Senate Bill No. 468–Committee on Taxation

 

(On Behalf of the Legislative Committee on Local Government Taxes and Finance)

 

March 24, 2003

____________

 

Referred to Committee on Taxation

 

SUMMARY—Revises limitation on total ad valorem tax levy. (BDR 32‑625)

 

FISCAL NOTE:  Effect on Local Government: No.

                           Effect on the State: No.

 

~

 

EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted.

 

AN ACT relating to taxation; decreasing the limitation on the total ad valorem tax levy for all public purposes; exempting certain ad valorem tax levies from that limitation; clarifying the manner in which certain other limitations on ad valorem taxes are calculated; and providing other matters properly relating thereto.

 

THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN

SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:

 

1-1  Section 1. NRS 361.453 is hereby amended to read as follows:

1-2  361.453  1.  Except as otherwise provided in this section and

1-3  NRS 354.705, 354.723 and 450.760, the total ad valorem tax levy

1-4  for all public purposes must not exceed [$3.64] $3.14 on each $100

1-5  of assessed valuation, or a lesser or greater amount fixed by the

1-6  State Board of Examiners if the State Board of Examiners is

1-7  directed by law to fix a lesser or greater amount for that fiscal year.

1-8  2.  Any levy imposed by the Legislature for the repayment of

1-9  bonded indebtedness or the operating expenses of the State of

1-10  Nevada and any levy imposed by the board of county

1-11  commissioners pursuant to subsection 1 of NRS 387.195 [that is in

1-12  excess of 50 cents on each $100 of assessed valuation of taxable

1-13  property within the county] must not be included in calculating the

2-1  limitation set forth in subsection 1 on the total ad valorem tax levied

2-2  within the boundaries of the county, city or unincorporated town . [,

2-3  if, in a county whose population is 40,000 or less, or in a city or

2-4  unincorporated town located within that county:

2-5  (a) The combined tax rate certified by the Nevada Tax

2-6  Commission was at least $3.50 on each $100 of assessed valuation

2-7  on June 25, 1998;

2-8  (b) The governing body of that county, city or unincorporated

2-9  town proposes to its registered voters an additional levy ad valorem

2-10  above the total ad valorem tax levy for all public purposes set forth

2-11  in subsection 1;

2-12      (c) The proposal specifies the amount of money to be derived,

2-13  the purpose for which it is to be expended and the duration of the

2-14  levy; and

2-15      (d) The proposal is approved by a majority of the voters voting

2-16  on the question at a general election or a special election called for

2-17  that purpose.

2-18      3.  The duration of the additional levy ad valorem levied

2-19  pursuant to subsection 2 must not exceed 5 years. The governing

2-20  body of the county, city or unincorporated town may discontinue the

2-21  levy before it expires and may not thereafter reimpose it in whole or

2-22  in part without following the procedure required for its original

2-23  imposition set forth in subsection 2.

2-24      4.  A special election may be held pursuant to subsection 2 only

2-25  if the governing body of the county, city or unincorporated town

2-26  determines, by a unanimous vote, that an emergency exists. The

2-27  determination made by the governing body is conclusive unless it is

2-28  shown that the governing body acted with fraud or a gross abuse of

2-29  discretion. An action to challenge the determination made by the

2-30  governing body must be commenced within 15 days after the

2-31  governing body’s determination is final. As used in this subsection,

2-32  “emergency” means any unexpected occurrence or combination of

2-33  occurrences which requires immediate action by the governing body

2-34  of the county, city or unincorporated town to prevent or mitigate a

2-35  substantial financial loss to the county, city or unincorporated town

2-36  or to enable the governing body to provide an essential service to

2-37  the residents of the county, city or unincorporated town.]

