construction tax.  It was paid 
with the resident construction tax as any other tax would be.  The developer chose 
to not give up ownership and to do the maintenance on the park because the 
developer could maintain the park at a much higher standard than the city park 
maintenance people could.  The park still functions as a public park, but there is no 
provision in the law to have the park appraised and assessed as a public facility.

Senator O'Connell pointed out the problem is very different from that of the Sun 
City Summerlin Community Association.  If this is an agreement between the 
developer and the city, why are the residents of Caughlin Ranch paying the price 
to keep it up rather than the developer?

Ms. Shipman explained the developer was required, as a condition of that 
development, to make the park open to the public.  All of the other amenities 
within the Caughlin Ranch Project are not necessarily open to the public.  There are 
private recreational facilities on which they are taxed.  

Senator O'Connell clarified the developer agreed to put in the park.  The park was 
paid for by the homeowners.  Then the developer said he would maintain and own 
the park.  Is the problem now that the developer no longer wishes to own and 
maintain the park?

Ms. Shipman responded the issue really came down to the fact there is no 
discretion within the assessor's office to look at the items contained in S.B. 512, 
e. g., the deed restrictions or other matters which would depreciate the value of 
the property.

Discussion centered on whether there was any similarity or connection between the 
two problems.

Ms. Shipman explained she came to testify because the statement by the deputy 
attorney general at the State Board of Equalization was that he felt this bill did take 
care of the Caughlin Ranch issue.  Obviously, it does not.

Chairman Lowden expressed the bill is at least a vehicle by which the problem can 
be dealt with.  A subcommittee can try to work on language to solve both 
problems.


Mr. Higginson clarified the similarity in the two issues would be if there are deed 
restrictions on both properties.  He was not sure.  If there are deed restrictions, 
simply amending the language to require an assessor, when valuing improved 
property, to look at deed restrictions in determining value could be a solution to 
both problems. 

Discussion centered on language needed to amend the bill to satisfy everyone.

Irene Porter, Lobbyist, Executive Director, Nevada Homebuilders Association, 
testified she has lived in a planned unit development since the 1970s.  The 
development contains a club house, three swimming pools, jacuzzis, tennis courts 
and two parks which are all paid for by the homeowners and deed restricted to 
those homeowners.  As a former member of the development's homeowners 
association board, she can assure the committee homeowners in her development 
are paying a higher property tax because of the amenities.  This bill would probably 
help a lot of communities such as Sun City Summerlin and her own development 
community.  However, discussion today has centered around Sun City Summerlin, 
the big project in Reno, and other big master plan communities.  The entire 
homebuilding industry is beginning to face a dilemma and a problem that she 
believes will end up before the Legislature.

Ms. Porter continued by saying the homebuilders go in with a tentative map, for 
maybe a 200- to 300-lot subdivision, and the local government demands the 
homebuilder construct a park, landscape the exterior boundaries of the subdivision, 
and install flood control and a detention basin, which is to be left as open space.
These demands result in all public kinds of amenities.  The streets and the parks 
of the development are dedicated to the city once they are completed.  The city 
takes them over for maintenance.  The open space areas may be dedicated or kept 
in a common element of the subdivision.  Local governments across the state are 
now starting to say to developers that they do not want the liability or the 
maintenance, even though the property owners are paying the bill.  Therefore, the 
developer is required to put in all the amenities and improvements, and also must 
form an entity, a homeowners association, or a maintenance district, to take all the 
liability for these facilities and to maintain them.  This liability and maintenance 
even includes the public streets of the development.  Property which is now 
dedicated to public streets, parks, and open areas is still on the tax rolls and being 
assessed to homeowners in the developments where these dedicated properties are 
located.  This is a major, major issue which is just beginning to loom.  What has 
been heard today is just the tip of the iceberg.  

Senator O'Connell asked whether when a developer's plan is approved, does the 
government automatically assume some responsibility for accepting these amenities 
such as streets and parks?


Ms. Porter answered there is a provision in the subdivision act which states that 
streets are offered for dedication at the time of the final map.  The local 
government has the ability to accept or reject that offer.  Local government can put 
on just about any conditions they want on a development.  There have been 
developments which have had as many as 80 conditions tied on to them, including 
the stipulation a flood control and detention basin are to be built, and then the 
developer must create an entity made up of the homeowners to take care of the 
long-term maintenance.  Government is beginning to walk away from those kinds 
of responsibilities and to place the burden on the individual citizens.

Senator O'Connell queried whether this was a problem unique to Nevada, or if it 
is occurring throughout the nation?

Ms. Porter replied some of this has been seen in California, but not nationwide.  

Chairman Lowden reported previous testimony indicated some of the golf courses 
in Sun City Summerlin are built on flood control plains.  Are these the areas Ms. 
Porter is talking about?

Ms. Porter responded she was talking about open space areas which are designed 
and landscaped as part of the flood control drainage areas.  In other cases, the 
developers are having to build detention facilities, flood control, concrete-lined  
channels through the property, and then being asked to maintain the channels.  The 
liability is horrendous to the developer.  Government has a cap of $50,000 per 
incident; the private property owners who are left with this have no cap on any 
incident.  If a traffic accident occurs on one of the development streets, or if a child 
drowns in one of the channels, the homeowners have the liability, and there are no 
caps on how much the homeowners can be found liable.


