MINUTES OF THE meeting

of the

ASSEMBLY Committee on Taxation

 

Seventy-Second Session

April 3, 2003

 

 

The Committee on Taxationwas called to order at 1:44 p.m., on Thursday, April 3, 2003.  Chairman David Parks presided in Room 3142 of the Legislative Building, Carson City, Nevada, and via simultaneous videoconference, in Room 4406 of the Grant Sawyer State Office Building, Las Vegas, Nevada.  Exhibit A is the Agenda.  Exhibit B is the Guest List.  All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.

 

 

COMMITTEE MEMBERS PRESENT:

 

Mr. David Parks, Chairman

Mr. David Goldwater, Vice Chairman

Mr. Bernie Anderson

Mr. Morse Arberry Jr.

Mrs. Dawn Gibbons

Mr. Tom Grady

Mr. Josh Griffin

Mr. Lynn Hettrick

Mr. John Marvel

Ms. Kathy McClain

Mr. Harry Mortenson

Ms. Peggy Pierce

 

COMMITTEE MEMBERS ABSENT:

 

None

 

GUEST LEGISLATORS PRESENT:

 

Assemblywoman Genie Ohrenschall, District No. 12

 

STAFF MEMBERS PRESENT:

 

Ted Zuend, Fiscal Analyst

Mary Garcia, Committee Secretary

June Rigsby, Committee Secretary

 

OTHERS PRESENT:

 

Mark Schofield, Clark County Assessor and Chairman, Legislative Committee for the Assessors Association

Jeff Johnson, President, Assessors Association of Nevada

Dave Dawley, Carson City Assessor

Zane Burgeson, Manager, Assessment mapping, Clark County Assessor’s Office

Chuck Fulkerson, Director, Office of Veterans Services

Tony Vaughn, member, American Legion

Ron Kruse, Chairman, Veterans Services Commission

Dan Musgrove, Director, Office of the County Manager, Clark County

Jerry Carroll, Director, Audit Department, Clark County

Mike Alastuey, representing Clark County

Gaylyn Spriggs, representing the Nevada Taxpayers Association

Alan Glover, Carson City Clerk Recorder

Kathy Burke, Washoe County Recorder

Charles Chinnock, Executive Director, Department of Taxation

Doug Sonnemann, Douglas County Assessor

Carole Vilardo, representing the Nevada Taxpayers Association

 

 

Chairman Parks:

Good afternoon, I would like to call the Assembly Committee on Taxation to order.  [Roll was called.]  Today we have three bills posted for consideration.  We will start with Assembly Bill 351.  [See Exhibit G for bill explanation.] 

 

 

Assembly Bill 351:  Proposes to exempt medicines and medical devices that are ordered for senior citizens by providers of health care and sold over counter, without prescription, from taxes on retail sales. (BDR 32-74)

 

I also notice that we have persons in the audience from Room 4406 at the Sawyer Building, so thank you for attending.  We will proceed with Ms. Ohrenschall.

 

Assemblywoman Genie Ohrenschall, Clark County Assembly District No. 12:

Thank you, Mr. Chairman.  Good afternoon.  [Introduced herself.]  I would like to present Assembly Bill 351.  Very briefly, it proposes to exempt from taxes on retail sales medicines and medical devices that are ordered for senior citizens by a health care professional and sold over the counter without a prescription. 

 

[Assemblywoman Ohrenschall, continued]  This was requested of me by several seniors who feel they often spend as much money on peripheral things that go with the prescription as they spend on the actual prescription after Medicare and insurance have taken care of a good part of it, and who are living with the very familiar problems of a fixed income, save for security cost-of-living adjustment, which really does not adjust enough to give any real benefits, and so on.  This bill, if it were to become effective at all, would become effective in 2005, so we are not looking at a sudden catastrophic change of anything in our market.  It would operate by providing an exemption, as I said, for medicines and medical devices ordered for seniors by a health care professional and sold over the counter. 

 

In today’s world, drugs, both prescription and over-the-counter, are the fastest rising component of personal health expenditures in the United States.  A recent study forecast that retail prescription drug costs will increase by nearly 20 percent by the end of 2003.  That information is from the Segal Health Plan Cost Trend Survey, Segal Group.  The cost of health care is of great concern to all Americans, but especially to older Americans, who are the biggest consumers of these products.  The problem for senior citizens is compounded because many seniors are on a fixed income.  This bill attempts to mitigate these escalating health care costs on Nevada’s senior citizens. 

 

If A.B. 351 is approved by the 2003 Legislature, a proposal will be submitted to the registered voters of this state at the 2004 General Election.  The voters would then decide whether to amend the Sales and Use Tax Act of 1955.  If the majority of the voters are in favor of a tax exemption for over-the-counter medicine and medical devices ordered by a health care provider for the use of senior citizens, the amendment to the sales and use tax will become effective January 1, 2005.  In addition, if this proposal is adopted, A.B. 351 will also amend the local school support tax law and the city-county relief tax law to provide the same exemption. 

 

I urge your support of Assembly Bill 351, and I thank you and the Committee for your time and patience in listening to this presentation.  If the Committee has any questions, I will be happy to attempt to answer them.  Thank you.

 

Chairman Parks:

Does anyone have any questions for Ms. Ohrenschall?  I guess I have a couple questions.  One is, because it would apply to persons 62 or older, would they be required to show proof of age?  Is that the manner in which it would work?

 

Assemblywoman Ohrenschall:

Yes, that is how it would work.  They would be required to show proof of age.  They need to have something in writing from the person who is their regular health care provider showing that they need this over-the-counter item.  There would be a paper trail along the way, but it would have to be a paper trail that would not be so very heavily documented that it would either become an insupportable burden on the individual or create a bureaucracy. 

 

Chairman Parks:

When are you saying that this would then go into effect?

 

Assemblywoman Ohrenschall:

If the voters pass it, [it will go into effect] in 2005.  We are giving it to the people to decide.

 

Chairman Parks:

Right, I see that.  I guess the second question would be could you indicate a sampling of the types of items that would then be exempt?

 

Assemblywoman Ohrenschall:

Oh, very easily, at least for women, and for men, too.  Any senior who has ever had a problem with a blood clot, with blood pressure, who has ever had major surgery of arteries, the first thing you are told to have is protective-type hose with the elastic that prevents swelling and edema in the lower extremities.  Now, one pair of female pantyhose strictly for that purpose costs between $30 and $40.  The men’s version, though, does not have as much Lycra in it and is not quite as expensive.  Still, you are talking $20 or $25 per pair.  At least in my home, if I leave my support hose around and my cat or dog gets them, it is a major tragedy.  That is a lot of money, and it is not covered by insurance.  Nobody else understands that it is something that your doctors told you you must wear and use on a regular basis, and yet is not something that is dispensed by prescription.  There really is nothing to help you at all with these things.

 

Chairman Parks:

Would this require an education effort for various retailers?  I can see that there might be an understanding if you had to buy the item and then take it to the pharmacist counter in the drug store.  They would probably understand.  We are also talking analgesics.

Assemblywoman Ohrenschall:

Yes, I believe we would be.  What I had envisioned, Mr. Chairman, is that it would be outlined in the ballot question that would be presented to the voters for their vote.  Otherwise, it could obviously get out of hand.  At your 7-Eleven store, the sales clerk does not have time to do these things.  It would be limited to certain stores that dispense certain paramedical things as at least one significant part of the goods that they sell.  I would be willing to go even so far as to say that we could do it on a voluntary basis and allow stores that are kind of everything stores, that have a pharmacist department on one side and maybe the meat department across the way.  They can sign up saying that they would be willing to partake of the program.  If they were willing, presumably they would get something out of it because more people would come and purchase there. 

 

We are talking about items that run up a big tab, most of them.  Some of them do not, such as the requirement of one aspirin a day to avoid getting a stroke or a clot later in life.  That applies to everyone, and certainly, when people get to senior citizen age, it applies even more.  An aspirin a day is a cost of maybe $3 a month.  That is not a big thing, but then you have the big-ticket items, too.  I think within the Nevada Administrative Code that could be worked out. 

 

Chairman Parks:

Have you had an opportunity to look at the fiscal note on this?

 

Assemblywoman Ohrenschall:

Mr. Chairman, as far as I know, I have not had one returned.  Now, if one has come in in the last day, I have not had time to track it.  I certainly signed all of the documents necessary to have a fiscal note delivered, because I do that regularly on all the bills, but, to my knowledge, we have not gotten one yet. 

 

Chairman Parks:

We do have a fiscal note here, and it does indicate that the date on it was March 28.

 

Assemblywoman Ohrenschall:

In that case, it slipped my office.

 

Chairman Parks:

They are indicating, in FY2004-2005, approximately $5.3 million, as far as sales and use tax.

 

Assemblywoman Ohrenschall:

That is the effect on the state?

 

Chairman Parks:

Yes, and then as far as the effect for future biennia, it is listed as $11.2 million per biennium.

 

Assemblywoman Ohrenschall:

That is very significant.  In that case, assuming that the Committee and the public were interested, it would be necessary, in drafting up administrative regulations, to make sure that they are very clear, very specific, limited to particular parts of the market that do want to work in it.  There may be other ways that it could be tightened up further.  Perhaps the citizens, instead of starting at 62, could start at 65 or 70.  There is logic to pushing the age up, because the need does become greater, unfortunately, as people continue to get older and older. 

 

Chairman Parks:

I am looking at this and I am presuming that the Department of Taxation, in generating this number, probably looked at all of the revenues that are generated from this product line.  I am thinking that maybe some of that, if not a fair share of that, may not evade the tax strictly from the fact that people may not know that it is a nontaxable item because the person is over 62.

 

Assemblywoman Ohrenschall:

Also, the health care provider must feel that, although nontaxable, this item is sufficiently significant to this particular patient that the health care provider is willing to dispense a written document to that effect, which would be lodged with that particular pharmacy or seller of these items.  I did not know.  I apologize to the Committee.  That just escaped me.  If the fiscal note came in, there certainly was no attempt to mislead the Committee.

 

Chairman Parks:

Perhaps you may like to contact the Department of Taxation to get a clarification, just for your own satisfaction.

 

Assemblywoman Ohrenschall:

I would like to do that, certainly, Mr. Chair.  If there is something that seems to be significant in favor of the potential beneficiaries, would it be possible to come back to the Committee with that report before the magic date of April 11?

 

Chairman Parks:

I am sure that there is ample opportunity.  What I would suggest you do is get a copy and read it, because there is a fairly lengthy explanation there as well.  I think we have some questions. 

 

Assemblyman Goldwater:

Ms. Ohrenschall, are you saying that the tax itself, 7 percent, is what the barrier is to purchasing these items?

 

Assemblywoman Ohrenschall:

That was what I understood from the people who approached me, and there were different seniors.  Unfortunately they did not all come together so I could point to one cohesive group.  I understand that AARP is interested in supporting it, but they are still studying it.  They have not gotten around to looking at it.  It could be that they have gotten hold of the fiscal note that I had not, and that is what their barrier is.  I do not know.

 

Assemblyman Goldwater:

Do people ever buy these things online or through a catalog in order to avoid that?

 

Assemblywoman Ohrenschall:

I would imagine that they do on a lot of these things, but, again, you are talking about a $30 pair of panty hose for a woman.  It is expensive.  If you are on a fixed income, you are not going to be able to buy more than that one pair, and are going to feel as though it is made of gold.  If you are buying only one, then you have to pay shipping and handling.  You may not actually get any greater benefit by buying through a catalog than by going down to the nearest retailer in your neighborhood.  The initial cost is high enough that you can only afford to get one and hope that it lasts as long as it possibly can. 

 

Anyone who has these burdens has other burdens, too.  For instance, again, just to get back to the pantyhose, men’s are over the knee, but are for the same problems, and they can come up to the thigh, depending on the type of surgery that men have had.  In terms of washing them, you have to get Woolite and special things, and they have to be cared for in a way that is much more expensive than maintenance of normal undergarments. 

 

Assemblywoman Pierce:

The only way that you could get this exemption is if you had a note from a doctor saying you need this, so if you get a cold and you want to go down and get Sudafed or something, you could not just go and get this exemption?

 

Assemblywoman Ohrenschall:

No, and it would have to be that you regularly need it; you have a condition where you must regularly use or need the item over and over.  It would not be a one-time stop.

 

Assemblywoman McClain:

Ms. Ohrenschall, I really appreciate some of the bills you bring before us.  You always have seniors in mind.  You are on my list.

 

Assemblywoman Ohrenschall:

We are all of us heading in that direction.