2-38      Sec. 2.  NRS 361.4545 is hereby amended to read as follows:

2-39      361.4545  1.  On or before May 5 of each year or within 5

2-40  days after receiving the projections of revenue from the Department,

2-41  whichever is later, the ex officio tax receivers shall prepare and

2-42  cause to be published in a newspaper of general circulation in their

2-43  respective counties, a notice which contains at least the following

2-44  information:

3-1  (a) A statement that the notice is not a bill for taxes owed but an

3-2  informational notice. The notice must state:

3-3       (1) That public hearings will be held on the dates listed in the

3-4  notice to adopt budgets and tax rates for the fiscal year beginning on

3-5  July 1;

3-6       (2) That the purpose of the public hearings is to receive

3-7  opinions from members of the public on the proposed budgets and

3-8  tax rates before final action is taken thereon; and

3-9       (3) The tax rate to be imposed by the county and each

3-10  political subdivision within the county for the ensuing fiscal year if

3-11  the tentative budgets which affect the property in those areas

3-12  become final budgets.

3-13      (b) A brief description of the limitation imposed by the

3-14  Legislature on the revenue of the local governments.

3-15      (c) The dates, times and locations of all of the public hearings

3-16  on the tentative budgets which affect the taxes on property.

3-17      (d) The names and addresses of the county assessor and ex

3-18  officio tax receiver who may be consulted for further information.

3-19      (e) A brief statement of how property is assessed and how the

3-20  combined tax rate is determined.

3-21  The notice must be displayed in the format used for news and must

3-22  be printed on at least one-half of a page of the newspaper.

3-23      2.  Each ex officio tax receiver shall prepare and cause to be

3-24  published in a newspaper of general circulation within the county:

3-25      (a) A notice, displayed in the format used for news and printed

3-26  in not less than 8-point type, disclosing any increase in the property

3-27  taxes as a result of any change in the tentative budget.

3-28      (b) A notice, displayed in the format used for advertisements

3-29  and printed in not less than 8-point type on at least one-quarter of a

3-30  page of the newspaper, disclosing any amount in cents on each $100

3-31  of assessed valuation by which the highest combined tax rate for

3-32  property in the county exceeds [$3.64] $3.14 on each $100 of

3-33  assessed valuation.

3-34  These notices must be published within 10 days after the receipt of

3-35  the information pursuant to NRS 354.596.

3-36      Sec. 3.  NRS 354.705 is hereby amended to read as follows:

3-37      354.705  1.  As soon as practicable after the Department takes

3-38  over the management of a local government, the Executive Director

3-39  shall:

3-40      (a) Determine the total amount of expenditures necessary to

3-41  allow the local government to perform the basic functions for which

3-42  it was created;

3-43      (b) Determine the amount of revenue reasonably expected to be

3-44  available to the local government; and

4-1  (c) Consider any alternative sources of revenue available to the

4-2  local government.

4-3  2.  If the Executive Director determines that the available

4-4  revenue is not sufficient to provide for the payment of required debt

4-5  service and operating expenses, he may submit his findings to the

4-6  Committee who shall review the determinations made by the

4-7  Executive Director. If the Committee determines that additional

4-8  revenue is needed, it shall prepare a recommendation to the Nevada

4-9  Tax Commission as to which one or more of the following

4-10  additional taxes or charges should be imposed by the local

4-11  government:

4-12      (a) The levy of a property tax up to a rate which , when

4-13  combined with all other overlapping rates levied in the State ,

4-14  including, without limitation, any levy imposed by the Legislature

4-15  for the repayment of bonded indebtedness or the operating

4-16  expenses of the State of Nevada and any levy imposed by the board

4-17  of county commissioners pursuant to NRS 387.195, does not

4-18  exceed $4.50 on each $100 of assessed valuation.

4-19      (b) An additional tax on transient lodging at a rate not to exceed

4-20  1 percent of the gross receipts from the rental of transient lodging

4-21  within the boundaries of the local government upon all persons in

4-22  the business of providing lodging. Any such tax must be collected

4-23  and administered in the same manner as all other taxes on transient

4-24  lodging are collected by or for the local government.

4-25      (c) Additional service charges appropriate to the local

4-26  government.

4-27      (d) If the local government is a county or has boundaries that are

4-28  conterminous with the boundaries of the county:

4-29          (1) An additional tax on the gross receipts from the sale or

4-30  use of tangible personal property not to exceed one-quarter of 1

4-31  percent throughout the county. The ordinance imposing any such tax

4-32  must include provisions in substance which comply with the

4-33  requirements of subsections 2 to 5, inclusive, of NRS 377A.030.