Kit Carson Weaver, Carson City Assessor representing the Assessors Association 
of Nevada, testified assessors, when doing valuations,  look at the location first. 
 Along with the location, amenities play a very, very important role.  For example, 
if there was a subdivision of 20 $200,000 houses, and $1 million houses were 
built on both ends of the subdivision, all of the houses and lots would be worth 
more money.  People like to be located around $1 million houses, especially if they 
only paid $200,000.  Everything is an amenity.  The law states the assessor will 
value land at its full cash value by the legal restrictions.  The law also says the 
value must be consistent with its use, but the use only would reduce the value 
further.  If there is a legal restriction, it seems improbable that the land's value 
would not be reduced in value accordingly.  He cannot see where there is any 
double taxation.  He does not speak for Clark County, but this is a very big issue. 
 In the last hour there has been a great deal of testimony, including testimony from 
local governments on the problems they are facing, on the issue of amenities and 
double taxation.  

Mr. Weaver went on to say he is investigating the Caughlin Ranch situation this 
week to find out exactly what happened.  It is an issue of double taxation, but the 
County Board of Equalization does not believe so and neither does the State Board 
of Equalization.   Dedication of areas normally happens.  When subdivisions are 
built the parks, streets, etc., are dedicated.  His concern is that any language in the 
bill will have to be super carefully written because of the term, "common interest 
community."  Every community is common interest; every industrial community, 
every residential community and every retail community are common interest 
communities.  The way the bill is written right now, the developer of a subdivision 
could build golf courses, bowling alleys, restaurants, or whatever, and they could 
all be considered part of this common interest community.  Whatever the price of 
the lots are would include whatever those amenities are.  Mr. Weaver sees this as 
a huge, complex issue and the wording must very carefully scrutinized.

Caughlin Ranch, Mr. Weaver continued, encompasses a public park.  The land value 
was put on by the Washoe County assessor at a minimal value.  The problem is 
that there are approximately $1 million in improvements to that park.  That is why 
the tax bill was $13,000 for this current year.

Senator Regan asked Sam McMullen about his tax bill for his Caughlin Ranch home 
and property.  Senator Regan wanted to know how the tax bill was broken down, 
if it had the property taxes separate from the taxes on the amenities of the 
community.


Sam McMullen, Concerned Citizen, stated he must pay into the homeowners 
association, which is a requirement of being in a planned unit development.  Even 
though he does not receive a separate tax bill for the amenities, he pays into the 
homeowners association, which gets the tax bill for the amenities.  Actually, as a 
resident of Caughlin Ranch, his concern is S.B. 512 does not go far enough.  He 
is very much aware the value of his home is factored up because it is part of a 
planned unit development.  That planned unit development is a function of all the 
amenities offered.  Therefore, there is an increment of value in his house.  Now to 
say the common areas, some of which, like golf courses are flood control areas  
that lie on land which cannot be built on, but have been built to do something 
constructive with flood control areas rather than just have 150-foot wide trenches 
or concrete channels, must be assessed at $30 million because that is what it 
could be  if it was on non-flood control areas, seems grossly inequitable.  This is 
a serious policy issue which need fixing.

Chairman Lowden asked Mr. McMullen if he would volunteer to serve on a 
subcommittee for the bill?

Mr. McMullen agreed to be on the subcommittee and complimented the bill drafter 
for getting as far as he has.  This is definitely a complex issue, but language in 
front of the committee goes a long, long way toward trying to address it.

Patricia Justice, Lobbyist, Clark County, testified assessment is not her strong suit 
but she did speak with Mark Schofield, Clark County Assessor, who also agrees it 
is a very complex issue and would like to participate in any subcommittee working 
on language for the bill.

Janice Wright, Deputy Executive Director, Department of Taxation, stated in the 
1980s the Legislature heard arguments from the senior citizens who said they were 
living in homes and the values kept rising forcing them out of their homes.  So the 
Legislature went to a concept called taxable value.   Now, in the 1990s is fair 
market value coming back?  This bill will address that issue, which it needs to do. 
 When looking at the language of the bill, the language deals with full cash value. 
 If a fair market concept is employed, there are a lot of changes which will fall out 
from that.  This is just part of the issue.  A larger concern is really being opened. 
 Does the Legislature want to continue with the taxable value concept, or does it
want to go back to full market value?  

Ms. Wright continued saying, the other thing that must be considered is there is an 
individual case which came before the State Board of Equalization on Tuesday.  She 
has heard a number of the eloquent arguments about Sun City.  Those arguments 
also went to the county board, the State Board of Equalization, district  court and 
the Nevada Supreme Court.  This body should hear what happened to Caughlin 
Ranch in front of the State Board of Equalization.