 

Assemblywoman McClain:

That is right, but maybe if you looked at some specifics and eliminated over‑the‑counter cold medicines and things like that, that would take that fiscal note down a bunch.  The other thing is, in Judiciary, we just changed the age limit for seniors to 60 to comply with some other federal and state statutes, so I do not know if you want to look at this being in compliance or what.

 

Assemblywoman Ohrenschall:

I will, but I have the impression, I could be wrong, that that was limited to the civil/criminal area.

 

Assemblywoman McClain:

The point of that was to bring that particular statute into compliance with Older Americans Act and stuff, or you might want to look at just raising it to Medicare age, which is gradually going to get older now.

 

Assemblywoman Ohrenschall:

That is a very good suggestion.  I think it is something that would benefit a lot of people.  To be honest, I was staggered at hearing the fiscal impact that was mentioned by the Chair.  I really do want to examine it carefully for the state’s benefit and Committee’s, as well as for the people who would be using it. 

 

Assemblyman Marvel:

Genie, I will be very candid with you.  I think we have such a plethora of exemptions now, we have eroded the sales tax base so immensely.  I have been pretty consistent in always voting against any more exemptions, particularly in a year like this.  If that fiscal note is anywhere near accurate, that is another big hole we have to try to fill.

 

Assemblywoman Ohrenschall:

If it is, in fact, I believe it would be necessary to reevaluate the bill itself.  I find it difficult to believe that it is, and that is why I asked the Committee to give me the opportunity to check it through.  I do not believe in being fiscally irresponsible or throwing things around.  I do know where you are coming from on that. 

 

[Assemblywoman Ohrenschall, continued]  It is the same thing we see in criminal law where we are doubling the penalty for this and doubling the penalty for that.  I heard one legislator say the other day, ”Well, why don’t we just have a bill saying, ‘three times for everything, no matter what?’ and that would take care of it all.”  That way we do not have to look at any individual crimes.  That is about where we are getting to in the criminal area, by taking out specific this and specific that and doubling and tripling.  It made sense in the beginning and through the middle, but we are getting to that point. 

 

I truly hope this bill is not at that point, and I hope I will be able to come back and convince you that it is not.  At least, I have a lot of homework to do.  Again, this bill was by request of various constituents.

 

Chairman Parks:

Thank you very much.  We have two other bills that both deal with assessors and property tax.  I know we have had a lot of the assessors sign in.  I do not know if they are only interested in A.B. 533 or they are also interested in A.B. 442.  Could I just have a show of hands of individuals who are here for A.B. 442?  Okay, and are you here also for A.B. 533?  What I would like to do, since I know some people have to catch a plane, is to take the agenda out of order and proceed to A.B. 533 at this time.

 

 

Assembly Bill 533:  Makes various changes to provisions governing the recordation and taxation of property. (BDR 32-122)

 

This was a bill that was requested on behalf of the County Assessors Association.  I am presuming we have members of that Association here to lead off and speak on the bill.  [See Exhibit H for bill explanation.]

 

Mark Schofield, Clark County Assessor and Chairman, Legislative Committee for the Assessors Association:

[Introduced himself.]  This afternoon I have with me Jeff Johnson, the President of the Assessors Association of Nevada, and Dave Dawley, the Carson City Assessor, and down south I have Zane Burgeson, my manager of Parcel Data Systems, which most people refer to as mapping.  The four of us are going to be assisting and rendering the testimony on A.B. 533 this afternoon.  I appreciate you allowing us to take this out of order, Mr. Chairman, and I really appreciate you, Mr. Hettrick, giving us this opportunity. 

 

This is a rather lengthy bill.  It is the lengthiest bill we have ever attempted to navigate through the Legislature.  It is 67 sections in length, 63 pages in length.  We have taken the liberty to rearrange A.B. 533 out of sequential order and place it in subject matter order to facilitate testimony and save your time.  Have you all received the handout (Exhibit C) that we passed out?  We will be testifying from this document, if we may.  What I would request of you, Mr. Chairman, because of the complicated nature of some of the sections in this bill, is that, if you have any questions, ask them as we go through because there is a tremendous amount of information to digest. 

 

[Mr. Schofield, continued]  The first is the Appraisal and Assessment Section broken down by subject matter.  It is Section 2 of the bill.  This will allow us, for those businesses that lease out manufactured housing for the purpose of renting them for offices, to combine those on a personal property declaration and treat it just as we would a business.  They would be assessed as manufactured homes.  They would continue to receive decals to be placed on them so we could police whether or not they had been assessed.  Clark County, by the way, is one of the few counties that use decals.  What it would do is simplify the administration of the assessment system.  We would not have to send out 2,725 separate bills.  For example, we currently have 20 businesses in Clark County that rent out these manufactured homes for construction sites and for other reasons.  We could essentially compress this into 20 bills.  It would not change the assessment practices relative to the assessment of manufactured homes; it would just ease the administration of it.  Mr. Johnson is going to take over Section 15.

 

Jeff Johnson, President, Assessors Association of Nevada:

[Introduced himself.]  Section 15 is mostly some clarification and replacement of some outdated terms.  You see that we want to replace the out-of-date term “mobile homes” with “manufactured housing” and also clarify “full cash value.”  In subsection 5 it says, “the computed taxable value of any property must not exceed the full cash value of a fee-simple interest in the property.”  We are dealing with the ownership of the property and trying to clarify what that means, and full cash value and ownership. 

 

The third thing is to give property owners more time to appeal.  During the process of appealing they only have until January 15 to have their appeals turned in to the assessors’ offices, but they may not get their assessment cards until January 2 or 3, because currently the statute requires that we have those mailed out on or before January 1.  We want to change that to December 18, so those cards can go out a little sooner and people have more time to look over their valuations and call us and discuss any concerns they have.

Mark Schofield:

Section 16 requires a great deal of explanation.  It has created much confusion.  I will try to truncate my testimony and simplify it as much as possible.  NRS 361.228 was a section of the NRS that was changed in 1999.  Many of you heard the rather contentious issue of the assessment of intangibles.  This particular section deals with the exemption of intangibles, but the intent and the spirit of it was to exclusively apply to the assessment of centrally assessed properties.  We feel that perhaps NRS 361.228 was not the appropriate section to place this in, because it was exclusively dealing with centrally assessed properties.  We thought it should be more appropriate to place it in 320, but nonetheless, here we have it in 361.228. 

 

Let me give you a little background.  Local assessors have not, since 1981, assessed intangibles as they relate to the assessment of real and personal property.  However, when it came to those properties that were centrally assessed by the Department of Taxation through the Nevada Tax Commission, the intangible element in the appraisal was included.  So, in 1999 the Legislature reached a consensus through some rather lengthy, complicated testimony that the state of Nevada would exempt the assessment of intangibles as it related to centrally assessed properties.  Keep in mind that local assessors do not assess intangibles. 

 

We have an amendment and I ask you, Mr. Chairman, if you have that amendment in front of you.  It is an amendment to Section 16 of A.B. 533.  [Vice Chairman Goldwater confirmed that he did have it.]  I will go into that in a moment if I may.  We have discovered that we have some individuals who believe that NRS 361.228 is applicable to the assessment of locally assessed property.  That was not intended by this body.  It was never the intention to exempt intangibles at the local level, because they never were assessed anyway.  We have clarified that in this language.  We have done that by stating very simply that “the provisions of Sections 1 and 2 of this Section do not apply for the purposes of determining full cash value of a fee-simple interest in property pursuant to subsection 5 of NRS 361.227.” 

 

NRS 361.227 is essentially one of the laws governing the local assessors.  Let me cite a specific example.  We have a major hotel casino that is assessed under the Nevada Revised Statutes tenets that we must follow as they relate to the assessment of property.  The casino owners feel that the taxable value we arrived at using the statutes and using the methods we are required to use exceeds full cash value.  “Full cash value” is the term in the statutes, a term of art, that in essence describes market value.  In order to test that with income‑producing properties, we capitalize their income stream.  If we capitalize their income stream and subsequently discover that capitalization results in a lower value than the initial taxable value we had on the property based upon the methodologies we have to use under the law, then the law requires us to lower it.  Not only did they want us to reduce it by what the capitalized income stream would be, which is a reflection of full cash value, but they said, “Aha!  If you read NRS 361.228, it also says that you must reduce the value further by the amount of the intangibles.”  That was not the intent of 361.228. 

 

[Mr. Schofield, continued]  We have clarified that.  Let me make it very clear that the assessors were in total support of exempting the intangibles from centrally assessed properties in 1999, because we knew there was an inequity as it related to local assessment versus centrally assessed properties.  We will continue to support it.  We are in no way trying to infringe upon the work that went into the exemption of the intangibles.  We are just trying to clarify who that legislation was written for and directed at. 

 

Vice Chairman Goldwater:

Is there a revenue number on that clarification?  Do you think that will change?

 

Mark Schofield:

This simply keeps everything whole.  Let me cite a factor in this that you need to know.  If you decided they could, in fact, reduce intangibles using the income approach, from the full cash value, there would be a swift and significant fiscal impact on all local governments.  I will assure you of that.  If you go back into the 1999 Session, you will all recall how contentious that discussion was, and you will recall that this particular language was written specifically for the centrally assessed properties.  All we are doing is stopping a potential abuse from occurring that was not intended by the Legislature. 

 

Assemblywoman Gibbons:

Why are you adding water rights on line 16, page 17?  Water rights being very valuable, that would really increase the value.

 

Mark Schofield:

Water rights are an inherent part of the land value.  That is more of a clarification than anything else.  When there is a disparity in land values, we can determine when land values have water rights and when they do not.  Often we do not even know water rights are out there.  The issue of water rights is a very complicated one.  In fact, we have people selling water rights when we do not even know where those water rights are or whether or not they actually, legally own them.  We are clearing up the fact that water rights are an inherent part of the assessment.  Yes, it contributes to the value of property.  That is what we are stating there.

 

Assemblywoman Gibbons:

Okay, having said that, then when drought periods come do we devalue the property? 

 

Mark Schofield:

The water rights issue, relative to our venue, the assessment of property, is reflective in the market.  If the market addressed the drought, and subsequently the price of the land dropped, yes, it would be addressed.  Everything we do is driven by the market.  The market tells us how we value property relative to vacant land, the land in general that is unimproved.

 

Assemblywoman Gibbons:

But if you have water rights, you do not necessarily have to be using them.  You can own them and then reassign them to someone else that lives clear across town.

 

Mark Schofield:

That would be reflected in the sale of the land.  For example, if you had water rights but you have sold them to someone else, water rights would be one of the sticks in the bundle of rights, and you sold them to someone else, and then you went to sell your land, because you sold those water rights to another individual to use, and you could never recapture them, your land would not be nearly as valuable as the land that had the water rights still attached to the land.  I know it is a very complicated issue.

 

Assemblywoman Gibbons:

I do not like it.

 

Mark Schofield:

Let me preface any further testimony with this:  there is nothing in this bill, let me assure you, that will harm taxpayers.  I will articulate it as clearly as possible, and if you think there is an issue that will harm taxpayers, we need to know about it because that certainly was not our intent.  There are, however, issues in here that we will point out as we go through our testimony, that do have a fiscal impact on local government and a small, minor impact on state government.  I know you are going to hear additional testimony on this, both pro and con, after we conclude our testimony.  The water rights issue was simply a clarification more than anything else.

 

Jeff Johnson:

What we are trying to do in Section 17 is to allow the assessor to factor improvements and land that is not in the revalue cycle.  This outlines the process whereby the assessor will determine the replacement cost and then subtract all applicable depreciation and obsolescence and apply that 35 percent ratio for the improvements, and then, if any, factor for the land, for the assessed value.  It allows a county to go ahead and apply factors to improvements and land separately, if they are not in a revalue cycle.  I do not know if that made any sense, or if I lost you.

 

Mark Schofield:

Essentially, this already exists in the statute.  This changed in 1997 in the omnibus bill.  Whereas Clark County is the only county in the state currently that reappraises the whole county each and every year, and subsequently recosts, this further clarifies you can do that and you can do that without reappraising the whole county.  We believe it could promote greater equity.  Actually, we have discovered in Clark County, Mr. Chairman, that because we do reappraise the whole county every year and recost improvements every year, it has promoted a greater equity as reflected in the number of appeals we have received.  They are reducing in numbers, yet we are growing. 

 

Section 18 is a companion to Section 2 that deals with those companies that lease out manufactured homes for the office use purposes.  Would you take Section 19, Mr. Johnson?