4-34          (2) An additional governmental services tax of not more than

4-35  1 cent on each $1 of valuation of the vehicle for the privilege of

4-36  operating upon the public streets, roads and highways of the county

4-37  on each vehicle based in the county except those vehicles exempt

4-38  from the governmental services tax imposed pursuant to chapter 371

4-39  of NRS or a vehicle subject to NRS 706.011 to 706.861, inclusive,

4-40  which is engaged in interstate or intercounty operations. As used in

4-41  this subparagraph, “based” has the meaning ascribed to it in

4-42  NRS 482.011.

4-43      3.  Upon receipt of the plan from the Committee, a panel

4-44  consisting of three members of the Nevada Tax Commission

4-45  appointed by the Nevada Tax Commission and three members of the

5-1  Committee appointed by the Committee shall hold a public hearing

5-2  at a location within the boundaries of the local government in which

5-3  the severe financial emergency exists after giving public notice of

5-4  the hearing at least 10 days before the date on which the hearing will

5-5  be held. In addition to the public notice, the panel shall give notice

5-6  to the governing body of each local government whose jurisdiction

5-7  overlaps with the jurisdiction of the local government in which the

5-8  severe financial emergency exists.

5-9  4.  After the public hearing conducted pursuant to subsection 3,

5-10  the Nevada Tax Commission may adopt the plan as submitted or

5-11  adopt a revised plan. Any plan adopted pursuant to this section must

5-12  include the duration for which any new or increased taxes or charges

5-13  may be collected which must not exceed 5 years.

5-14      5.  Upon adoption of the plan by the Nevada Tax Commission,

5-15  the local government in which the severe financial emergency exists

5-16  shall impose or cause to be imposed the additional taxes and charges

5-17  included in the plan for the duration stated in the plan or until the

5-18  severe financial emergency has been determined by the Nevada Tax

5-19  Commission to have ceased to exist.

5-20      6.  The allowed revenue from taxes ad valorem determined

5-21  pursuant to NRS 354.59811 does not apply to any additional

5-22  property tax levied pursuant to this section.

5-23      7.  If a plan fails to satisfy the expenses of the local government

5-24  to the extent expected, the Committee shall report such failure to:

5-25      (a) The county for consideration of absorption of services; or

5-26      (b) If the local government is a county, to the next regular

5-27  session of the Legislature.

5-28      Sec. 4.  NRS 354.723 is hereby amended to read as follows:

5-29      354.723  1.  If the Executive Director determines that a severe

5-30  financial emergency which exists in a local government under

5-31  management by the Department is unlikely to cease to exist within 3

5-32  years, he shall determine:

5-33      (a) The amount any tax or mandatory assessment levied by the

5-34  local government must be raised to ensure a balanced budget for the

5-35  local government; and

5-36      (b) The manner in which the services provided by the local

5-37  government must be limited to ensure a balanced budget for the

5-38  local government,

5-39  and submit his findings to the Committee.

5-40      2.  The Committee shall review the findings submitted by the

5-41  Executive Director pursuant to subsection 1. If the Committee

5-42  determines that the severe financial emergency which exists in the

5-43  local government is unlikely to cease to exist within 3 years and that

5-44  the findings made by the Executive Director are appropriate, the

5-45  Committee shall submit its recommendation to the Nevada Tax

6-1  Commission. If the Committee determines that the financial

6-2  emergency is likely to cease to exist within 3 years, that decision is

6-3  not subject to review by the Nevada Tax Commission.

6-4  3.  The Nevada Tax Commission shall schedule a public

6-5  hearing within 30 days after the Committee submits its

6-6  recommendation. The Nevada Tax Commission shall provide public

6-7  notice of the hearing at least 10 days before the date on which the

6-8  hearing will be held. The Executive Director shall provide copies of

6-9  all documents relevant to the recommendation of the Committee to

6-10  the governing body of the local government in severe financial

6-11  emergency.