Michael Pitlock, Executive Director, Department of Taxation, and Secretary, State 
Board of Equalization, stated on Tuesday [May 30, 1995] the state board heard an 
appeal from the Caughlin Ranch Homeowners Association relative to the so-called 
public private park.  At the time the state board was deliberating the issue, a 
facsimile of this bill,  S.B. 512, was circulated to the members of the state board. 
 Just to emphasize previous testimony regarding the language needing some work, 
the board did not have the faintest idea what the intent of those words were.  
Actually, even though the state board was aware the bill was intended to deal with 
this kind of situation, after the board looked at it, and after the deputy attorney 
general representing the board looked at the bill, the board felt like the county had 
actually complied with the language, which is the exact opposite of what the intent 
of the bill was.  This, then, is a real life example of the need to have some work 
done on that language because the state board voted 2 to 1 to uphold the  decision 
the County Board of Equalization had made.  The state board hopes some work is 
done on the language of the bill and would like to be involved in drafting the 
language to make sure the state board understands this law, which will obviously 
have an impact on its decisions.

Chairman Lowden observed both Ms. Wright and Mr. Pitlock, as well as Ms. Porter 
have put the bill in its proper perspective by stating a bigger policy issue than this 
individual bill's language is at stake.  It might be better if the issue was given over 
to an interim study to be competed before the next legislative session.  The interim 
study would look at the entire question, not just the bill.  That is not to say the 
committee does not want to deal with the bill now.  If the committee can come up 
with some kind of compromise language that would be helpful to all parties, the 
committee would be amenable to listening.  However, it seems no one likes the 
present language of the bill, and the bill does not even include the problems Reno 
is facing.  In the meantime, the committee needs to discuss the possibility of an 
interim study for what is obviously a major policy issue which must be considered. 
 Nothing will be done on the bill right now.  She suggested the interested parties 
get together and try to hash out some language acceptable to all sides.

Chairman Lowden opened the hearing on S.B. 518.

SENATE BILL 518:	Makes various changes concerning Airport Authority of
Carson City.  (BDR S-1889)


Steve Tackes, Chairman, Carson City Airport Authority, explained S.B. 518 amends 
one of the special acts found at the end of the Nevada Revised Statutes (NRS).  
Among these laws at the end of NRS are the airport authority acts for the various 
airport authorities around the state.  This bill adds a clause on the taxation issue, 
which does not increase any tax fee, charge, or anything else.  It simply makes it 
clear that when the airport leases a piece of property to someone who is going to 
conduct business at the airport, the amount they pay is that lease fee and there is 
no additional tax on the leased dirt.  The assessor's office does tax them for 
improvements.  That is the way it should be and will continue to be.  The reason 
the change is necessary is the provision is already in other airport authority acts, 
but is not in Carson City's.  This raises a question with the Department of Taxation 
and other government departments as to whether or not the city should be taxing 
its tenants on the dirt the tenants rent from the airport authority in addition to the 
rental fee.  Carson City has never dealt with the matter in that way previously and 
have never issued leases on that basis.  The language in section 1 of S.B. 518 is 
simply to make the laws conform with the practice Carson City has been utilizing 
for many years.

Mr. Tackes continued saying the second section of the bill addresses the city 
official member on the airport authority.  The airport authority is made up of seven 
 individuals.  One of the members of the airport authority board must be a city 
official.  There are not a lot of city officials to choose from that have the experience 
in airports or the desire to spend their evenings working on airport matters.  The 
way the law was originally written it states after a 4-year term, an incumbent is 
ineligible to serve again for 4 years.  Because of the difficulty of finding a city 
official, with some knowledge regarding airports and the willingness to serve on the 
airport authority board, this bill will amend the act to say the city official does not 
have to wait 4 more years to be reappointed to the board.  Mr. Tackes said he is 
unaware of any opposition to the bill.

Chairman Lowden asked if there are any other airports which fall under this bill?

Mr. Tackes answered the bill amends the Carson City Airport Authority's special 
act and so would only apply to the Carson City Airport Authority.  Carson City has 
received a letter from the Department of Taxation which states the city must 
change its practices and start charging airport tenants tax assessments on the land 
as well as the building they are renting.  Since the leases were not negotiated on 
that basis, Mr. Tackes' personal opinion is to tax the tenants on the land would be 
unfair, given the lease rates negotiated with the tenants.  To negotiate a rate and 
then go back later and tell them, in addition to their rent payments, they must pay 
taxes on those rent payments seems unfair.  


Ms. Wright clarified that land and improvements, if talking about a  public airport, 
 are going to be exempt.  If talking about a situation like what has happened in 
Carson City,  the only other provision that would apply would be a similar provision 
which Washoe County has in its special act.  All the other airports have to tax the 
land and the improvements.  If a private person goes in and leases a hangar, or 
leases a concession or a business, or a rental car area on airport land, that is all 
subject to taxation.  All of the county assessors have been advised by the 
Department of Taxation to not only assess the improvements, but also the land 
under those improvements, on any rental representing a private, for profit business 
use.  According to the current statutes the improvements and the land underneath 
are subject to taxation.  The exception is Washoe County which has a special act 
similar to this.  Now Carson City is saying it would also like to have that ability, 
because of its lease situation, to not tax the land.      