 

Jeff Johnson:

I actually covered that inadvertently when I accidentally skipped ahead on that.  That is the appeal and mailing of assessment cards.  That deadline for us is moved up a little bit.  [Vice Chairman Goldwater requested clarification of the purpose of that.]  To make sure we mail out those assessment cards a little sooner than January 1.

 

Section 29, if I may, Mr. Chairman, clarifies the priority of tax liens on mobile homes.  This language came from the Clark County District Attorney’s Office, the District Attorney that represents the Clark County Board of Equalization.  She reviewed the bill and suggested this language.  It makes the tax lien on a manufactured home superior to all other liens because there has been some confusion about that. 

 

Sections 30, 54, and 55 deal with the owners of the manufactured homes that are leased out for office use.  They clarify the quarterly payment qualifications.  We have made a small change here.  It used to be that if you were a business that had a million dollars, or a tax bill of $10,000, which is roughly a million dollars in taxable value, and you were not secured to the roll, you did not enjoy the opportunity to pay quarterly as though you actually owned the land your business sat on.  What we did was say if you met certain criteria, you could pay quarterly as opposed to paying in one lump sum.  Actually this came from the Nevada Taxpayers Association.  We felt that was fair. 

 

[Mr. Johnson, continued]  It used to be that the business had to be in existence for three years.  We have changed that and made it a little easier.  We have said, “and the business has paid its personal property taxes without accruing penalties for the immediately preceding 2 fiscal years in any county in the state.”  Essentially we have compressed the time frame.  We feel we will be able to allow more businesses to take advantage of that opportunity.  It is nothing more than allowing them the benefit of quarterly payment.

 

Currently, when a person seeks to obtain relief from payment of penalties, we require a statement made under oath that must be notarized.  We feel that is an unnecessary burden on the taxpayer.  We feel a signed statement from the taxpayer should suffice, and therefore we would just accept that and not force them to get their signature notarized.  Section 31 deals with that.

 

Assemblywoman Gibbons:

Suppose a business has had its property devalued so that the taxes are low (a lot of people are doing that right now, especially with the economy down), and then it is sold a year later for much more than its assessed value.  They have already gotten the benefit of the devaluation.  Do you go back and recoup that?  Is there any provision in law that lets you recoup that?

 

Mark Schofield:

No, there is not.

 

Assemblywoman Gibbons:

Should we do that?

 

Mark Schofield:

I do not believe that that would be an appropriate thing to do, because circumstances change dramatically in the market.  A perfect example of that is September 11, 2001.  Look what happened to the market all across the board because of September 11.  Now we have the Iraqi war looming, and that is having a significant effect on the market.  Market situations change; the circumstances change. 

 

If they came to us and they received the reduction because their business was poor, that has been based in Clark County recently on the last 3 years of income.  We stabilize the income because we want to look at the whole picture and we want to make sure that no one is taking advantage of us for just one year for that very circumstance you just mentioned.  I do not think going back and recapturing a loss is going to do anything more than absolutely infuriate the purchaser of the property, because that is who the loss would have to be recaptured from.  

 

[Mr. Schofield, continued]  Section 32 is a technical clean-up.  Currently, when the government acquires property, either through eminent domain or through a redevelopment transaction, that property becomes exempt because, of course, government property is not subject to property tax.  That was applicable only to real property, not personal property.  This language makes it applicable to personal property that is acquired by the government.  If the government were to go in and purchase a piece of property in January, for example, we would exempt it from that point forward, so there would be no taxes paid.  That is currently how it exists with real property.  We are saying it should also exist with personal property in order to be fair to local governments.  That is essentially what this language does.  Are there any questions?

 

Assemblyman Anderson:

Who does that harm?  Does it harm visitors?

 

Jeff Johnson:

It harms no one.

 

Mark Schofield:

What we are dealing with is classes of property.  Let me cite an example.  If they continue to maintain the exemption on the airport, and if the airport were to acquire personal property, right now there is no provision to abate the taxes on that.  Personal property would mean kitchen equipment, office equipment, and things of that nature that they acquired from a private party.  This adds the personal property to the real property.  It levels the playing field.  It harms no one.  I doubt it will be used, but we put it in there just as a technical clean-up.  There is no hidden agenda relative to it being in here other than it should be included with the real property. 

 

Assemblyman Anderson:

It does not have an impact upon the SST, the distributive school taxes?  Not in any way?

 

Mark Schofield:

It could, but it would be so negligible it would not even be a blip on the radar screen.  This happens very rarely.

 

Assemblyman Anderson:

I guess it depends on whose radar screen you are looking at.

 

Mark Schofield:

I appreciate that remark, Assemblyman Anderson.

 

Assemblywoman Gibbons:

What about a situation where the local government is competing with private business?  Why should they not have to pay personal property tax when they are actually providing a service in competition with business people that perform the same service?

 

Mark Schofield:

Are you stating that the government is operating the business?  It is because they are currently exempt under the law.  It is within your venue and purview to change that if you so desire.

 

Section 34 clarifies requirements for posting notices of seizure for personal property for nonpayment of taxes.  Posting should be made at the building that houses the assessor’s office and at the site of the property being seized.  It was requested by the Clark County District Attorney’s Office.  It requires that the minimum bid for the sale of personal property must be equal to the total amount of taxes, penalties, and costs to avoid having to accept the lowest bid provided by a bidder that does not cover our cost.  Actually, this is just the reaffirmation of what is already in there.  It also expands the search capability of locating the legal property owner.  Are there any questions on that?

 

Section 35 deals with recreational vehicles.  We have several individuals who try to circumvent paying the governmental services tax by registering their recreational vehicles as chattel at the assessor’s office.  They do that because the tax rates are substantially lower for personal property than they are for vehicles.  For all intents and purposes, recreational vehicles are vehicles, and most of them are registered and licensed and pay the government services tax. 

 

This puts a provision in for parks that do not allow recreational vehicles to reside for more than 9 months.  In other words, it has to be less than 9 months; they must be registered with the DMV (Department of Motor Vehicles).  It is a horrendous administrative problem for us, because when we go out there and we see these recreational vehicles that may be snowbirds, they may have been in the park for less than 9 months, they have to register with DMV.  We are essentially making them comply, as we do with out-of-state residents who come in and must comply with registering in the state of Nevada.

Assemblyman Mortenson:

You are saying that snowbirds, the seniors that come down for 3 months, have to change…maybe I missed what you said.

 

Mark Schofield:

I misspoke, Mr. Mortenson.  This does not apply to snowbirds.  Snowbirds, typically, are registered in other states.  They come here and they spend the winter months because of the fair weather, particularly in southern Nevada.  No, those people do not pay a tax either through our office or through the Department of Motor Vehicles.  This captures those people who are moving around from place to place to avoid registering with the Department of Motor Vehicles but have no problem registering with us.  We feel it is more appropriate that they should be assessed through the DMV if they are in the park for less than 9 months, and that is the requirement of the recreational vehicle park.  That is the fair thing to do.

 

Section 36 is to add unsecured personal property to make it equitable with secured personal property.  This deals with a section of the statute, NRS 361.768, which deals with factual errors.  Factual errors are errors that we were not aware of or that the taxpayer brings to our attention such as zoning, use issues, demolition or destruction of the property, and things of that nature.  All we are doing is making it equitable again.  This is very similar to what we did with NRS 361.484 when we added the personal property.  Currently, it allows us to deal with factual errors involving only secured personal property.  We are saying it should be both secured and unsecured.

 

Section 14 is rather complicated.  It deals with the appeals process.  We are discovering during the appeals process that professional fee appraisers are not providing us with fee appraisals.  They are not providing us with appraisals that reflect market value, but rather appraisals that are done for tax purposes.  In essence, what they have done is an assessment based on the way we would have done the assessment, which would be for tax purposes, not market value, and we do not feel that is appropriate.  They are challenging our methodology, saying that we applied the wrong methodology.  Typically what fee appraisers are doing is trying to challenge the methodology we applied because our appraisal exceeded what they could sell the property for.  We are saying, “This is okay, this is appropriate, but you must receive a valid appraiser’s certificate and authorization from the Department of Taxation, such as we all hold, in order to render an appraisal for that purpose.”  That is essentially what Section 14 does.

Assemblyman Hettrick:

Would that include most appraisers that are licensed appraisers, or is it unusual for the average appraiser to have that certificate from the Department of Taxation?

 

Mark Schofield:

I am not aware of how many currently possess appraisal certificates from the Department of Taxation, the very ones that we hold.  This has just recently become an issue.  What I would envision is that the Department would look at their credentials, and, if they are licensed fee appraisers, or particularly if they hold the designation, would probably issue them a certificate.  We are only saying that if you are going to render an appraisal for purposes of taxation, then you need to be qualified to do that. 

 

I had requested, prior to Mr. Chinnock’s arrival about a year and a half ago, that perhaps we should pursue an Attorney General’s opinion through the Department of Taxation.  Unfortunately, we never got to that to determine if it was even legal for them to present an appraisal for tax purposes and not an appraisal that was a fee appraisal reflecting its market value.

 

Assemblyman Hettrick:

Mr. Chinnock is in the back.  The only problem is whether or not he is prepared to issue these.  The second question would be why a licensed MAI (Member Appraisal Institute) appraiser is not suitable to do this if they are already licensed as an MAI appraiser or whatever.

 

Mark Schofield:

We are not saying that they are not capable of doing this; we would just like the Department to be made aware.  The methodologies that we use to assess property for purposes of taxation are entirely different in a lot of ways from methodologies used to appraise property for sale or refinance.  All we are making note of is that if you are going to challenge us and use the same methods we use, then you need to understand what Nevada law requires relative to the assessment of property for tax purposes.  As far as the administration of this, I have not specifically spoken to Mr. Chinnock about this issue.  I can only tell you that this afternoon, before we started testifying, I asked if there were any issues on the bill, and he indicated that there were not.

 

Assemblyman Hettrick:

Mr. Chinnock, do you want to nod your head back there?  Are you going to be able to issue this certificate or approve it?  [Mr. Chinnock indicated in the affirmative.]  Okay, that is all I needed.

 

Vice Chairman Goldwater:

I have just a couple of questions on Section 14.  I understand your logic there.  I guess none of us knows enough about the appraisal industry to be comfortable saying something like this.  I think I share similar concerns with Mr. Hettrick.  Did you share this with people in the industry?

 

Mark Schofield:

No, we have not, because there have been very few that have attempted to do this, but we see this as a trend.  Certainly, those legitimate appraisers that follow the Uniform Standards of Professional Appraisal Practice (USPAP), that go the Department of Taxation, that try to acquire this certificate are going to have absolutely no problem whatsoever, I can assure you.  We are saying, “Let us see that you are qualified.”  It is one thing for them to do an appraisal for purposes of determining market value and challenging our taxable value.  It is an entirely different thing to sit at the table with an appraiser that is challenging our taxable value based on what he or she thinks the taxable value is.  We are saying, “You had better know what you are doing, and you had better know what the law says, and you had better know what the methodologies are that we use to appraise property before you present a case to the Board of Equalization,” because I can assure you there have been occasions where we have lost appeals because the Board, because of those credentials, believed the appraiser over our appraisal.  We subsequently would take those to the state.  We have lost appeals based on that, and we are saying if you are going to challenge us on the way we valued property, based upon your opinion of how we valued it, using the same methods we use, then you need to be qualified to do that.  Any legitimate appraiser, especially an MAI, would have no problem meeting these criteria.

 

Assemblyman Arberry:

Mark, when the appraisers come in to get the certificates, will they have to fill out any paperwork, or will they just come in and show their licenses and then you will issue them these certificates, or is there a testing process?

 

Mark Schofield:

That is something that would have to be worked out.  I would imagine that would be something that could be provided for procedurally in Nevada Administrative Code.  I would envision that it would be a matter of them coming in saying, “I am already a licensed fee appraiser.  I have a designation.”  Certainly, if they had a designation from the International Association of Assessing Officers, which is our national trade group, such as a certified assessment evaluator, they would automatically be granted, as they are now under the law, an appraiser certificate. 

 

[Mr. Schofield, continued]  We are letting the Department know, we are putting everybody on notice, that we know what the appraisers are doing, and we do not mind them doing it, but we want them to be qualified in the process of doing it.  We want to notify the Department what they are doing and what the level of it is.  I think we can make it a very easy process for them, and we will make it as manageable as possible. 

 

Assemblyman Arberry:

That would be good, because as soon as we pass this, then we get all the calls from the appraisers saying, “Why did you do this?” and then we are out of session and there is nothing we can do.

 

Mark Schofield:

I appreciate that.  We certainly are not intending to create any problems for the appraisal industry.  In fact, we rely on them a great deal.