6-12      4.  If, after the public hearing, the Nevada Tax Commission

6-13  determines that the recommendation of the Committee is

6-14  appropriate, a question must be submitted to the electors of the local

6-15  government at the next primary or general municipal election or

6-16  primary or general state election, as applicable, asking whether the

6-17  local government should be disincorporated or dissolved. If the

6-18  electors of the local government do not approve the disincorporation

6-19  or dissolution of the local government:

6-20      (a) The maximum ad valorem tax levied within the local

6-21  government, if any, must be raised to $5 on each $100 of assessed

6-22  valuation;

6-23      (b) Any other taxes or mandatory assessments levied in the local

6-24  government, notwithstanding any limitation on those taxes or

6-25  assessments provided by statute, must be raised in an amount the

6-26  Nevada Tax Commission determines is necessary to ensure a

6-27  balanced budget for the local government; and

6-28      (c) The services provided by the local government must be

6-29  limited in a manner the Nevada Tax Commission determines is

6-30  necessary to ensure a balanced budget for the local

6-31  government.

6-32  In calculating the rate of tax required by paragraph (a), any levy

6-33  imposed by the Legislature for the repayment of bonded

6-34  indebtedness or the operating expenses of the State of Nevada and

6-35  any levy imposed by the board of county commissioners pursuant

6-36  to NRS 387.195 must be included.

6-37      5.  If the electors of the local government approve the

6-38  disincorporation or dissolution of a local government that is:

6-39      (a) Created by another local government, [it] the local

6-40  government must be disincorporated or dissolved:

6-41          (1) Pursuant to the applicable provisions of law; or

6-42          (2) If there are no specific provisions of law providing for the

6-43  disincorporation or dissolution of the local government, by

6-44  the entity that created the local government. If, at the time of the

6-45  disincorporation or dissolution of the local government pursuant to

7-1  this paragraph, there are any outstanding loans or bonded

7-2  indebtedness of the local government, including, without limitation,

7-3  loans made to the local government by the county in which the local

7-4  government is located, the taxes for the payment of the bonds or

7-5  other indebtedness must continue to be levied and collected in the

7-6  same manner as if the local government had not been

7-7  disincorporated or dissolved until all outstanding indebtedness is

7-8  repaid, but for all other purposes the local government shall be

7-9  deemed disincorporated or dissolved at the time that the entity

7-10  which created the local government disincorporates or dissolves the

7-11  local government. Any other liabilities and any remaining assets

7-12  shall revert to the entity that created the local government which is

7-13  being disincorporated or dissolved.

7-14      (b) Created by a special or local act of the Legislature, [it] the

7-15  local government may only be disincorporated or dissolved by

7-16  the Legislature. The Executive Director shall submit notification of

7-17  the vote approving the disincorporation or dissolution of the local

7-18  government to the Director of the Legislative Counsel Bureau for

7-19  transmittal to the Legislature. At the first opportunity, the

7-20  Legislature shall consider the question of whether the special or

7-21  local act will be repealed.

7-22      (c) Created in any other manner, [it] the local government must

7-23  be disincorporated or dissolved:

7-24          (1) Pursuant to the applicable provisions of law; or

7-25          (2) If there are no specific provisions of law providing for the

7-26  disincorporation or dissolution of the local government, by

7-27  the governing body of that local government. If, at the time of the

7-28  disincorporation or dissolution of the local government pursuant to

7-29  this paragraph, there are any outstanding loans or bonded

7-30  indebtedness of the local government, including, without limitation,

7-31  loans made to the local government by the county or counties in

7-32  which the local government is located, the taxes for the payment of

7-33  the bonds or other indebtedness must continue to be levied and

7-34  collected in the same manner as if the local government had not

7-35  been disincorporated or dissolved until all outstanding indebtedness

7-36  is repaid, but for all other purposes the local government shall be

7-37  deemed disincorporated or dissolved at the time that the governing

7-38  body of the local government disincorporates or dissolves the local

7-39  government. Except as otherwise provided in this subparagraph, any

7-40  other liabilities and any remaining assets of the local government

7-41  shall revert to the board of county commissioners of the county in

7-42  which the local government is located. If the local government is

7-43  located in more than one county, the governing body of the local

7-44  government shall apportion the remaining liabilities and assets

8-1  among the boards of county commissioners of the counties in which

8-2  the local government is located.