Chairman Lowden asked why does just Washoe County have this provision?

Ms. Wright stated Washoe County has a special act; Carson City has a special act. 
 The Legislature approved these special acts.

Chairman Lowden asked when these special acts were approved?

Ms. Wright replied the acts were approved in 1977.  This bill would create an 
exception.  Carson City would not need to tax the land currently being taxed in all 
other airports, except Washoe County.

Mr. Weaver came up to support the bill.  Carson City has been operating under a 
attorney general's opinion from 1965.  Carson City Airport Authority wants 
language in its act to match the language in Washoe County's Airport Authority 
Act relative to possessory interest.  As Carson City assessor, Mr. Weaver is 
interpreting the handling of valuing possessory interest, if the land is at a park, 
fairground, market, or airport, by assuming the land is exempt from taxation.  This 
exemption includes similar buildings used by the public.  A new attorney general's 
opinion  received 6 months ago, states if there is a hangar with a lock on it, the 
hangar is not accessible to the general public.  Therefore, the hangar is taxable. 
 S.B. 518  alleviates the need for the assessor to tax the land on which the hangars 
sit.  If the bill does not pass, the land will be have to be assessed and taxed.  He 
urged passage of the bill.

Chairman Lowden felt before any action is taken on this bill the committee should 
first hear S.B. 519, which is on the same subject.

SENATE BILL 519:	Revises provisions governing taxation of property that
is exempt from taxation when it is leased to entity which 
 				is not exempt from taxation.  (BDR 32-1926)


Hale Bennett, Concerned Citizen, told the committee he requested this bill when he 
heard the real estate on the Silver Springs airport and all other airports were subject 
to being taxed.  He has been trying to develop the Silver Springs Airport.  He has 
a 50-year lease with Lyon County, which owns the airport.  That lease was 
predicated on the fact that the real estate would not be taxable, but improvements 
and personal property would be taxable.  The non-taxation of the airport real estate 
was in conformance with an attorney general's opinion from 30 years ago.  Lyon 
County and most other counties have been conforming to this opinion.  A recent 
attorney general's opinion has held, on the same law, which has not been changed, 
the exact reverse interpretation of the law.  To cure the problem of differing 
opinions, he suggested this bill be drafted.  The bill validates the procedure for 
taxation of real estate on airports which has been in effect for 30 years.  

Mr. Bennett spoke with the Lyon County assessor this morning.  The assessor 
asked Mr. Bennett to convey to the committee that the passage of this bill would 
have no effect on Lyon County.  The non-passage of this bill would put into effect 
a new and very difficult taxing procedure for Lyon County. 

Chairman Lowden pointed out there is a fiscal note to local government and the 
state attached to the bill.  

Ms. Wright indicated the Department of Taxation has not yet received a request for 
a fiscal note.  She stated she believes there will be a fiscal impact and said the 
department will be happy to prepare the fiscal note for both S.B. 518 and 
S.B. 519.

Mr. Bennett is concerned that those leasing airport land are being subject to a 
change in interpretation of the tax law which affects the costs of the leases.

Ms. Wright asked Mr. Bennett to look at the language of the existing statute, which 
is now in effect.  The statute means that the lands and the improvements are 
subject to taxation when they are privately used for profit.  If there is a public 
parcel of land which is being partially leased out for a business for profit use, 
according to the existing language of the statute, it is subject to taxation.  That is 
what the Department of Taxation has advised all of the assessors they should be 
doing.  What this bill does is to say that will no longer be the case.  Really what is 
being sought is to try to figure what is subject to taxation.  There may be instances 
where the assessors are not taxing the airport land, but under the existing statutory 
language, which has been in effect a long time they are mandated to tax the land, 
too.

Ms. Justice presented the committee with an amendment (Exhibit G) to S.B. 519. 
 Under the current law, it is very confusing for assessors to work at airports.  The 
amendment will take care of any ambiguity in the bill.  The language in the 
amendment is designed very specifically to take care of the problems in Clark 
County.  Although there is a fiscal impact, Clark County is quite prepared to absorb 
that because they feel it is so important to have the law clarified.


Senator Adler pointed out the fiscal impact would affect the Clark County school 
system.  In Lyon County, the fiscal impact may truly not be a big deal, but it is a 
big, big issue with the Clark County School District because there are some 
fabulously expensive leases at the airport.

Chairman Lowden asked Ms. Justice to get a fiscal note for the bill.

Senator Adler asked for clarification from Ms. Wright about whether the Clark 
County School District would stand to lose a great deal of money if this bill was 
passed.

Ms. Wright explained the lion's share of the property tax does go to the school 
district. Therefore, any loss in tax revenue would impact the school district.

Barbara Byington, Assessor, Douglas County, testified this is the first year she has 
actually had to tax the land under the hangars.  Ms. Wright stated only land under 
hangars being used for profit need to be taxed.  If a person has a small airplane and 
rents a hangar at the county airport, that person is paying taxes for the hangar 
itself. The Douglas County Assessor's policy has been to tax the facility, but not 
the land under the facility.  Now, she, as the Douglas County Assessor,  is being 
told by the Department of Taxation she must go out and come up with a value for 
each little square of land which is a part of the airport.  However, the county is 
already charging a lease and the tax on the land was never figured in.  Probably, 
in some of these cases, the county will end up paying the tax because of the way 
the lease is written.