 

Vice Chairman Goldwater:

Is there a local association or state association of appraisers?

 

Mark Schofield:

Yes, there is.

 

Vice Chairman Goldwater:

How about if you bounce this off them and at least communicate with the Committee that they are indifferent or in support of this?

 

Mark Schofield:

This has happened very rarely, but we are noticing trends in appraisal where all kinds of creative appraisal theories are coming forward, particularly when it relates to protesting the assessment of property.  Again, it happens very rarely.  We would be happy to run it by a couple of the appraisers who sit on the Clark County Board of Equalization.  Perhaps the Department of Taxation could run it by the appraisers that sit on the state Board of Equalization.

 

Vice Chairman Goldwater:

If there is a state association, that is probably more important and broad-based.

 

Mark Schofield:

Let me say this out of deference to the appraisal industry and the private fee appraisers.  I can tell you there will not be much appetite for supporting this by their group, even though the qualifications to get them the certificate could be made very simple.  As we craft legislation, we try not to be myopic, and we try to look way down the road when things happen, and they happen on not a regular basis but very infrequently.  We try to capture those things in the statutes so that we do not have a problem in the future.  Then all of a sudden we wake up one day and say, “Oops, we do not have a law that governs this.”

 

Vice Chairman Goldwater:

If that is true, then why do you come every session with a bill a half-inch thick?  Are we legislating for the year 2150 now in this bill?

 

Assemblyman Hettrick:

I see where you are trying to go.  I do not disagree with what you are trying to do, but I have to tell you I do not think this language really does it.  If it is going to be as easy as presenting my MAI certificate and the Department is going to hand me something that says, “Yes, you qualify,” I go right back out and appraise under any rule or theory or anything else I want to, because I have a certificate that says I can appraise any way I want to. 

 

Mark Schofield:

You are indeed correct, and I certainly did not mean to lead you to believe that it would be that easy.  I said we would try to simplify it as much as possible.  What I envision happening is a workshop in the crafting in this Nevada Administrative Code, the regulation that the Department is responsible for, to take before the Nevada Tax Commission.  At that point, the appraisers that would be involved with this particular issue would be invited to the workshop to give their input.  I know the Department of Taxation would not issue a certificate to someone to appraise property for tax purposes if they were not qualified.

 

Vice Chairman Goldwater:

Mr. Schofield, you know the spirit in Nevada has been less restrictive and “you have to be qualified to do this and qualified to do that” and more a spirit of “any one of our great citizens can come up and do what they need to do.”  I think if the Board knows, if the Board is well qualified, you would think they could spot a person who did not know what he was talking about in about 2 seconds.  I understand that you are losing appeals, but I think maybe you should review this particular section and check with the industry.  Maybe it is more an issue of Board education than qualification of presenters.

 

Mark Schofield:

In the spirit of expedience, Mr. Chairman, Mr. Hettrick, members of the Committee, I respectfully request you delete this section.  I think your points are well taken.  We shall talk with the Department of Taxation, and we will have dialog with the appraisal community.  We were remiss in not doing this.  We will come back to you next year with this change.  I guess, in essence, Mr. Chairman, it gives me a great sense of satisfaction that you just allowed us to fire a warning shot to some individuals that have a proclivity to push the envelope.

 

Vice Chairman Goldwater:

I think it reminds us, too, that our boards have to be well trained, knowledgeable, and your staff needs to be on cue and be able to present and know what they are doing and identify people who do not know what they are doing.

 

Mark Schofield:

So you are asking that this be deleted? 

 

Chairman Parks:

Would you like to go ahead and proceed?

 

Mark Schofield:

Thank you, Mr. Chairman.  Mr. Dawley is going to take over the exemption section.

 

Dave Dawley, Carson City Assessor:

[Introduced himself.]  I get the privilege of testifying for Mr. Marvel’s favorite subject, exemptions.  In Section 3, what we are trying to do is change the definition of the “bona fide resident.”  Currently, it requires a 6-month residency.  We are trying to say that if they get their Nevada driver’s license or the Nevada ID card, we believe that it is their intention to become a Nevada resident, therefore we do not believe that they should need the six months residency. 

 

In Section 4, as well as the next page, Section 39, we made an error and we need to amend this to remove the orphans’ exemption from these particular bills.  There are currently no exemptions, nor, to the best of my knowledge, have there ever been any orphan exemptions, so, therefore, we are requesting that this be amended to remove those. 

 

The purpose of these sections is to increase the current assessed valuations for the surviving spouses.  Two years ago, this body raised the assessed values for the veterans’ exemptions based on the Consumer Price Index.  Currently, the surviving spouses receive a $1,000 assessed exemption.  We are requesting that that be amended to include the Consumer Price Index, then that would be starting in the year 2005–2006.  Again, Section 39 is pretty much just the same information that would be in NRS 361.080. 

 

[Mr. Dawley, continued]  In Section 5, we are required by law to appraise low-income houses, low‑income apartment buildings in which those incomes actually exceed the low-income status.  There are currently no regulations requiring that these apartment buildings provide us with any kind of information as to the number of units or number of people who are actually over the low-income limit; therefore, this section is putting the onus on the property owner to provide us with the information that we would need in order to completely appraise the property. 

 

Assemblywoman McClain:

Do you realize that in some of these low-income housing projects the mix of low-income versus higher priced apartments changes pretty often?

 

Dave Dawley:

Yes, Ma’am, we do.  We are also aware of the fact that once these particular individuals who are renting these apartments go over the limit, they are not allowed to be evicted from the actual apartment building, but they are taxable.

 

Assemblywoman McClain:

So that is all worked into the mix of how you assess that particular property?

 

Dave Dawley:

Right.  We take a percentage of the total apartments and then we tax only on those apartments that are actually over the limit.

 

In Sections 6 and 64, the intent is to change the affidavit from the physicians for simplifying the documentation required by the physician.  That would allow them to state the applicant is legally blind without excluding the actual prescription.  The intent is also to increase the amount of the blind exemption that is currently at $3,000 assessed.  We believe that should be increased based on the Consumer Price Index just like you did with the veterans’ exemption 2 years ago.  Section 40 is just a clarification of the blind exemption, which would make it the same as Section 6 and Section 64. 

 

Sections 7 and 8 concern the veterans’ exemption.  Currently veterans are able to get an exemption if they fit within a time category or a classified conflict.  We believe there are soldiers out there whose lives are threatened on a daily basis.  This does not include any of the conflicts or any of the liberations such as Libya, Grenada, or Honduras, or take into account veterans that currently place their lives on the line on a daily basis.  The Iraqi conflict is probably the most important one.  These people would not be eligible for this exemption if we do not update this exemption and remove all of the dates in it.  Sections 41 and 42 are just making the language consistent for NRS 361.090. 

 

[Mr. Dawley, continued]  Currently, the only people who are allowed to donate their portion of this exemption to the funding of a veterans’ home are regular veterans.  In Sections 9 and 10, we are requesting that this be changed to allow disabled veterans to donate part or all of their exemption to the Veterans’ Home Account Fund.  Sections 43 and 44 are changes that would go with the last section, Section 9 and Section 10, to make everything the same.  Sections 11 and 12 are the same thing.  They allow the disabled veterans to donate their portion of the veterans’ exemption to fund the veterans’ home.  Sections 45 and 46 are making the language consistent with prior NRS’s. 

 

Mark Schofield:

The next subject deals with the assessors and the Department of Taxation.  We have an agreement to disagree between the Clark County government and the Assessors Association.  They are here to give their point of view on this particular subject. 

 

Currently, as many of you are aware, the assessors, all 17 of us, are probably the most highly regulated elected officials in the state.  We are regulated for very good reasons, to make sure there is uniform and equal treatment of the citizens of Nevada.  That is tested every 3 years with a performance audit conducted by the Department of Taxation where they ensure that one third of the assessors every year are complying with Nevada Revised Statutes, assessment methodologies, and Nevada Administrative Code, et cetera. 

 

It used to be the ratio studies were conducted once every 2 years.  In 1993 or 1995, the Department of Taxation was suffering from a personnel deficit, and they did not have the personnel to conduct these audits once every 2 years.  They wanted to expand it to once every 4 years.  I vehemently opposed this concept because it is bad for business.  It is a bad idea.  It is our major check and balance, and we encourage the Department to come in and audit as frequently as possible.  They apparently agreed with me, and they continued the 2-year format.  In 1997 I made an agreement with the previous director that I would not oppose expanding the timeline to once every 3 years.  As a matter of fact, they are just about to bring to closure Clark County’s ratio study.  I have seen the preliminary draft on it, and I am very satisfied with it. 

 

I am very satisfied with the professionalism and the expertise of the Department.  We have a great, cooperative relationship with them, as do the other assessors throughout the state.  Of course, they do not come in and do financial audits.  The county government Finance audits our receipts and accounting practices, and we, again, encourage them to come in as frequently as possible because we want to make sure that the laws are followed.  Actually in Clark County’s case, Internal Audit comes in and does finance audits.  Any time that we make an accounting change as it relates to the collection of property tax or any type of accounting change, we seek the input and tacit approval from the Internal Audit Division or the Controller in Clark County. 

 

[Mr. Schofield, continued]  We feel very strongly that they feel now they have the authority to come in and do performance audits on all of the elected officials.  Their definition of a performance audit, as you will hear shortly, is substantially different from mine.  All of the assessors, many of the other elected officials that I have spoken to, and many other experts in the field feel that this is a power and authority issue.  There has got to be a balance of power.  Elected officials who are governed by state law in addition to being governed by state agencies and regulated and audited should not be in any way shape or form dictated to by someone who works for the county commissioner or the county manager.  We are saying there has to be a separation of power there. 

 

The performance audits are already conducted, and there are other measures to test to ensure that the assessors are doing their jobs properly.  There are some very serious sanctions in Nevada Revised Statutes that essentially hold us accountable for following the law.  What we are suggesting is that we keep it that way, that we do not allow local governments to come in.  I am not speaking for any other group because I have not been given that permission.  I am only speaking for the Assessors Association and we are in unison in this principle.  We believe that things are fine just as they are.  We believe that there should be no way that a governing agency can come in and dictate to another elected official. 

 

With that said, do we mind the scrutiny?  No.  We absolutely want to be scrutinized.  We are the most scrutinized elected officials in the state by virtue of what we do.  We have invited representatives from county government to come in informally to look at our assessment practices. 

 

They have a different viewpoint, and I respect that viewpoint.  However, I have to respectfully disagree with it.  I think we must maintain that balance of power.  We already have the Department of Taxation, on behalf of the Nevada Tax Commission, checking to see that we are doing our job properly.  We also have the sanctions in the statute.  You will hear their point of view later.  To me, it is a philosophical issue.  It is a power of authority issue.  It is a political issue.  It is not an issue of “we do not want to be audited,” because we are constantly audited.  Any questions?  Mr. Johnson will take the appeals and Board of Equalization section.

 

Jeff Johnson:

Section 21 deals with allowing one additional day every four years, that leap year, to be used to schedule county equalization meetings.  This will maybe help alleviate some tight equalization schedules with no negative impact to any other process.  It just says “last day of February” instead of “February 28.”

 

Section 22 is new language to coincide with the code that states that the petitioner has the burden of proof when appealing his or her taxable value to the county boards of equalization.  This new language will reflect the directives of the Nevada Tax Commission.  In Section 22, we do have one change we would like to make, if we could.  The way it currently reads in Section 1 of Section 22, the county board of equalization “may not reduce the assessment of the county assessor unless the appellant shows by clear and satisfactory evidence that the valuation established by the county assessor is excessive or inequitable.”  Since there can be varying degrees or definitions for “excessive,” we would rather strike “excessive” and change that to “exceeds market value.”  There is some other language that helps clarify the data necessary to comply with NRS 361.227 and the consequences of failing to respond to a subpoena.  

 

Sections 23 and 24 consist of clarification to extend the deadline when it falls on a non-business day.  As sometimes January 15 falls on a holiday, we would to be able to make that a little less strict so that it would fall on January 15 or the first business day following that day if it falls on a Saturday, Sunday, or holiday.

 

In Section 25, we are attempting to clarify the meaning of “full cash value.”  The purpose of this clarification is to extend the deadline when the date falls on a non-business day in this section as well.  It is similar to the language we had earlier as far as the “full cash value” meaning fee-simple interest in the property.