8-3  6.  Within 10 days after the Nevada Tax Commission makes a

8-4  determination pursuant to subsection 4, the Executive Director shall

8-5  notify:

8-6  (a) The city clerk, if the local government is a city; or

8-7  (b) The county clerk in all other cases,

8-8  and provide the clerk with the amount any tax or mandatory

8-9  assessment levied by the local government must be raised and a

8-10  description of the manner in which the services provided by the

8-11  local government must be limited to ensure a balanced budget for

8-12  the local government.

8-13      7.  After the Executive Director notifies the city clerk or the

8-14  county clerk, as applicable, pursuant to subsection 6, the clerk shall

8-15  cause to be published in a newspaper of general circulation that is

8-16  printed in the local government a notice of the election once in each

8-17  calendar week for 2 successive calendar weeks by two weekly

8-18  insertions a week apart, the first publication to be not more than 30

8-19  days nor less than 22 days next preceding the date of the election. If

8-20  no newspaper is printed in the local government, publication of the

8-21  notice of election must be made in a newspaper printed in this state

8-22  and having a general circulation in the local government.

8-23      8.  The notice required pursuant to subsection 7 must contain

8-24  the following information:

8-25      (a) That the Nevada Tax Commission has determined that the

8-26  severe financial emergency which exists in the local government is

8-27  unlikely to cease to exist within 3 years;

8-28      (b) That the question of whether the local government should be

8-29  disincorporated or dissolved will be submitted to the electors of the

8-30  local government at the next primary or general municipal election

8-31  or the next primary or general state election, as applicable; and

8-32      (c) That if the electors do not approve the disincorporation or

8-33  dissolution:

8-34          (1) The maximum ad valorem tax levied within the local

8-35  government, if any, will be raised to $5 on each $100 of assessed

8-36  valuation;

8-37          (2) Any taxes or mandatory assessment levied in the local

8-38  government will be raised to ensure a balanced budget for the local

8-39  government and the amount by which those taxes or mandatory

8-40  assessments will be raised; and

8-41          (3) The services the local government provides will be

8-42  limited to ensure a balanced budget for the local government and the

8-43  manner in which those services will be limited.

8-44      9.  If any provisions providing generally for the

8-45  disincorporation or dissolution of the local government require that

9-1  the question of disincorporating or dissolving be published or

9-2  submitted to a vote of the electors of the local government, the

9-3  publication required by subsection 3 and the election required by

9-4  subsection 4 satisfy those requirements. If:

9-5  (a) There is any other conflict between the provisions of this

9-6  section and any provisions providing generally for the

9-7  disincorporation or dissolution of a local government; or

9-8  (b) The provisions providing generally for the disincorporation

9-9  or dissolution of a local government provide additional rights to

9-10  protest the disincorporation or dissolution of a local government not

9-11  provided by this section,

9-12  the provisions of this section control a disincorporation or

9-13  dissolution pursuant to this section and any person wishing to

9-14  protest such a disincorporation or dissolution must proceed in

9-15  accordance with the provisions of this section.

9-16      10.  As used in this section, “local government” does not

9-17  include a county, a school district or any agency or department of a

9-18  county or city which prepares a budget separate from that of the

9-19  parent political subdivision.

9-20      Sec. 5.  NRS 450.760 is hereby amended to read as follows:

9-21      450.760  In a county whose population is less than 400,000:

9-22      1.  If, after a hearing, the board of county commissioners

9-23  determines that the dissolution of a hospital district is necessary, the

9-24  board shall by resolution provide for the dissolution of the hospital

9-25  district. On and after the filing of the resolution with the county

9-26  recorder, the hospital district shall be deemed dissolved.

9-27      2.  Before dissolving a hospital district pursuant to subsection 1,

9-28  the board of county commissioners shall determine whether the

9-29  proceeds from the taxes currently being levied in the district, if any,

9-30  for the operation of the hospital and the repayment of debt are

9-31  sufficient to repay any outstanding obligations of the hospital

9-32  district within a reasonable period after the dissolution of

9-33  the district. If there are no taxes currently being levied for the

9-34  hospital district or the taxes being levied are not sufficient to repay

9-35  the outstanding obligations of the hospital district within a

9-36  reasonable period after the dissolution of the district, before

9-37  dissolving the district pursuant to subsection 1 the board of county

9-38  commissioners may levy a property tax on all of the taxable

9-39  property in the district that is sufficient, when combined with any

9-40  revenue from taxes currently being levied in the district, to repay the

9-41  outstanding obligations of the hospital district within a reasonable

9-42  period after the dissolution of the district. The allowed revenue from

9-43  taxes ad valorem determined pursuant to NRS 354.59811 does not

9-44  apply to any additional property tax levied pursuant to this

9-45  subsection. If the hospital district is being managed by the

10-1  Department of Taxation pursuant to NRS 354.685 to 354.725,

10-2  inclusive, at the time of dissolution, the rate levied pursuant to this

10-3  subsection must not be included in the total ad valorem tax levy for

10-4  the purposes of the application of the limitation in NRS 361.453, but

10-5  the rate levied , when combined with all other overlapping rates

10-6  levied in the State , including, without limitation, any levy imposed

10-7  by the Legislature for the repayment of bonded indebtedness or the

10-8  operating expenses of the State of Nevada and any levy imposed by

10-9  the board of county commissioners pursuant to NRS 387.195,

10-10  must not exceed $4.50 on each $100 of assessed valuation. The

10-11  board of county commissioners shall discontinue any rate levied

10-12  pursuant to this subsection on a date that will ensure that no taxes

10-13  are collected for this purpose after the outstanding obligations of the

10-14  hospital district have been paid in full.

10-15     3.  If, at the time of the dissolution of the hospital district, there

10-16  are any outstanding loans, bonded indebtedness or other obligations

10-17  of the hospital district, including, without limitation, unpaid

10-18  obligations to organizations such as the Public Employees’

10-19  Retirement System, unpaid salaries or unpaid loans made to the

10-20  hospital district by the county, the taxes being levied in the district

10-21  at the time of dissolution must continue to be levied and collected in

10-22  the same manner as if the hospital district had not been dissolved

10-23  until all outstanding obligations of the district have been paid in full,

10-24  but for all other purposes the hospital district shall be deemed

10-25  dissolved from the time the resolution is filed pursuant to

10-26  subsection 1.

10-27     4.  If the hospital district is being managed by the Department

10-28  of Taxation pursuant to NRS 354.685 to 354.725, inclusive, at the

10-29  time of dissolution, the management ceases upon dissolution, but

10-30  the board of county commissioners shall continue to make such

10-31  financial reports to the Department of Taxation as the Department

10-32  deems necessary until all outstanding obligations of the hospital

10-33  district have been paid in full.

10-34     5.  The property of the dissolved hospital district may be

10-35  retained by the board of county commissioners for use as a hospital

10-36  or disposed of in any manner the board deems appropriate. Any

10-37  proceeds of the sale or other transfer of the property of the dissolved

10-38  hospital district and any proceeds from taxes which had been levied

10-39  and received by the hospital district before dissolution, whether

10-40  levied for operating purposes or for the repayment of debt, must be

10-41  used by the board of county commissioners to repay any

10-42  indebtedness of the hospital district.

10-43     Sec. 6.  If, before July 1, 2003, the governing body of a county,

10-44  city or unincorporated town has levied an additional ad valorem tax

10-45  pursuant to the provisions of subsection 2 of NRS 361.453 and that

11-1  levy does not expire or is not discontinued before July 1, 2003, that

11-2  levy must be included in the calculation of the limitation set forth in

11-3  subsection 1 of NRS 361.453 until it expires.

11-4      Sec. 7.  This act becomes effective on July 1, 2003.

 

11-5  H