Chairman Lowden explained the committee would not take action until the fiscal 
notes are attached to the bills.

The hearing on S.B. 502 was opened by Chairman Lowden.

SENATE BILL 502:	Revises provisions governing rate of interest on 
delinquent taxes and fees.  (BDR 32-1549)

Senator Rhoads provided information on the bill.  This bill changes the interest on 
delinquent taxes from 18 percent per annum to the actual prime interest rate.


Al Kramer, Treasurer, Carson City, stated the bill allows the treasurers of the 
counties to telephone the directors of financial institutions to find out what the 
prime rate is for the largest bank in Nevada as of January 1 each year.  For 
example, on January 1, 1995, the prime rate was 8 1/2 percent per year.  On 
January 16, when penalties were added on to delinquent taxes, the prime rate 
would be added to the taxes due.  Right now, the interest rate charged on 
delinquent taxes is 1 1/2 percent per month.  His only concern is the short period 
of time the treasurers would have, from January 1 to January 16 to find out the 
prime rate and adjust their computer programs for computing the interest due on 
delinquent tax accounts.

Ms. Wright testified years ago when the interest was 1/2 percent, or 1 percent, the 
Department of Taxation found people were not paying their taxes.  They were in 
effect borrowing money from the state, because it was cheaper to pay the interest 
on delinquent taxes than borrow the money from the bank to pay the taxes.  The 
interest rate has been raised to 1 1/2 percent.  At 18 percent interest, it is less of 
an incentive for a business person to want to not pay the taxes than it is to go out 
and borrow the money and remit the taxes.  In the last fiscal year, the department 
collected over $4 million in interest.  This bill requires the Department of Taxation 
to change the interest twice a year for the January and July dates.  The problem 
 is that the department's current system cannot do this.  The system is physically 
incapable of making a change in the interest rate.  If there is a variable interest rate, 
there will be a considerable amount of difficulty for the taxpayers and the 
department.  If the taxpayer is remitting a payment in August, and that payment 
really applies to 3 months before August and the taxpayer is delinquent, the period 
covered for computing interest would be April through August.  That would result 
in two different interest amounts having to be calculated.  A lot of taxpayers who 
are aware they are late go ahead and calculate the interest. If the interest rate is 
a variable, the delinquent taxpayer will be unable to compute the interest because 
the interest rate is not a constant.  The department will do everything possible to 
notify, not only the 54,000 registered retailers, but also the business tax accounts, 
which will result in over 100,000 total notifications.  The difficulty will be in 
ascertaining what the interest rate change will do to the retailer and business 
account programs.   When they have to calculate the interest due in-house, they 
will have to change their computer programs to be able to accommodate the 
variable interest rate.


Ms. Wright went on to say if it is the Legislature's intent to reduce the interest, the 
department has no problem with that.  The greatest difficulty is the fact the 
interest rate is variable and changes every 6 months, so that all the tax forms must 
be reprinted, and everyone must be notified again at the time of each change.  If 
a fixed amount of interest was adopted, instead of the variable rate, the 
department understands how to do that and can make that change.  In an audit 
situation, since the department can go back 8 years, the department would have 
to be doing calculations based on 16 different interest rates.  It is very difficult for 
taxpayers to understand that.  The taxpayers want to send in a check and the 
department will have to share with the taxpayers those 16 different components 
for each time period.  The contractor working on the department's new automated 
computer program estimated it would cost about $30,000 to make the computer 
changes.  The Department of Information Services told the Department of Taxation 
it would cost $50,000 to do the computer changes to the department's program 
to be able to let the department accommodate this change.  In addition, no costs 
for notification of the 100,000 taxpayers are included in either of those amounts. 
 The department has not had an opportunity to put that information together, but 
she wanted the committee to know there would be a fiscal impact, not only in the 
loss of the amount of money generated in the past in interest on delinquent taxes, 
the $4 million-plus figure, but also in the cost to the Department of Taxation to 
merely accommodate the change.  

Senator O'Connell requested a fiscal note on the bill.

SENATOR AUGUSTINE MOVED TO DO PASS S.B. 502 AND RE-REFER TO 
	THE SENATE COMMITTEE ON FINANCE.

SENATOR O'CONNELL SECONDED THE MOTION.

THE MOTION CARRIED.  (SENATORS REGAN, ADLER AND RHOADS 	
	VOTED NO.)

	*****

Mr. Pitlock said if the committee is considering passing this bill, there is one 
technical problem with it.  Language has been deleted that refers to a monthly rate 
and inserted language refers to an annual rate.  Unless additional changes are made 
to the language, the Department of Taxation will be charging delinquent taxpayers 
11 percent per month, instead of 11 percent annually.  This was certainly not the 
intent of the bill.

Discussion continued by the committee about reconsidering the vote on the bill, but 
it was decided to let the action stand.