 

Section 26 deals with clarification to extend the deadline when it falls on a non-business day.  Also, it clarifies data necessary to comply with the NRS and the consequences of failing to respond to a subpoena.  It also coincides with the Nevada Administrative Code (NAC) 361.735 that states that the petitioner has the burden of proof.  It also allows the assessor to more accurately set value for economically challenged or troubled properties that historically have received reductions.  It would also tend to reduce the adjustment in the March segregation report.  I believe that is covered in Section 5 there, “the county assessor shall review each year any change made in assessment for the previous fiscal year,” and then maintain or remove changes as circumstances warrant. 

 

The change in Section 27 deals with tax roll dates.  It will guarantee 2–4 workdays after county equalization and billing activities cease to allow preparation of the reports to be filed.  The new due date will not negatively impact consequent work that utilizes report information.  It will increase the reliability and timely filing of these reports, again changing the date, to a specific date this time.  Instead of the first Monday in March, it would be March 5, and May 5 as opposed to April 30.

 

[Mr. Johnson, continued]  Section 28 eliminates any doubt that a payment was made under protest.  The problem is really a technological one in some respects.  If someone scans a check, it is not going to show up necessarily that they paid it under protest.  This would give the ability to have some kind of form that would show that they actually did make a payment, and they did make it under protest, instead of them having to check every single check that comes through.

 

Assemblyman Hettrick:

I understand what you are doing.  I do not have a problem with that.  I guess the only thing I would say is, earlier in the bill we said we do not need a notarized statement, just a signed statement is good enough.  Why do we have to make them notarize this statement?

 

Mark Schofield:

The reason we need them to notarize that statement is the remedial process that a taxpayer goes through if they disagree with assessed valuation.  There are three steps.  There is the informal appeal with the assessor, there is the Clark County Board of Equalization, there is the State Board of Equalization, and then, of course, the last stop is district court.  In order to facilitate filing a lawsuit, they must pay under protest and it must be documented.  We have had cases where lawsuits have been filed, motions have been written, because we had no documentation that the payment under protest had been submitted because it was written on the check itself, so there was no way anyone knew they had paid under protest.  It is rare that this happens.  All this would facilitate is that there would be communication to all parties concerned, the treasurer and the assessor in this case, that the payment in protest was made.  You may proceed in the legal remedy as it relates to the assessment of your property.

 

Assemblyman Hettrick:

I understand the reasoning.  It says, “Protest must be in the form of a notarized statement from the property owner filed with the tax receipt or at the time of payment of installment.”  If they are going to be there, they are obviously protesting.  They are dissatisfied.  They are at your shop.  You are receiving the check.  Or if they are not, if they just wrote you a letter, why can you not acknowledge the receipt of their protest?

 

Mark Schofield:

If they would write the letter, that would be perfectly appropriate and acceptable.  The problem is in a couple of cases they did not write a letter.  Even though the written statement was required under law, they wrote it on the check and, because they wrote it on the check, that was accepted as a written statement. 

 

I can assure you that there are so few of these this would not adversely affect the taxpayers.  What we are doing is just adding additional insurance that everybody is on the same page as it relates to the need to follow administrative remedy and to follow it under the letter of the law, and everybody needs to know about it.  We could require them, as is required now under statute, to file a written statement and prohibit that written statement from being placed on the check.  That would be fine if they would file it.  We never see the check; that goes to the treasurer’s office.

 

Assemblyman Hettrick:

The existing law as I read it says the tax receiver shall forthwith forward one copy of the protest.  I guess technically you are the tax receiver?

 

Mark Schofield:

No.

 

Assemblyman Hettrick:

The treasurer is, so the treasurer was to forward a photocopy of the check.

 

Mark Schofield:

She did not know.

 

Assemblyman Hettrick:

But it says she should.  It says the tax receiver shall forward one copy. 

 

Mark Schofield:

If it had been provided in a written statement, as you or I would have done, we would have exhausted the first two steps of our administrative appeal, and we would now be paying our taxes under protest because we plan to pursue this issue in court.  There would have been no problem.  She would have had notification; she would have filed the appropriate copies.  In this case, it was written on the check.  Now, I have a remedy.  We can prohibit them from writing the statement on a check and not require the notary.

 

Assemblyman Hettrick:

The only part I am after is the notary.  If a letter is suitable, why do we have to make them notarize it?

 

Mark Schofield:

The letter is already required.  What I am saying is they do not follow the law when it comes to the requirement of the letter.  If the Legislature would put in a provision that it must be in letter format and not written on a check that is for payment of taxes specifically, that would be fine.  That would solve our problem.

 

Assemblyman Hettrick:

My only concern is the word “notarized.”  Any way you are happy, I just do not see why at one point they have to be notarized, and at another they do not.  If you can accept a letter, I do not have a problem with a letter.

 

Mark Schofield:

Would you make the motion that a statement that I pay under protest, written on an instrument to pay the property taxes, such as a check or certified funds, such as a money order, is not an acceptable is not an acceptable method of making a statement? 

 

Assemblyman Hettrick:

I am concerned about your electronic transfer site, so, rather than go to the check, why do we not just say, “in the form of a statement other than by the method of payment?”

 

Mark Schofield:

Beautiful, that works.  Perfect.  I think we will check with you, Assemblyman Hettrick, the next time we start to write our bill.

 

Assemblyman Mortenson:

I was just trying to pursue the same thing as Mr. Hettrick.  I just love it when government makes it easy for their constituents or the people who pay their salaries, instead of making it hard for them.  That is a great solution, Mr. Hettrick.

 

Mark Schofield:

If I may, I am going to turn some additional testimony over to Zane Burgeson, who is my manager of what you would refer to as the mapping division.  We call it Parcel Data Systems.  He is going to testify on various sections.  After he has concluded his testimony, I have one subject that will require a great deal of discussion, maybe 5 minutes.  We will breeze right through the rest, and we will have completed our testimony.

 

Zane Burgeson, Manager, Assessment mapping, Clark County Assessor’s Office:

[Introduced himself.]  My first section is Section 13, which is on page 38 of your packet.  This is clean-up language from last session.  Any document that conveys ownership of land would have not just a complete legal description, which was passed in the last session, but a correct and legal description before we would change any records.

 

Assemblyman Hettrick:

How do you know it is correct?  It says it contains a “correct and complete.”  How do they know it is correct?  They can only take the description they are given by somebody.  They are not going to go survey it, so how do they know it is correct?  Are they hereby certifying that this is a correct description?

 

Zane Burgeson:

Mr. Hettrick, it is our staff that analyzes these legal descriptions.  They are all experts in their field when it comes to interpreting these documents.

 

Assemblyman Hettrick:

So your staff is the one that is going to have to provide the correct one?

 

Zane Burgeson:

Well, not provide it.  We are the ones who are going to determine if it is correct.

 

Assemblyman Hettrick:

And what do you do if it is not?

  

Zane Burgeson:

We have a policy in our office.  Our procedures and processes are to notify both the taxpayer and the title companies when that situation arises.

 

Assemblyman Hettrick:

And right now if the words “correct” are not there and your staff goes through this and looks at it and determines that it is not correct, what do you do?

 

Zane Burgeson:

Again, we notify the title companies, the surveying community, and the taxpayer.

Assemblyman Hettrick:

So it is the same whether you change the language to “correct” or not.  My only point, again, is that I do not know how the person submitting knows.  He goes and gets his description from somebody and he does his best job, but he has no way of knowing if it is correct.  I do not know if we are putting some onus on the individual providing this or not.  I am just concerned with that.  If it is not a big deal, it is fine.  I do not want to make this all a technical mess, but I am just concerned that I do not know how the person submitting knows that.

 

Zane Burgeson:

I understand what you are saying, Mr. Hettrick.  We had a discussion with our District Attorney on that same point you are making, and he advised us to add that verbiage. 

 

My next sections, Sections 50, 51, and 52, are on page 45 of the packet.  The intent of these sections is to establish the process for the assessor’s office to work with the taxpayers and the cities to be able to adjust city boundaries by detaching, removing, or deannexing parcels from the city.  Currently, there is no provision in the statutes to allow the cities to do this.  One key point of the proposed language of these three sections is the stipulation that the parcels to be detached from the cities have to be split by the city boundaries.  Currently you have several areas in the valley that are in this situation.  The assessor’s office receives numerous phone calls from these taxpayers, and it is very difficult for us to explain why they have a city boundary running literally right through the center of their house.  These situations arose from past historical discrepancies in surveys in most of the cases.  We have worked hard with the cities, especially the city of Las Vegas where most of these reside.  We are looking for some kind of tool to be able to help the taxpayers in the situation where the parcels will be detached from the city.  Also, on the other side of this is where these taxpayers that had their parcels split by the city boundaries have had past problems obtaining permits, zoning changes, and determining whether they are in the city or not when it comes to actual elections and voting.

 

Assemblyman Marvel:

What happens if we have this split when a homeowner wants to refinance?

 

Zane Burgeson:

In that situation they still own a legal parcel pursuant to NRS 278.  Their lot could be established by a map.  When they refinance, the title company has to deal with two parcels.  For example, the front 10 feet of my parcel could be in the city and the back 90 feet of my parcel could be in the county.  When refinancing, you are looking at that parcel as a whole.

 

Assemblyman Marvel:

Is there any difference in the value if part of the parcel is in the city and part of it is in the county?

 

Zane Burgeson:

Not being an appraiser, my understanding of that is, if you look at this example, the front 10 feet and the back 90 feet as 2 individual parcels, in most situations that is the case, either they are small sliver parcels.  They place minimal value on that small piece and then the full pieces are valued out, usually without improvement value included in there at all.

 

Assemblyman Marvel:

Have you had any experience where you have had this problem, or where the owner has had a problem refinancing?

 

Zane Burgeson:

I have not had any experience with a problem with refinancing.  The problem is more of a concern or “Why am I receiving two tax bills?” or “Am I being double‑assessed?”  Those are the questions that we get.

 

Mark Schofield:

If I may, just to clarify, Mr. Marvel.  Where the property is located will not necessarily affect the way it is assessed or the value.  What could affect value is if we have a boundary line that cuts the parcel in half with one section in the city and one is in the county.  We are dealing with two different tax rates, the highest one being the city.  Is that correct, Zane?

 

Zane Burgeson:

That is correct.  Again, we are just trying to help the taxpayer relieve this situation, and the cities have actually asked us to work with them on this.

 

Assemblywoman McClain:

I would hope you do not have too many of those left by now.

 

Zane Burgeson:

No, I would say there are less than 50 parcels that are actually split by city boundary.  There are many parcels that are split by existing library districts or bond debt issues.

 

Assemblywoman McClain:

Thank you.  I know there was a lot of work done on rearranging and fixing boundaries.  I hope that with GIS systems nowadays, that will not happen in the future when annexations happen.

 

Zane Burgeson:

I hope so, too.  My next section is Section 61, on page 46.  We have many amendment maps here in Clark County.  A lot of times the information on the maps to our staff is ambiguous.  There are three or four sections on the map that we look at to determine what, exactly, has been amended.  There is a legal description, there is a title on the map, there is actually a graphic display delineating the area that is to be amended, and there is also an area for notes to display exactly what is being amended.  A lot of times we will read the legal description and it does not exactly match the area that is delineated on the graphic portion of the map, or the notes do not match the legal description, or the title does not reflect what is actually in the legal description.  What we are trying to do with this proposed language is eliminate that ambiguity and just depend on a legal description for the exact boundary of what is being amended by the maps.  This language we worked actually deletes Sections 61, 62 and 63.  We worked closely with all the entity surveyors and the southern chapter of the Nevada Association of Land Surveyors and their legislative committee.  To my knowledge, they have all agreed to this language. 

 

Section 62 is a little clean-up language that the surveyors have asked us to put in here.  It also affects the assessor’s office.  They want to be able to, under one map, do a reversionary map that affects multiple maps from parcels that were originally put on by multiple maps.  Instead of having to revert each one of those maps individually, they want to be able to do it under one reversionary map.

 

Section 63 is language pertaining to reversionary maps.  We have problems.  A reversionary map comes in and actually removes legal lot lines from the record.  For us, then, any future conveyance is out.  A lot of the descriptions on those conveyances still reflect those legal lots that are actually reverted.  We are looking for proposed language that any future conveyances of the reverted property must either contain a “meets and bounds” description or at least not refer to those legal lots that have been expunged from the record.  That is the end of my sections.

 

Mark Schofield:

I have one clarification, though, as it relates to the expansion of the exemptions for the veterans.  Mr. Chairman, you had asked me, when we spoke late Friday evening, whether or not, in the bill presented before you, the assessors had reached a consensus on every section.  We have just recently discovered that one of the members of our Association, actually the Storey County Assessor, is not in favor of the expansion of the veterans’ exemption.  I just wanted to make that clarification.

 

Chairman Parks:

Mr. Marvel is asking, “Do you know why?”

 

Mark Schofield:

Assemblyman Marvel, it is my understanding that her concern is the fiscal impact that it may bring to her county.  The interesting thing about expanding the veterans’ exemption is that we have a little over 40,000 veterans in Clark County that currently enjoy the exemption, whether it is through DMV (Department of Motor Vehicles) or through property assessment.  There are approximately 225,000 veterans that are currently eligible for that exemption.  Subsequently, I think the determination of the fiscal impact would be very difficult, as most of the veterans are not going to take advantage of this, just as we found with the surviving spouse as I have testified for the last five sessions.  It finally passed out of both houses the last session.  Now that widowers enjoy the exemption, very, very few have applied for it.  It was the principle of equity in their mind, as I testified in the previous 5 sessions.  I seriously doubt the fiscal impact would be that dramatic if you allowed all veterans to apply.

 

Assemblyman Marvel:

Mark, do you know in Storey County whether they are taking it out on their automobiles or their homes?

 

Mark Schofield:

Assemblyman Marvel, I have no idea what the ratio is to real property/personal property versus DMV in Storey County.

 

Assemblyman Marvel:

What is it in Clark County?  Do you have any idea?

 

Mark Schofield:

I can tell you in a moment.  You want veterans, correct?  24,505 currently apply it to the Department of Motor Vehicles government services tax; 1,289 apply it to personal property that could be business or aircraft or manufactured homes; 17,196 apply it to real property.  That is a total of 42,990.  I do not know if Clark County is reflective of the other counties.  I will tell you I advocate that the veterans and the surviving spouses apply their exemption to the government services tax because it is worth more money to them.  You appear to be so taxpayer friendly, I am sure you would probably advise them the same. 

 

Chairman Parks:

Does that conclude your testimony?

 

Mark Schofield:

Very briefly, a couple more sections if I may, Mr. Chairman.  Section 49 has stirred a great deal of controversy as it relates to the recorders.  We have asked to be able to share in the technology fund that was created in the last legislative session, which benefited the technology in the recorder’s office.  We have assured the recorders that it is our intent, as they have no appetite to share these funds with us for very valid reasons that I am sure they are going to articulate to you, because they need the funds that they currently receive.  I had attempted to amend the assessors into that bill at the final hour and was pleaded with and agreed to not to tamper with that bill, which I did not.  We have spoken to the recorders.  They would prefer us not be in their particular loop as it relates to what they receive under their brand new statute.  We have agreed to pull that out.  This is on page 36 of 48 (of Exhibit C).  It says, “the recorder and, at his discretion, may be used by other county offices that do business with the county” and it goes on to talk about the fee.  We are suggesting that you remove that because the recorders unanimously oppose us participating in their fund.  However, you have to understand that there is another bill out there that provides for the same type of mechanism for the clerks.  It currently is sitting, I believe, in the Senate chamber ready to take a full vote.  In lieu of that, what we are asking you to do is totally delete Section 49 out of this bill.  In return for that, we are asking you to create a technology fee for the assessors. 

 

As you well know, the local government assessors in most cases generate the second-largest pool of revenue for local governments, if not a very high ratio of the revenue local governments enjoy, as I am sure you heard testimony on Tuesday evening.  What we have asked to do is increase the collection fee for personal property from 6 percent to 8 percent, which is an additional 2 percent.  That additional 2 percent in Clark County would generate $1.6 million. 

 

We have crafted into this particular section, Section 33, language that is remarkably different from the recorders’ language or the clerks’ language in that what we are proposing is that we be able to share these funds with the nexus departments that we have something to do with, such as the county treasurers, public works, comprehensive planning, departments like that that would need funding to make technology compatible with all of the offices.  An additional feature that we have put in there as a check and balance is to essentially turn back the residual funds that were not spent to the county General Fund each and every year, whereas the other funds continue to accumulate.  That is essentially what that section does.  I know there is some opposition to that you will hear later.

 

[Mr. Schofield, continued]  I will be very brief.  The other sections, Sections 37 and 38 on pages 38 and 39, reverse the requirement of filing an affidavit of labor for mining in the county clerk’s office and reverts it to the recorder’s office.  It makes it much easier on the taxpayer and gets the information to us more quickly so we can provide the exemption.  We changed it several years ago, and I cannot recall what the rationale was to have it filed in the clerk’s office.

 

The other one, if I can refer to the additional, second-to-last amendment to the bill, is an amendment to Section 47 and it is subsection 3(d).  Essentially this is a situation I have spoken to the recorder’s office in Clark County about, and the other recorders have not had any difficulty with this language.  We made a mistake in our last omnibus bill last session as it relates to documents of conveyance.  What we thought we were doing, what we requested, was that tax mailing addresses be placed upon conveyances.  We thought, and the agreement we had with the recorder’s office was that that would just affect grant or grantee documents—documents that come through the assessor’s office from the recorder’s office that allow us to change ownership—that we send to the treasurers so they can send the property tax bill to the appropriate person.  What occurred was a disaster.  It was interpreted that conveyance means all documents.  It means reconveyance; it means all documents dealing with property.  So, what the previous recorder was doing was mailing the documents back that were not meant to fit into this bill relative to required tax mailing addresses.  We were getting calls from mortgage companies all over the country that were trying to record reconveyances, things that were getting mailed back to them that really had no requirement to have a tax mailing address.  We fixed that here in this language.  We fixed it with one amendment to Section 3, and we put provisions in for documents that it does not apply to.  We need to add a “d” to that, and that is on your amendment.  This was suggested by the title industry, “any document that does not convey fee-simple title to real property.”  We hope this will fix that problem.  This created an enormous headache for the taxpayers, particularly when the recording process at the time was rather arduous.  To have it mailed back to the taxpayer and have to go through the re-recording was quite a task.  Are there any questions on those items?

 

I am going to go from the amendment you have and just speak extemporaneously about these sections.  There are numerous sections affected.  Originally, in the language that you have before you, in order for there to be continuity in exchange of information between the recorder’s office and the assessor’s office, we had crafted language that simply stated, “Documents must be compatible with the information technology used by the county assessor.”  We presented that language to the recorders.  They had somewhat of a concern about the verbiage that was used.  It seemed to be rather too direct and a little harsh, so we accepted a change that they provided to us that it is my understanding they are all in favor of, and this amendment affects Sections 48, 58, 53, 56, 61, 57, 59, 60, 62, 65, and 66.  In a simple change, we replaced the phrase “compatible with the assessor’s systems” or “compatible with the technology used by the assessor” with “in a mutually accepted format.”  That is the change that was made.  That is the exemption you have in front of you.  To my knowledge, that is accepted by them.  If that is the case, there will be no problems with this section of the bill.  I think we finally got our issues solved as they relate to communications with the recorder’s office.

 

Assemblyman Marvel:

Do you think you can get mutual acceptance?

 

Mark Schofield:

I am highly confident we will receive that, yes.  Thank you, Mr. Chairman, members of the Committee.  I know that was a long bill.  Thank you for your patience.

 

Chairman Parks:

Thank you.  We have quite a number of individuals who have asked to speak on this bill.  We have Mr. Chuck Fulkerson and members of the American Legion.  They have all been here patiently waiting.  If any of them wish to come forward, we have three chairs here in the front.

 

Chuck Fulkerson, Director, Office of Veterans Services:

[Introduced himself.]  At the risk of being thrown out, I would like to propose an amendment (Exhibit D).  It is important.  On pages 6–12 it speaks of donations being deposited in the veterans’ nursing home’s Home Account.  I would like to delete the word “Home” so that the donated funds go into the nursing home Gift Account.  That way those funds, if they are not used on an annual basis, roll over and can be used for a larger purpose or the home regains control of those funds.  If it goes into the Home Account, at the end of the fiscal year the remainder funds go into the General Fund.  Coming from the federal sector, believe me, at the end of the fiscal year, if you have not spent it, you lose it.  In the federal government, it develops into a spending frenzy that this state does not need to experience.  The line, the section, the page is all annotated on a handout I gave you. 

 

One other small matter:  It was brought to my attention that the VA (Veterans’ Administration), when they make disability awards, often say 70 percent service-related disability, 30 percent unemployability, classify the veteran as 100 percent disabled.  The language in NRS 361.091 consistently talks about permanent service-connected disability.  In this particular case, this would preclude this veteran from being qualified with the assessor’s office to receive 100 percent exemption on his property.  It puts the assessor in a position of referee.  The veteran goes in and says he has 70 percent and he has 30 percent of service-connected disability and the federal government classifies him as 100 percent disabled.  I would like to suggest that we delete “service-connected” and just leave language in the NRS that says, “incurred a disability and has been honorably discharged.”  At the pleasure of the Committee, I can go through the next couple of days and make those changes.

 

Chairman Parks:

We would certainly like to have those changes presented to us for further consideration.

 

Chuck Fulkerson:

One other thing, I echo what has already been said.  At the present time the property exemption is only applied to “wartime service.”  I maintain since 1946 there has not been a non-wartime service.  From what we are going through now it looks like we are going to be in it for a long time into the future before we ever see that.  To give you a few historical examples, in the 1920’s, army troops spent 3 years guarding supply trains in Russia while Russia sorted out who was going to rule the country.  They got shot at every day.  In the 1930’s, the U.S. Marine Corps was in and out of a half dozen Central American countries protecting the “banana belt,” and they got shot at every day.  In 1946–1950, army advisors in Korea were with the ROK army getting shot at.  The U.S. Army, and I was part of that, guarded the “Iron Curtain” in Europe.  We eyeballed those guys, and once in a while somebody popped off a round.  The Air Force daily, almost hourly, flew those resupply airlines into Berlin from south Berlin, and they were getting shot at.  The list goes on and on and on.  I feel that this is something that needs to be done so all veterans who have served honorably get to take advantage of this exemption.  Right now, the VA considers 97 percent of veterans are service connected, anyway, so we are not talking about including that many more folks. 

 

Chairman Parks:

Just as a point of clarification on the suggested change you made, you want to have it changed to the Veterans Home Gift Account established pursuant to NRS 417.145, subsection 7.

 

Chuck Fulkerson:

Yes, page 6, Section 7, paragraph 5(b), line 34, [Chairman Parks indicated that that was correct.] and then page 8, section 8 paragraph 4(b), line 3.

 

Chairman Parks:

Right, but in each case you are referring to NRS 417.145, subsection 7.  [Mr. Fulkerson indicated agreement.]  Yes, I think we have that.  Thank you.

 

Tony Vaughn, member, American Legion:

[Introduced himself.]  I am here at the direction of the Department of Nevada American Legion National Committeeman, Ron Guzman.  I will be very short, sweet, and to the point here.  With regards to A.B. 533, which we have all listened to, the American Legion does support the provisions of this bill as it affects veterans.  We would like to add our support for Mr. Fulkerson and for passage of the veterans’ sections in this bill.  Thank you.

 

Ron Kruse, Chairman, Veterans Services Commission:

I rise in support of this bill and these changes for veterans.  I am a retired Master Chief Petty Officer from the Navy from 1952–1973, and I did get involved in some of those cold wars.  These changes are sorely needed to make us move along a little further.  I also represent the 260,000 veterans that now live in Nevada.  We are in full support of these changes.  [Introduced himself.]

 

Chairman Parks:

Mr. Fulkerson, there is one other bill, and that is A.B. 366.  Have you been working on that bill as well?  I think there are some changes in that bill that would correspond to this.  You do not need to do anything right at this point, but if you would look at that, I think we can make sure that we are moving forward on that.

 

Chuck Fulkerson:

Yes, sir, I will.

 

Chairman Parks:

Is there anyone else that would like to talk on the veterans’ issue?  The next person who signed in was Jerry Carroll.

 

Dan Musgrove, Director, Office of the County Manager, Clark County:

[Introduced himself.]  We have an amendment we would like to offer (Exhibit E).  Mr. Carroll will get into the details, but simply our amendment asks that Sections 1 and 20 of the bill be removed and returned to the existing statutory language as it relates to audits.  Mr. Jerry Carroll, who is the Director of Audit Department of Clark County, will go into the details. 

Jerry Carroll, Director, Audit Department, Clark County:

I want to tell you a little about myself, and then I can get into the amendments.  I am a CPA (Certified Public Accountant), I am a past president of the State Board of Accountancy, and I have been with the county for over 20 years, 17 years as a director.  Although I have only been up here a couple times, it is a great pleasure and an honor to be here today.  I just have some wording that I feel is not good public policy, and that refers to the parts that limit the county from doing performance types of audits, specifically it restricts us to doing financial audits of receipts.  The county just recently received an opinion from the District Attorney’s Office that the Commissioners can do or ask to have performed certain types of performance audits.  I am just here to try to preserve that right. 