Chairman Lowden told the committee S. B. 272, which the committee sent to the 
Assembly was returned to the committee with an amendment.




SENATE BILL 272:	Establishes fee for issuance and renewal of certificate
of compliance to suppliers of liquor located outside of
this state.  (BDR 32-507)

Ms. Wright explained this bill was a funding mechanism that was viewed as 
something that could be processed.  The concern was that the local government 
finance section of the Department of Taxation has two budget analysts.  One has 
been occupied full-time since January by the White Pine County School District 
crisis.  That leaves one remaining budget analyst to review 240 budgets.  When the 
department does not do a good job of reviewing the budgets, situations like the 
White Pine County School District can occur and the department would not know 
about such situations in order to bring them to the attention of the Legislature.  The 
concern was expressed that the department is not doing a good enough review. 
 It was explained it was a manpower problem.  A local government budget analyst 
would cost the department about $45,000.  This bill was originally viewed at $25 
for the issuance and renewal fee, generating $15,000. The fee in the amendment 
is increased to $50, which was done to reconcile Nevada's charge to what 
California charges, generating $30,000.  The fee would have to be increased to 
$75 in order to generate $45,000 and then the mechanics would have to built in 
to get that as an appropriation into the department's budget to be used for a  local 
government budget analyst position.

Senator Townsend was very concerned about the bill.  He said this bill was a real 
stretch.  Usually people are taxed on something that is related, such as gasoline 
taxes are used to repair roads.  It seem too large a stretch to expect that some 
person drinking himself to death in Gerlach is going to be able to help the 
Department of Taxation keep a budget analyst working on White Pine County's 
budget.

Mr. Pitlock clarified the fee being raised in the bill is on out-of-state liquor 
importers.  It is not a tax on anyone within the State of Nevada.  It is the fee for 
the license which is required to be renewed annually.  There was a statute which 
prohibited the Department of Taxation from charging anything at all for this license. 
 The department wanted the bill put in to begin with out of concerns for equity. 
 The $25 was originally put in simply as a cost-recovery mechanism for the cost 
of processing the issuance or renewal.

Chairman Lowden asked if Mr. Pitlock recalled he was asked at the time the bill 
was introduced if he was sure the $25 fee was all the department needed?  She 
was of the opinion the Assembly Committee on Ways and Means came up with the 
plan to use this bill as a vehicle to get another person on the department's staff. 


Mr. Pitlock stated the group dealing with the situation in White Pine County has 
made some changes in other pieces of legislation which actually place greater 
requirements on the department's local government finance section to do more in 
terms of reviewing and enforcing certain statutes dealing with quarterly reporting 
of the local entities.  In order to accomplish that, for the 247 entities the 
department monitors, and to do an efficient job at it, frankly, it cannot be done 
with just two people.  So when the need was discovered for a third person, it 
appeared this bill would be a convenient mechanism to generate additional revenue 
other than an increased appropriation from the General Fund, which would be the 
alternative if it is decided a third person is needed in this section of the department.

Senator Augustine said when S.B. 272 first came before the committee, the whole 
reason for the bill the committee was told, and she was the only dissenting vote 
on this committee, is the Department of Taxation wanted this bill just because this 
[issuance and renewal of the license] is a cost which is incurred by the department 
and the department  wanted to recover that cost.  Now, the committee is hearing 
the department wants to use the fee for a dedicated fund.

Senator O'Connell interrupted to say this change in the bill and its focus is not Ms. 
Wright's fault.  She was not even at the original meeting.  She is only the 
messenger.  Senator O'Connell was at the meeting and she only wanted to make 
sure the committee knew what happened previously in the meeting and why the 
amendment is back before the committee.

Chairman Lowden explained the only reason she has the explanation about the 
amendment is because she was approached by someone on the Assembly 
Committee on Ways and Means telling her what that committee's plan was.

Ms. Wright agreed with Senator Augustine.  The department is only trying to 
recuperate its actual cost for processing the 600 certificates of compliance.  That 
cost represented $25 per issuance or renewal.  

Discussion ensued on the change in the amount of the fee, and what the revenue 
generated was originally supposed to do versus what it is proposed to do now.

Senator Regan stated there are three liquor licensees sitting on this particular 
committee.  He finds it difficult, even though the fee is for out-of-state suppliers, 
which always sounds great, to vote for this bill.  The whole thing will shift back to 
him in his wholesale cost of liquor.  This means Senator Regan will have to shift 
his increased cost to his retailer.  He does not think his drunks in North Las Vegas 
and Clark County should pay for White Pine County.

Senator Townsend pointed out Ms. Wright is caught in a terrible situation.  Her 
department has a manpower drain and this bill is a solution someone else 
attempted to apply to the department.  As she is aware, because she sits in on the 
committee hearings every day, if there is anything good about this committee, it 
is its consistency about policy.  Forgetting the $75, which, by the way, is 
important for just the reasons Senator Regan has shared, the policy of just picking 
something is awful.  One day it is one group of people, and the next day it is the 
other people out of the room, and the following day it is the people who were not 
sitting in on the meeting because they were at a funeral.  The public has the right 
to have the sense the committee is consistent in its policy.  That is why he  
wanted Ms. Wright to understand that even though she did not create this problem 
and is simply the messenger, when the Assembly asks her why the amendment did 
not pass the Senate, she can tell the Assembly committee members the rarified air 
on the third floor needs to be dealt with, because this is a massive leap of faith that 
might work in the Assembly, but will not work in the Senate.

Ms. Wright asked then if she has been successful?  Her goal is to get the 
committee not to concur.

SENATOR AUGUSTINE MOVED NOT TO CONCUR ON THE AMENDMENT
TO S.B. 272.

SENATOR TOWNSEND SECONDED THE MOTION.

THE MOTION CARRIED.  (SENATOR ADLER WAS ABSENT FOR THE VOTE.)

	*****

Chairman Lowden said there were two bills for introduction.  Stephanie Tyler will 
come forward to explain why the first bill should be introduced.


Stephanie Tyler, Lobbyist, Regional Transportation Commission of Washoe County, 
referred the committee to Bill Draft Request (BDR) 32-681, which has been around 
for a while.  The BDR has a nice compromise to it.  The Regional Transportation 
Commission of Washoe County is facing 16 to 18 percent cuts in its service as a 
result of a lack of funding.  Rather than just cutting service, the commission has 
been in lengthy negotiations with representatives of the cab industry primarily in 
terms of trying to find a way to make those service cuts hurt a little bit less.  With 
this BDR and its amendments and modifications, the commission is asking to 
basically be able to contract service with the cab industry so that big 80-foot buses 
are not chasing through small residential areas.  This is the only way the cuts can 
be minimized to the best of the commission's ability.

BILL DRAFT REQUEST 32-681:		Expands types of transit service and vehicles
authorized for use by regional 
transportation
commission.

Chairman Lowden asked if the regional transportation commission could just modify 
the bus routes and use cabs without having to get a bill passed?

Ms. Tyler replied it could not be done.  There is specific language in statute which 
states the Regional Transportation Commission has to operate fixed routes and 
that, basically, the commission itself must operate those routes.

SENATOR AUGUSTINE MOVED TO INTRODUCE BDR 32-681.

SENATOR TOWNSEND SECONDED THE MOTION.

THE MOTION CARRIED UNANIMOUSLY.

	*****

Chairman Lowden said the next BDR just arrived.  BDR 38-1761 has to do with 
repealing taxes on hospitals.

BILL DRAFT REQUEST 38-1761:	Require Intergovernmental Transfers and
eliminate Hospital Provider Tax.

SENATOR AUGUSTINE MOVED TO INTRODUCE BDR 38-1761.

SENATOR TOWNSEND SECONDED THE MOTION.

THE MOTION CARRIED UNANIMOUSLY.

	*****

Lucille Lusk, Nevada Concerned Citizens (NCC), asked if she could speak to 

S. B. 502, on which the committee had heard testimony this afternoon.  She said 
she was coming up at this time to ask the committee to think again about 
reconsidering the motion made for two reasons.  First of all, Mr. Pitlock clarified a 
question in her mind about whether the bill transferred the interest rate to an 
annual rate, rather than monthly.  Therefore, the committee is sending a bill out 
with a do pass which is of a significant concern.  In addition, the variable rate is a 
significant concern.  Even though it is more intended for a joke than anything else, 
that is what the record reflects.  Also, it was commented that the revenue loss 
would be $4 million, but assuming it was not intended to be a yearly rate, but 
monthly, this revenue loss still would not be $4 million.  That was the total amount 
received from interest.  The revenue loss would only be whatever percentage the 
interest rate was reduced.  Ms. Lusk asked committee members to reconsider their 
motion and then either re-refer to finance without a do pass, or keep it here and 
take it seriously.

SENATOR RHOADS MOVED TO RECONSIDER S.B. 502.

SENATOR TOWNSEND SECONDED THE MOTION.

THE MOTION CARRIED.  (SENATOR REGAN AND SENATOR ADLER WERE
ABSENT FOR THE VOTE.)

	*****

Chairman Lowden asked what the committee wanted to do about S.B. 502 now 
that reconsideration was agreed to?

Senator Townsend suggested Chairman Lowden give a copy of the bill and the 
small little fiscal note, along with a memo, to the chairman of the Senate 
Committee on Finance, stating that, before the Senate Committee on Taxation 
processes the bill in which he has such an interest, there are certain ramifications 
if the bill is passed.  Let the finance chairman make a determination on how he 
would like the bill handled.

Chairman Lowden said the person who made the motion to reconsider sits on the 
Senate Committee on Finance.  She nominated Senator Rhoads to deliver this 
message.

Senator Rhoads asked Ms. Wright what the hit would be if the interest was 
dropped from 1 1/2 percent to 1 percent?

Ms. Wright explained the $4 million is 18 percent, so 12 percent will bring it down 
considerably.  She will do a fiscal note which will show the differences if the rate 
is monthly versus annual and also what the cost is.



Senator Augustine wondered why it had been noted there was no fiscal note 
required?

Ms. Wright said all she could say was when Department of Taxation staff read the 
bill, they determined there is a fiscal impact.  

Kevin Welsh, Deputy Fiscal Analyst, Fiscal Analysis Division, stated the reason the 
bill does not require a fiscal note is because it does not mandate any reduction in 
the revenues directly.  The bill says the interest rate will be changed from a fixed 
rate to a variable rate.  That variable rate could very well go higher than the fixed 
rate is now.

Chairman Lowden announced there was an update on the Caughlin Ranch/Sun City, 
et al., dilemma.  Because there are not many homeowners associations in 
Tuscarora, Senator Rhoads asked to be excused. She requested one of the people 
working on the issue to come forward as the spokesperson to give the update.

Mr. Gordon came forward with proposed language the various interested parties 
have been working on in the hall (Exhibit H).  The language has been slightly 
modified to bring in as much of the definition as needed.  They have been 
conferring with the Department of Taxation while developing the language.

Mr. Pitlock wanted to echo some of the comments Ms. Wright made earlier.  A can 
of worms is being opened when dealing with some of these issues, especially when 
market value concepts are mixed in with taxation concepts that have been 
separated for quite some time.  It also appears the bill is dealing with situations 
which are not as similar as some people may perceive them to be.  The Sun City 
situation may not be similar to the private public park in Caughlin Ranch, and there 
may not be a common solution to both of those problems.  He offered to sit down 
with the interested parties in working to resolve this, but he thought the issue 
might be much broader and much more basic, in terms of a policy choice the 
committee would have to make, and that it would have ramifications well beyond 
Sun City and Caughlin Ranch.  Therefore, the department needs more time to 
review this information.  It is impossible to make a decision on something he was 
given a few minutes ago.


Chairman Lowden appreciated Mr. Pitlock's offer to work with those involved.  She 
pointed out five of the committee's members are already on three interim 
committees in the Senate Committee on Commerce and Labor.  The thought of 
being on another interim committee is not appealing to any of the Senate 
Committee on Taxation members, especially an interim committee dealing with tax 
issues.  However, this is one of the issues which needs to be studied with input 
from everyone.  This is just the tip of the iceberg.  If the immediate problems can 
be resolved in the next day or so with language acceptable to all, it does not mean 
just because an acceptable  bill come up now the committee cannot go back and 
examine the issue and look at a bigger policy issue.

Mr. Pitlock suggested another alternative.  The committee could order the 
department to study this issue in the interim and then report back to the next 
Legislative Session as opposed to having a formal interim committee do it.

Chairman Lowden appreciated the suggestion and promised if an interim study 
committee is appointed, the Department of Taxation would be invited to every 
meeting.

Ms. Porter agreed the issue probably does belong in an interim study committee, 
but felt some of the issues presented by Del Webb representatives could be dealt 
with in this bill.

Mr. McMullen explained Mr. Gordon had a draft of suggested language for the bill, 
but after the wording had been agreed upon, there was no time to discuss the 
drafted wording with the Department of Taxation.  The department will need some 
time to look at the suggested language.  The issue of limiting the bill to residential 
common unit ownership properties is addressed in this language.  Mr. McMullen 
explained the theory of the agreed upon language and explained the intent.  (See 
Exhibit I.)  He wanted to explain the term "common elements" a little more in 
detail.  If there was a golf course owned by Company A and a subdivision next 
door owned by Company B with no deed linkage whatsoever, there would probably 
be some impact on the value of the houses in Company B.  It would also be 
possible to go back and get the full cash value of the golf course.  They would be 
taxed up.  There is no question about this.  This is by virtue of its legal creation and 
structure a whole different animal.  The interesting thing brought up is that the 
green belt areas are not taxed by the assessor's office.  They are, frankly, as much 
an amenity as anything else in the community.  As a home buyer the value of the 
parcel is purchased along with all its greenbelt areas and everything else and yet 
that is really not all that much different in terms of amenities at least for purposes 
of factoring in to the value of the house.  This may in fact work.  The issue is 
whether or not the Department of Taxation has a concern with the language.


Mr. Higginson added Sun City Summerlin gave some serious thought to declaring 
parts of its golf courses as flood control channels.  Those of the audience and 
committee who may have been in Las Vegas in the month of January and saw the 
significant amount of rain are aware a raft could have been floated down the 14th 
and 15th fairways of many of the golf courses because the fairways are used to 
convey the flood waters.  He wondered how the assessor would view a declaration 
by Sun City Summerlin that the golf courses are flood control channels and part of 
the public safety concerns and therefore have no value.  That is not what Sun City 
Summerlin representatives are here to do.  They believe Sun City Summerlin 
residents are paying a higher tax on their homes because of the amenities they own 
and then are being taxed again for those amenities.  There must be some way to 
find a solution which would be agreeable to all.

The meeting was adjourned at 4:55 p.m.  

RESPECTFULLY SUBMITTED:



	
Sandy Arraiz, Committee Secretary

APPROVED BY:



______________________________
Senator Sue Lowden, Chairman


DATE: _______________________

Senate Committee on Taxation
June 1, 1995
Page