 

We look at ourselves as similar to the legislative auditors, and it appears to me that in this bill it restricts both the state and the county entities from looking at certain parts of the assessor’s office.  To give you a little background into performance audits, they typically include economy and efficiency types of audits as well as program results.  The language prevents us from verifying, for example, performance standards, performance measures, and best practices.  We talk about the balance of power.  An assessor could come in to the County Commission and say, “Okay, I need this particular budget, and without it I will not be able to do my assessments.”  It does not allow the commissioners to say, “Let me verify that.”  We are asking to remove this language to allow and continue to allow us to verify that type of information through performance audits. 

 

In those performance audits we look at processes that not only involve one office, they may involve several offices.  You may go out and look.  Just to give you an example with the assessor’s office, we may want to look at the process of how a building gets on our tax rolls all the way to how it gets evaluated through the assessor’s office.  It is important for the state to look at that also, because they receive about 1/3 of the tax rate.  We may be looking at the speed at which that is being done. 

 

Our intention is not to overlap or try to step on the toes of the Department of Taxation.  I will be the first one to tell you that we do not have the expertise to look at appraised values.  If we ever did, or the commissioners ever wanted to look at that, I think there are other safeguards.  One of the things that an auditor may do is when they go in, for example if they were looking at a company that had diamonds on their inventory.  Obviously, a CPA cannot come in and look at that and say, “Yes, that is a diamond, and all these diamonds are worth $100 million.”  Typically, what they do is hire professionals to come in and take a look at and reevaluate that.  We are not trying to do anything that the Department of Taxation already does, but there may be instances during the course of these other audits that come to our attention that we need to either question, bring back to the assessor’s office, or even bring back to the Department of Taxation, to find out what is correct or a little out of whack.  We see ourselves as a complement to that initiative. 

 

[Mr. Carroll, continued]  Finally, we do other types of audits besides financial and performance audits.  We do information security, information systems audits, so we want to ensure that somebody is not able to hack into our systems and, in this instance, change our assessed values.  We do legwork for the District Attorney’s Office concerning possible embezzlements.  We usually prepare the case for the DA if it involves an individual within our county.  We also look for computer fraud in those instances. 

 

Finally, in my opinion, I do not think the Commissioners have a final say in the assessment, but there may be instances when we want to question it from time to time.  I think we need to preserve that right.  That concludes my comments.  If you have any questions, I will be happy to answer them.

 

Chairman Parks:

Mr. Anderson has a question.  While he is getting to the microphone, I want to say that we do have members of this Committee that have to leave shortly for Elections, Procedures, and Ethics.  We will continue, and what we will do, if we lose a quorum, is to act as a subcommittee to complete receiving the testimony on it.

 

Assemblyman Anderson:

Thank you, Mr. Chairman.  I know I have to go to Elections, Procedures and Ethics in a moment.  The question is, did you bring these issues any other time before this meeting, or did you just pop up with your concerns now?

 

Jerry Carroll:

Do you mean in prior years, or just recently?

 

Assemblyman Anderson:

On this one, having seen this legislation, did you make them aware of your concerns with the legislation?

 

Jerry Carroll:

Yes, we have had some continuing discussions and there is just a difference of opinion regarding these issues. 

Chairman Parks:

We are going to excuse the members of Elections, Procedures, and Ethics and thank them for staying until the last moment.  We will proceed with the next witness.  Thank you, Mr. Carroll.  [Quorum was lost.]

 

Mike Alastuey, representing Clark County:

[Introduced himself.]  I am not in opposition to the bill, but I wanted to point out in Section 33, as was probably described in testimony, there is a proposed increase in the percentage of commission on personal property tax to be retained and then applied to technological improvements for the office of the county assessor.  I have been approached by representatives of city governments and I wanted to pass on the observations that they made that this particular commission would act, in effect, to reduce the amounts that would be distributed to cities and other local governments from this particular source.  Again, I am not in opposition to the bill, but I am concerned with a feature of the bill that you may wish to consider as you go forward in processing it. 

 

Chairman Parks:

Will there be any written statement on this from the various entities that you are aware of?

 

Mike Alastuey:

I will get that and transmit that to you. 

 

Chairman Parks:

We have 8 days to move this bill through this Committee, and I think what we are going to do in the interest of time is look at all these sections, and anything that we cannot resolve we are going to just strike out of the bill and then push the bill through with what is there, as long as it is still coherent.

 

Mike Alastuey:

Mr. Chairman, we will get that information to you and share that also with the assessors and all parties.

 

Chairman Parks:

Thank you very much.  The next person that is signed in is Terry McHenry, Nevada Association of Land Surveyors.  He indicated his opposition to the bill.  I am sure it is one or two sections on the bill.  Moving down, Gaylyn Spriggs.

 

Gaylyn Spriggs, representing the Nevada Taxpayers Association:

[Introduced herself.]  Overall, we are in favor of the bill.  I think most of the ideas are good ones.  We do have a couple of concerns, though.  First, I would like to say that the Nevada Taxpayers Association supports Section 1 of the bill.  We do not believe that anyone in this state, other than the Department of Taxation, has the expertise to audit what the assessors do or what their performance is.  The Department of Taxation already does performance audits.  The Tax Commission holds hearings on those audits.  They are all public, and all of that information is public.  Any assessor that does not pass the performance audit gets called on the carpet and has to mend his ways.  We agree that financial audits should be made of all of the assessors’ offices, and we believe they are.  We would be opposed to seeing Section 1 removed.  We think it is a good addition. 

 

[Ms. Spriggs, continued]  On Section 16, subsection 4, on page 17 of the bill, where we are talking about intangible personal property, if it is the Legislature’s desire or intent to not have intangible property applied to locally assessed, and only to centrally assessed, we believe that intent should be in the statute, but not in the centrally assessed portion.  You know, legislative intent sometimes gets lost, and the law will prevail in years to come.  We just wanted to make sure that the intangible being exempt in centrally assessed remains that way, and that there is no attempt for anyone to try to decide that maybe that should not be the way it is because of the language we are putting in now. 

 

We agree with the assessors’ amendment in Section 22 to change the word “excessive” to “full cash value” so that everybody knows what the standard is.  As always, along with Assemblyman Marvel, the Taxpayers Association has been opposed to increasing or adding to exemptions.  We wanted that on the record also.  That is all I had to testify on.

 

Chairman Parks:

With regards to Sections 16 and 17, have you had conversations with the requestors of the bill and explained your situation to them, and do you know if there is any proposed redrafting of the language to make any particular changes?

 

Gaylyn Spriggs:

I do not know if there is any proposed addition or change to the language.

 

Mark Schofield:

I think we might mitigate the problem that some individuals have with their concern about even touching NRS 361.228, that it might open the door for further amendment if we move that into NRS 361.227, which is the language that essentially governs the assessment of local property by the local assessors.  That would totally leave NRS 361.228 intact.  What we would do in NRS 361.227 is add the amended language that we provided in NRS 361.228 in Section 4.  We would take that language and insert it into NRS 361.227.  I think that may resolve the problem.

 

Gaylyn Spriggs:

That would mitigate our problem.  We would not have a problem if it were in the other section so it was clear.

 

Chairman Parks:

Can somebody put that in writing as to exactly how you wish to draft that?

 

Mark Schofield:

Mr. Chairman, I would be happy to.  We did have a meeting with Ms. Spriggs and Carole Vilardo yesterday at Nevada Taxpayers Association offices.  We had discussed this concept.  In actuality it was initially in NRS 361.227, but it was pulled out because it was viewed as redundant.  We did not anticipate it raising the ire of those who had an interest in the intangibles in NRS 361.228, so it is very easy to remove.  All we will do is reinsert the language in 228 into 227 and remove it totally from 228.  I will provide that to you tomorrow afternoon.  I will run it by Ms. Spriggs, and we will be fine with it.

 

Alan Glover, Carson City Clerk Recorder:

[Introduced himself.]  We would like to publicly thank Mr. Schofield and the Assessors Association for agreeing to amend their own bill on Section 49 by deleting the new language and the other sections in Section 48 where we have the mutually compatible information technology between the two offices.  We think it is fair that we can work it out amongst ourselves.  I do not have too many other comments on the bill except to support the assessors in their desire to get a technology fee for themselves.  That is terribly important.  It has really helped the recorders’ offices this year and a half to have a Technology Fund.  We are just now starting to make some progress in that area.  I think that if they had a technology fee, they could really go a long ways toward improving their offices’ service to the public and could even generate some more money for the counties by doing a better job.  With that, Mr. Chairman, I have nothing else unless you have questions.

 

Assemblyman Marvel:

Alan, can you talk to each other now?

 

Alan Glover:

In Carson City, our Assessor, Dave Dawley, is here.  We are using Intranet within the city offices, and basically have a license to our program.  They just bring up everything that we can bring up.

 

Assemblyman Marvel:

Is that working?

 

Alan Glover:

It appears to be.  We have not had any problems so far.  Technology and requirements will certainly change in the future.  I know that.

 

Chairman Parks:

Mr. Glover, you said Internet, or did you mean Intranet?

 

Alan Glover:

It is Intranet.

 

Kathy Burke, Washoe County Recorder:

[Introduced herself.]  I, too, now support the assessors’ bill.  We thank Mark for making the amendments for us.  We do use our Technology Fund, and we do need to rotate our technology in the smaller counties.  They do not accrue enough money in their Technology Fund to be able to let it lapse in a year.  It may take 2 or 3 years to accumulate enough money to buy one piece of equipment.  I know a county right now that is trying to buy a map machine in the recorder’s office to reproduce the maps that we are required to by law.  I know that it will be about August, by their calculations, before they have accumulated enough money in their Technology Fund account to buy that piece of equipment.  To have it revert or to share with other offices at this time would be difficult. 

 

I can say that the Washoe County Assessor Bob McGowan and I work very well together.  He called to let me know that, “Kathy, we are fine with this.  I am going to Washington, D.C.”  I said, “Sure, Bob.  My problem with it was the compatibility lines where we had to be compatible with your technology system.”  We work perfectly fine together.  We have an Internet and an Intranet system.  Our Assessor’s Office has licenses to our system, and they have provided us with access to their system, but when it comes to compatibility, our system cannot read from their system and vice versa.  However, I can assure you that the people doing data entry in the Assessor’s Office see our image as fast as we are scanning that image, and can actually call our office while we are typing the grantor/grantee index into it and let us know we have made a mistake.  I do not think I can get them the information any faster than that.  They are very satisfied with the information the way they are getting it, but do our systems talk to each other?  No, and we both have new systems, so that would probably be a pretty big burden on the county if the word “compatible” remained.  The way that Mark Schofield has amended it will work fine, because we do mutually agree that we can get our work done very well.  I am obviously in support of a Technology Fund for them, knowing how much it has helped us and knowing how many compliments we have gotten from customers for being able to move forward with technology and get them the information faster. 

 

[Ms. Burke, continued]  I do have an issue with one of the amendments that was given on Section 47.  I guess we will thank them a lot for that one, too, because it has been extremely difficult to have to return documents to customers when you do not necessarily agree that something would need a “mail tax statement” address on it.  The amendment said, “any document that does not convey fee-simple title.”  We would simply ask, and I am sure that the Nevada Land Title Association will help us do this, to actually identify those documents within the content of the bill so that nobody tends to have their own definition of what “fee-simple title” would be.

 

Chairman Parks:

Thank you.  I do have a document here, one page that says, “3(d) – any other document that does not convey fee-simple title to real property.”

 

Kathy Burke:

Correct, and just to define those fee-simple title documents that do not convey.

 

Charles Chinnock, Executive Director, Department of Taxation:

[Introduced himself.]  I know our Department has been mentioned a lot throughout this hearing.  I wanted to let everybody know that we have a long history of working closely with the county assessors.  In the spirit of that cooperation, we do not object to all the things that are in that bill.  In fact, we can support many of the things that are in that bill. 

 

Mark Schofield:

We really appreciate your time.  We realize the length of this bill and the tremendous commitment you have made to hear it.  We will get all the changes made and get them to you as soon as possible.  I think we have reached accord with most of the issues, and we really appreciate your time.  Thank you so much.

 

Chairman Parks:

I am a little bit hesitant.  Let me talk to my able support people for a second.  [He went off-microphone for a brief period.] We have conferred and we are not going to create a subcommittee.  We would like to get any specific changes you would like to see added.  If you can get those to our staff as soon as possible we will line them up, incorporate them, and move it forward to a work session.  Thank you all.  We are going to close the hearing on A.B. 533 and open the hearing for Assembly Bill 442.  [See Exhibit I for bill explanation.]  Mr. Hettrick.

 

Assembly Bill 442:  Provides for abatement of property taxes for certain residences to avoid severe economic hardship. (BDR 32-783)

 

Assemblyman Hettrick, Assembly District No. 39:

[Introduced himself.]  Before I start, I just want to give a very quick piece of background, although I believe everyone here is probably experienced on this Committee.  I want to at least acknowledge a couple of things.  One is that this bill is, in part, allowed because of S.C.R. 8 of the 71^st Legislative Session.  It has been passed a couple of times previously, the voters approved it, and this allows for some adjustment or mitigation within the property tax statutes that were not permitted previously because of the Constitution of the State of Nevada. 

 

Secondly I want to thank Mr. Goldwater and the members of this Committee from a session ago when we brought what was at the time a very controversial bill and tried to take care of some of these problems.  I commend the Committee and Mr. Goldwater frankly because they got it, and they understood what had to be done and why.  Instead of taking the political rhetoric side, which they could have done, they did not, but moved the bill out instead.  Unfortunately, it got lost in the last couple hours in the frenzy of closing. 

 

With that, let me move to the bill and just give you a very quick overview of what this does.  S.C.R. 8 allows for property tax to be adjusted in the case of severe economic hardship.  A.B. 442 defines one type of severe economic hardship.  It does not say how the assessor must determine what that is.  It simply says that this type can be considered, and that is the intent of this bill.  I appreciate Mr. Zuend’s description of the bill.  I have an amendment there that changes it very slightly, but gives you a very good description of what this bill does.  We have a situation in the Lake Tahoe Basin where property values are rising so rapidly it is forcing people out of their ability to retain ownership of their property.  In fact, it is rising so rapidly that it is also forcing many people to sell their property, and the only buyer, because of the tax bill or the restrictions on the land, is the federal government, or U.S. Forest Service or other government agencies, that will not pay taxes to counties.  The intent here is to allow the county assessor to look at some of those properties and adjust the property tax bill to keep the property on the tax rolls and allow the private citizen to retain ownership. 

[Assemblyman Hettrick, continued]  I do not know how much detail to give you, Mr. Chairman, whether you want detail, or you just want me to go through the basics.  I do not think this bill has any opposition that I am aware of at this time.  This bill allows the public, if they feel they have a severe economic hardship, to be able to go to the assessor and say, “I have a problem with paying this tax bill.  It is going to force me out of my home.”  The assessor has the ability to look at virtually anything that might justify that and make a decision as to whether or not it would be appropriate to adjust the property tax. 

 

The only thing that could be used to determine whether or not that application can even be looked at is the increased value of land.  If someone puts up a multi-million-dollar home on a piece of land and then says, “I cannot pay the taxes,” it will not work.  It has to be that the person has a home there, and the land prices, over which the owners have absolutely no control, are skyrocketing, which is the Tahoe Basin for sure, and suddenly they are forced out. 

 

The testimony this Committee heard last time was a 35-acre parcel with an 800‑square-foot cabin on it that was in an area in Lake Tahoe Basin that cannot be touched by Tahoe Regional Planning Authority rules, never developed, never split, no road into it, only used in the summertime for about 3 or 4 months.  The taxes were about $7,000 per year.  They went to $105,000 per year.  The people were going to sell the property.  The only buyer was the U.S. Forest service, which would pay half the value and then take it off the tax rolls.  It made no sense whatsoever. 

 

We worked, as I said, very hard, and Mr. Goldwater and the Committee were very accommodating and helped us get a bill out, which ultimately died.  This comes back and provides what needs to be done.  The one thing I will point out to everyone is the recapture provision.  If someone does obtain an abatement, they keep the property for multiple years; a retired couple with a fixed income can afford to stay in their home until it comes time to dispose of it.  At that time, if the family sells the property, and it sells for a lot of money, it does not matter what it is, the county will capture 7 years at the current tax rate.  That is built into this bill.  It is exactly like the agricultural land.  The recapture does the exact same thing for the exact same reasons. 

 

Unless you want more detail, I will stop and take questions, but I will be happy to provide whatever detail you wish.  There are amendments that we put in (Exhibit F).  They were done by Bill Drafting to address a couple very minor technical adjustments in the bill.  One was essentially to eliminate a duplication of wording by striking lines 22–24 on the second page of the bill, and adding the words “one or more of the last assessments,” which was simply a clarification.  We struck one paragraph that required recording because, at the back of the bill, it already required recording.  We did not need it twice.  That is all we have done. 

 

Assemblyman Goldwater:

I want to thank you for the kind words.  This is a good bill.  The assessors have control of it and have discretion.  It is certainly not a runaway.  I think we discovered in Elko County—I was listening to that bill a couple of days ago—where also the land prices are increasing due to potential mineral deposits and everything.  I thought maybe that might have been an issue the other day.  Anyhow, it is a good, well-written bill.

 

Assemblyman Marvel:

The only thing I worry about, the land values are not going to go up too high for them are they, so the taxes go up too high and they cannot qualify?

 

Assemblyman Hettrick:

Well, no, the land value going up will make them qualify.  It will not let you do it, though, if you add improvements and drive up your property taxes and then come in and say, “Oh, I cannot pay this.  I cannot afford it,” when you spent the money and built the improvement.  That will not work.  It is only off the land value.

 

Assemblyman Marvel:

We tried to change the Constitution the last session.  We thought we were going to get away with it, but we did not.

 

Assemblyman Hettrick:

We tried.  We did all we could.

 

Chairman Parks:

Mr. Zuend pointed out that in the proposed amendment page, beginning with the line at the end of subsection 2, there is reference to land increased in the assessment.  Should that also read “one or more of the last assessments,” or is that correct as written?

 

Assemblyman Hettrick:

You may be correct.  I believe it ought to be in both places.  It should say “one or more of the last,” and then you would add “s” to the word “assessment.”

 

Doug Sonnemann, Douglas County Assessor:

[Introduced himself.]  In an escalating market like Douglas County, I can certainly see the need for this legislation.  I have talked to numerous seniors throughout the county with concerns along this line.  Many have owned their property for some number of years, many before the escalation of values, especially, as Mr. Hettrick said, at the lake.  Now that they are retired on a fixed income, the rising values and corresponding increase in property taxes are worrying them about their ability to meet those needs. 

 

[Mr. Sonnemann, continued]  I appreciate what Mr. Hettrick is saying as far as allowing us the ability to determine these.  It does make assessors nervous without having strict guidelines. 

 

Chairman Parks:

I have one question, and I will direct that to the requestor of the bill.  I was approached by an individual who has a very, very small cabin in the Mt. Charleston area.  That individual was complaining about the property tax.  His cabin is probably a good windstorm short of falling down.  I wondered if you might comment as to its applicability throughout the state.

 

Assemblyman Hettrick:

Yes, it is, I think, applicable throughout the state.  First, I think it has to be.  Second, I am not an attorney or an assessor, but it is my opinion that if the land value is driving the taxes, and they can show hardship, then they have a right to at least apply.  Whether or not the assessor in Clark County would determine that was a justification to lower the taxes or not I have no idea.  That would be up to the assessor in Clark County.  That is the very reason why this is left as broad as it is, because there are going to be a million things we could never foresee that might come into play here.  Certainly, we are not trying to reduce taxes for anyone who can afford to pay them.  The other side of that coin would be they might complain about the tax on their little tiny cabin because the land went up, but they also might have a very good income and can pay it.  This, I believe, should not allow them to get out of paying the tax.

 

Chairman Parks:

If I might follow with one other question, I do not find it in here, but I am presuming that any allowance for this action would be properly recorded and would be available to the public for review and analysis.

 

Assemblyman Hettrick:

Indeed, it is in here in a couple of different places.  The last one is on the last page, Section 13, subsection 2, “each year the assessor shall record a list of parcel numbers, owner names for single primary residences on which a lien exists pursuant to subsection 1.”  When you abate the tax, you create the lien, because there is a recapture provision immediately.  It is all recorded and, indeed, it says in the bill that they can require information, but it is confidential.  If you look at Section 5, it goes through subsection 2, “information used by the county assessor to determine whether to grant an abatement, such as financial information, is confidential and must not be released,” and so on.  All the information is recorded.  Also the application would be recorded because it would be the justification for the lien.

 

Carole Vilardo, representing the Nevada Taxpayers Association:

[Introduced herself.]  As I am sure the Assemblyman testified to, this is in response to Ballot Question 8.  There is another bill on the other side that also provides a mechanism.  We supported the ballot question.  We support the bills in concept. 

 

The concern I have, in part, was expressed by Dave, and that is it is too broad.  There do need to be some parameters.  Not necessarily parameters as to whether it is a cabin or a 5,000 square foot house, but I think there need to be some parameters on what an assessor may ask for in financial information and what, in effect, are the ranges for severe economic hardship.  Is it somebody who has an income?  What I am concerned about is, because there are no parameters or ranges for looking at this, you can have 17 different assessors doing 17 different interpretations, and in some cases, the properties could be pretty similar.  Then I think we start getting into a question of whether or not you have got uniform and equal application of your laws.  That is my concern with not having them. 

 

It is not that you have to have the absolutes, because I agree with Assemblyman Hettrick.  You have so many variables in this state, but I do think you need parameters, a range that goes from here to there, so that there are some better guidelines for the assessors and not having it as subjective as it would be in this bill as written.

 

Assemblyman Hettrick:

I do not disagree with Carole at all.  The only thing I would say is I would appreciate some suggestion on the parameters, because when we sat down to start doing parameters it was a question of what are you going to do and what is the situation.  I gave the example in my testimony of the bill on that one property going from $7,000 to $105,000.  The property owner went back to Douglas County and said, “I cannot pay this.  I will give the property up and it will go off the tax roll.”  Douglas County said, “Okay, let us sit down and look at what the law says and see if there is any way we can mitigate this bill.”  In the end, they mitigated the bill down, by looking at existing standards that were perfectly legal, to $35,000, which the individual indicated he was willing to pay.  It is still high for what they have, but they indicated willingness to pay it.  I think they will do the same thing in this case. 

 

[Assemblyman Hettrick, continued]  Mr. Chairman and members of this Committee, if you remember, I testified on a bill in here, A.B. 200 a week or two ago, and we were hearing that the county clerks wanted to be able to ameliorate or mitigate property tax bills that were in arrears.  They have the ability to do that, and they are doing that already.  I think they are capable of doing this reasonably.  I do not think very many properties are going to qualify.  I think it is going to be a tiny number of properties that will qualify for this. 

 

Carole Vilardo:

I would agree with you.  The reason we supported this, in fact we have supported the original legislation in 1991, was because there was discussion at that point about the state and locals being able to use property tax.  There are instances where it is a hardship.  I would like to get you some suggestions.  I do think you probably have two things that can be used, either a percentage increase in the assessed value along with possibly a percentage increase in tax rate against that assessed value to cover what you are talking about, or an income level.  While you can have the type of increase you are talking about, I would have a problem finding out that Mr. Steve Wynn, with a house valued at $23 million, had applied for a hardship.  That is why I think you can set a couple of parameters that become either/or that, in effect, provide some direction for the assessors.  We started to put some of those in Senate Bill 440.  I do not know what is going to process how, but I think it would be a more comfortable situation. 

 

Chairman Parks:

Are there any other further questions or comments regarding Assembly Bill 442?  Not seeing any, we will close the hearing on A.B. 442 and await comments and recommended revisions in the language. 

 

I know we are going to have a busy week next week.  We have quite a number of bills that we need to clear out if they are going to get through the Assembly, and we still have some other bills to hear, so it will be a busy time, but if you have any bills that need amendments, we need to work on that.  We will deal with that next week.  If there is nothing further to come before the Committee, we are adjourned. [Adjourned at 4:36 p.m.]

[Bill explanations for A.B. 351, A.B. 533, and A.B. 442 were provided by Ted Zuend prior to Chairman Parks calling the meeting to order.  They are included as Exhibits G, H, and I respectively.]

 

 

 

RESPECTFULLY SUBMITTED:

 

 

 

                                                           

Mary Garcia

Committee Secretary

 

 

APPROVED BY:

 

 

 

                                                                                         

Assemblyman David Parks, Chairman

 

 

DATE: