MINUTES OF THE meeting
of the
ASSEMBLY Committee on Taxation
Seventy-Second Session
May 9, 2003
The Committee on Taxationwas called to order at 2:15 p.m., on Friday, May 9, 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 Office Building, 555 E. Washington Avenue, 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.
Note: These minutes are compiled in the modified verbatim style. Bracketed material indicates language used to clarify and further describe testimony. Actions of the Committee are presented in the traditional legislative style.
COMMITTEE MEMBERS PRESENT:
Mr. David Parks, 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:
Mr. David Goldwater, Vice Chairman
GUEST LEGISLATORS PRESENT:
None
STAFF MEMBERS PRESENT:
Ted Zuend, Deputy Fiscal Analyst
June Rigsby, Committee Secretary
OTHERS PRESENT:
Stephanie Licht, representing Elko County
Carole Vilardo, representing the Nevada Taxpayers Association
Charles Chinnock, Executive Director, Nevada Department of Taxation
David Schumann, representing the Independent American Party of Nevada
Curry Jameson, representing the Nevada Association of Realtors
Penny Mayer, Chairman, Nevada Association of Realtors
Alan Glover, Carson City Clerk-Recorder
Tom Warden, representing the Howard Hughes Corporation
Russell Rowe, representing the Focus Property Group
Chairman Parks:
The Committee on Taxation will come to order, please. [Roll called.] We have a Work Session Document (Exhibit C) in front of us. I thought we might try to move a couple of the bills we have in the Work Session Document.
Senate Bill 373 (1st Reprint): Revises certain provisions governing importation of liquor by common or contract carrier. (BDR 32-858)
Senate Bill 373 is Senator Schneider’s bill. Is there any discussion on that bill?
ASSEMBLYMAN MARVEL MOVED TO DO PASS S.B. 373.
ASSEMBLYMAN HETTRICK SECONDED THE MOTION.
THE MOTION CARRIED. (Mrs. Gibbons, Mr. Anderson,
Mr. Mortenson, and Mr. Goldwater were absent for the vote.)
Chairman Parks:
Another bill we could deal with is Senate Bill 466.
Senate Bill 466: Authorizes disclosure of certain information from records and files of Department of Taxation concerning administration of business tax. (BDR 32-555)
ASSEMBLYMAN HETTRICK MOVED TO DO PASS S.B. 466.
ASSEMBLYWOMAN PIERCE SECONDED THE MOTION.
THE MOTION CARRIED. (Mrs. Gibbons, Mr. Anderson,
Mr. Mortenson, and Mr. Goldwater were absent for the vote.)
Another bill we can take care of is S.B. 490.
Senate Bill 490 (1st Reprint): Authorizes use of money in infrastructure fund for operation and maintenance of flood control projects in certain counties. (BDR 32-579)
ASSEMBLYMAN MARVEL MOVED TO DO PASS S.B. 490.
ASSEMBLYMAN GRADY SECONDED THE MOTION.
THE MOTION CARRIED. (Mrs. Gibbons, Mr. Anderson,
Mr. Mortenson, and Mr. Goldwater were absent for the vote.)
Assembly Bill 281: Imposes and increases certain taxes and fees and makes various changes to provide additional state revenue and to stabilize revenue base of state. (BDR 32-756)
Chairman Parks:
Let’s open our hearing scheduled for today. The two areas we wanted to cover were room tax and real property transfer tax. We have had previous discussions on transient lodging. We had a bill that was put forward by Assemblyman Mortenson and had a fairly lengthy hearing on it, but what I wanted to do was open the Floor for further discussion with regards to room tax.
Stephanie Licht, representing Elko County:
[Introduced herself.] What you have before you (Exhibit D) is a packet I put together since the last hearing on this bill. Most of what is in the packet is what I said at the last hearing; however, I have received these other offers: five days and four nights in Orlando, Florida, plus two 3-day passes to Disney parks, for $149 per person, double occupancy; and “Celebrate the Magic of Disney,” for $99 per person. Then I got a nice brochure from the Marriott in Newport Beach that wants to put me up for several nights at $149 per person.
The tourism industry is flooded with materials and low-cost promotions, so anytime we make it more troublesome on our vendors, it really does put them in a bind. In the 1940s, 1950s, and 1960s, we had a lock on adult entertainment. Our laws made it easy to attract people who want marriages and divorces because they made it a little easier to get either one of those. Since those times, everybody has gotten into both businesses, so now we have to remain competitive.
Over the past 20 months since September 11, 2001, the United States has experienced a severe economic downturn, a war, and SARS (Severe Acute Respiratory Syndrome). Taken singly, any one of those events negatively impacts travelers’ psychology but when you add them all together, plus the loss of jobs and the loss of disposable income, you’re talking about an industry that’s a little tough.
There’s a map [Exhibit D] showing the lights across the United States. If you look where Nevada is, that’s a big hole. It’s not too bad for Las Vegas and Reno because they’re populated areas, but when you get out in the sticks, along with the $2 gallon of gas, it’s tough on us. I hope you will keep some of these things in mind, as well as the bullet points I provided to you. A room tax would be detrimental to those of us in rural Nevada.
Chairman Parks:
Do we have any questions for Ms. Licht? [There were none.] We’ve seen a wide variety of rates across the country. We especially look at major metropolitan area rates charged and the ability they have to attract a visitor, whether it’s a tourist or a businessperson traveling for business reasons. In the rural areas, I’m thinking it’s more likely to be a tourist. Could you address what type of transient lodging individual that would be?
Stephanie Licht:
In Elko we have a little different lock on things than Winnemucca or Lovelock because we have Casino Express Airlines, which is a part of the McClaskey operation. They used to be able to bring in enough tourists to keep the room rate in their properties at about 90 percent, but the Chief Executive Officer (CEO) of McClaskey Properties told me last week that they had 89–90 percent occupancy in March, but that even with Casino Express bringing those people in, their occupancy rate in April dropped to 79 percent. About 10 percent of the folks who come through are on their way between Salt Lake City and Sacramento on that Interstate corridor and the rest are truckers. We have a few vacationers, but in the wintertime we don’t get a lot of the snowbird traffic because they go down Routes 95 or 93 on either side of us. In Elko, Casino Express supports a tremendous number of visitors and the other 10 to 15 percent are folks traveling by car on business or just out looking around.
Chairman Parks:
Any further questions for Ms. Licht? [There were none.] With regards to the sign-in sheet, it doesn’t offer the opportunity to make reference to specific portions of the bill. What I would like to do is open up the hearing to individuals who might have comments regarding the transient lodging tax.
Carole Vilardo, representing the Nevada Taxpayers Association:
[Introduced herself.] Our Board of Directors did not have a consensus on the room tax, but there are a couple of things that should be pointed out. If the room tax is to be part of the package, it probably should be a percentage rate rather than a flat rate to avoid having those properties which have very low room rates having the greatest percentage of increase versus those properties that are very expensive and who, with a flat rate increase, would wind up with that [increase] being a very small percentage.
I would note that we had a bill last session trying to clean up some of the administrative procedures in room tax. The bill was lost when it didn’t come off the Chief Clerk’s Desk in time for the end of session. That bill had a couple of provisions you might want to consider if you’re going to use room tax. Realizing that nobody knows for sure, one of the things that is problematic on room tax is something found during the 1999 session. We allowed the imposition of additional room tax in Clark County to be used for schools, but we had no notification procedure. This is a tax that may be imposed by a local jurisdiction and, even though the state has a part, it is the locals who collect it for the state. I think you would want to have a provision whereby the Department of Taxation would provide notification to the entities if you do use this revenue source. I would also suggest that, because blocks of rooms are sold ahead of time and, to the best of my knowledge, there’s no way of recouping a rate increase other than putting the burden on the property, you would want to have a provision if blocks of rooms have been pre-sold. All of us are aware of that happening with tour wholesalers and those should not be subject to the increase.
[Carole Vilardo, continued.] You have the other issue of wanting a report on the money and what times that money would be remitted. I would suggest that this is a reverse case where the locals are doing the state’s business and probably should be allowed a collection allowance for collecting this tax for the state. There are a couple of other minor points, but those are some of the general ones if you were to consider the imposition of a room tax.
Chairman Parks:
I vaguely remember a bill last session.
Carole Vilardo:
There was evidently some misreading of a provision in the bill that put it on the Chief Clerk’s Desk and then, in the heat of the last minute closing, it never got taken off the Desk. I thought it was being re-requested for introduction this year but that also slipped through the cracks. It will probably get reintroduced next session because there are a number of clean-ups that are needed.
Chairman Parks:
Does anybody have any questions for Ms. Vilardo? [There were none.] Is there anyone else who would like to speak with regards to the hotel/motel room tax, the transient lodging tax, or the bed tax?
Charles Chinnock, Executive Director, Nevada Department of Taxation:
[Introduced himself.] I will echo what Carole Vilardo said. We recognized when some of these bills were proposed that there probably should be some oversight. We have already testified and submitted fiscal notes on those bills for one excise tax examiner.
On the other comment with respect to audit capability, we did not submit anything for an audit program. I don’t have my paperwork with me to know the total number of accounts that would be involved. Since this is administered at the local level and should continue to be administered through the counties, cities, or fair and recreation boards, you should be aware that the way the statute is worded, even though the counties currently identify all the transient lodging categories the same, they’re not required to do that. I’m speaking of RV parks, campgrounds, and those kinds of things, so there would probably need to be some strengthening of that. From the Department’s perspective, the small part we take in and oversee is not always timely, so that wouldn’t be a reason to have oversight of the program.
Chairman Parks:
Are there any questions for Mr. Chinnock? [There was no response.] There was a portion of the Amodei-Care Bill, Senate Bill 382, that had recommended, as part of their overall package, a 2 percent room tax. Is there anyone else who would like to speak to the Committee on the transient lodging tax? [There was no response.] We’ll close the discussion on that and I’d like to open the discussion on the issue of the real property transfer tax.
Assemblyman Lynn Hettrick, Assembly District No. 39 (Douglas County and portions of Carson City and Washoe County):
Since the tax proposal we had made included a real property transfer tax, I agreed to present what I think are the positive aspects of the tax and why I think it should be considered in a package.
Real property transfer tax is based on the value of real property. You’ve all heard Senator Raggio’s proposal that the state should capture some portion of the increased value of property tax into the future. I think that has a negative impact on the counties because you would be capturing a portion of the property tax that normally would go to them to sustain county government and school districts, which are directly funded by property tax.
Real property transfer tax is a tax on growth and the need for revenue in the state of Nevada, in my opinion, is being driven largely by growth. You would not pay real property transfer tax unless you chose to sell the property. Senior citizens and those on fixed incomes would never have to pay the tax because if they didn’t sell their homes the tax would never be charged. If they don’t choose to buy a new home the tax would never be charged. Only those people who choose to buy a new home or property, or a business that chooses to buy property, would pay the real property transfer tax.
Real property transfer tax is collected in virtually every state in the Union at the state level except in the state of Nevada. The beauty of the tax, in terms of putting it into a plan to try to fund the state of Nevada, is that it is probably the fastest-growing tax there is, other than a sales tax on services. One of the problems we have with Nevada’s tax structure right now is that the entities from which we garner the bulk of our revenue are either slowing, have slowed, or are not going to grow terribly rapidly in the future. Our population continues to be the fastest growing population in the United States, so if we don’t pick taxes that grow rapidly we are going to be back here doing this again. I think we should be looking at taxes that grow, and they should be based on the thing that drives the growth.
[Assemblyman Hettrick continued.] Real property transfer tax, as we proposed it, is 0.5 percent, which would be $500 per $100,000. It’s argued that this would be detrimental to first-time home buyers but, in reality, closing costs right now are far more than $500. Beyond that, real property in the state of Nevada in terms of homes in general, inflates at an average rate of 3.6 percent annually, so the cost of inflation alone is significantly greater than any cost of a real property transfer tax. In addition, if you look at the tax in the long term, the average homeowner, according to the figures I last saw, owns a home between seven and ten years. Over that period of time, at a 3.6 percent annual inflation rate, the home would probably inflate 40 to 50 percent in value at a minimum and you would pay property tax on that for the entire time.
To imply that the one-time 0.5 percent real property tax you would pay once every seven to ten years would be more detrimental than the other taxes and the other costs is just not true. I think it’s an excellent tax that broadens the base. One of the things we have been told over and over again is that the base needs broadening. This captures assessed valuation in a way that property tax cannot. Property tax is based on assessed value, which is essentially one-third of the real value of the property, and is based on depreciated value for the improvements. A real property transfer tax is based on market price and driven by the actual price of the property itself.
I know it meets with a great deal of disfavor amongst groups. I have had a million e-mails from them. They are very effective, and I give them credit for that. Our job here, unfortunately, isn’t to pick the ones that are popular or not popular but the ones, in our opinion, that will do the best job of fixing the problem. If we’re going to fix a problem and agree that we have to do something then we better pick the taxes that do that, and I believe this tax does.
Chairman Parks:
Earlier in session a comparative analysis was done with regard to other states and some of the systems that they use. I have to admit that it varies significantly. There are probably a dozen states that do not have real property transfer tax, but the balance of the states have some kind of a tax that varies extensively. I don’t know that I’ve seen a tax that doesn’t vary significantly.
Mr. Hettrick, when you looked at proposing your rate, did you consider a rate that would be tiered so that the price on the first $100,000 or $200,000 would be at a lower rate and then it would be incrementally larger as the property price was larger?
Assemblyman Hettrick:
No, we did not. Prior to the session I looked at this tax because we all knew what was going on with the deficit. I met with real estate agents and Washoe Country Recorder Kathy Burke and discussed this tax at length. The reason I didn’t look at any kind of tiering is because Ms. Burke indicated that, while we collect it across the state of Nevada right now, there are 16 exemptions existing in current state law. Those exemptions are already problematic in terms of people arguing that they don’t owe the tax because they fall under one of the exemptions. In addition, there’s an unintended exemption that should be addressed and that is there is no mention in state law of a stock transfer being a property transfer. If you buy the stock of a company you essentially have transferred property, but there’s no tax on the transfer. That probably should be addressed if we do this.
The reason we didn’t add any exemptions for first-time or lower-dollar-number purchases is because it would further complicate the collection, make it more difficult, increase the need for audits, and a lot of other things. I don’t feel that $500 on a $100,000 real property purchase is going to be significant given the rate of inflation and other costs that are already involved in purchasing a home. You can argue every one of these. My son is a real estate agent and I don’t deny them their ability to make a dollar on this and make a sale, but if you’re going to start arguing about percentage or some kind of cost having an impact on the sale, then you’re going to have to argue it on everything that’s involved in the sale, and I don’t think they want to do that.
Assemblyman Marvel:
All property?
Assemblyman Hettrick:
All property. I wouldn’t exempt property. The exemptions are listed in law, and they aren’t the typical exemptions you think of where somebody gets out of paying because they’ve gone to the Legislature and said, “I shouldn’t have to pay because . . .” These are exemptions such as a federal bankruptcy court has ordered property be sold to satisfy something, or a property is divided in the case of a divorce. There are a myriad of things like that; there are 16 altogether. They are generally court-ordered or reasonable, based on what they are, and you shouldn’t have to pay a transfer tax in those cases.
In 99 percent of the cases, when you transfer property it’s a willing buyer and a willing seller, and you negotiate the price. I told a real estate agent who called me that, if I were doing this, I would price my home to include the tax, and I would do my best to make sure that the would-be buyer was paying the tax. Then, when we had agreed on the price, I’d ask the buyer to split it with me.
Assemblywoman McClain:
That was my first question. I didn’t understand who actually paid, the buyer or the seller. Do you know how much money this would generate?
Assemblyman Hettrick:
This isn’t fixed; it’s a negotiated price, so the buyer and the seller can negotiate who pays or if they split it. It can be done any way you want to make the deal and I think that’s part of the strength of the tax.
The tax is one of the fastest growing. I believe the annual growth rate in Nevada has averaged over 10 percent for at least ten years and has hit as high as 17 percent. Using a very conservative annual growth rate of 10.5 percent, it would raise $137 million in the first year of the biennium; in the second year it would raise $151 million.
Assemblyman Arberry:
What happens if rates go up and the market starts taking a downward spiral?
Assemblyman Hettrick:
That’s a valid question. It probably would have an impact. Over the last decade, Nevada’s annual growth rate averaged well over 10.5 percent and, during that decade, we had interest rates that were significantly higher than they are today. I think the growth rate in Las Vegas and most of Nevada hasn’t been affected by interest rates over the last ten years. Our growth has gone on no matter what happened. I don’t think it would have a big impact on the tax.
Finally, the number I used here on growth rate was something like 10 percent. Staff actually gave me a figure of 12.5 percent because it had been that high for some time. As I said, the rate has been as high as 17 percent annually.
This is at least as stable as any other tax we have in the state because interest rates would probably have the same impact on property tax and many other things. If it’s going to have an effect, it should have it on all of them.
Chairman Parks:
Are there further questions? [There were none.] I might just offer an observation which is, for whatever reason, people are always buying or selling homes, and, needless to say, we’ve enjoyed phenomenal growth in Nevada over the last couple of decades. Whether it’s Nevada or other parts of the country, there is certainly going to be an individual who has to sell and an individual who’s interested in buying a home.
David Schumann, representing the Independent American Party:
I didn’t plan to speak on this but I’m a former California real estate broker and, as a recent buyer in Nevada, I don’t think your prices could possibly go down because of the fact that you’ve got a neighbor that has over 30 million people in it. Real estate here is cheap by comparison. I think this is the definition of a stable tax.
Chairman Parks:
Are there any questions for Mr. Schumann? I don’t have any other persons signed in but would welcome anyone to come forward who would like to comment.
Curry Jameson, representing the Nevada Association of Realtors:
[Introduced himself.] The transfer tax is, in our opinion, not a stable or broad-based tax. There have been several mentions made about interest rates. If you went back ten years, the price of housing was a lot less, too, so it’s a hard comparison to make. This market place is the best we’ve seen in probably 40 years. We, as real estate brokers and practitioners, say the real estate market is cyclic; therefore, the revenue generated from this tax is totally cyclic. I’m not going to tell you that interest rates are going to go to 10 percent tomorrow and that real estate is going to go down, but that whole issue bothers us with regards to the transfer tax.
The realtors have always come to the table with regards to the issues with revenue raising. As you know, we are behind the property tax increase. The reason we’re in support is because it’s a much broader-based tax and something you can count on. Whether it’s based on assessed valuation or not, it’s something you can count on. You cannot count on the transfer tax.
There is also an affordability issue. It does place a barrier and burden on the families who can’t afford it when you’re talking about this substantial increase in the transfer tax. The average income of Nevada families is between $30,000 and $40,000 annually, with 56 percent of the families making less than $50,000 and more than 300,000 families earning less than $35,000 in annual income. Speaking in general terms, in order to afford a $150,000 home, a family needs to show income of approximately $41,000, while a family attempting to qualify for a $200,000 home needs to show income of approximately $56,000. These numbers, in our opinion, clearly show that increasing the transfer tax will adversely impact the families.
[Curry Jameson, continued.] A recent study we shared with you shows that every time we talk about an increase of $1,000 in the down payment, it eliminates 2,400 families from the housing market, and you get a further reduction on the revenue base that you’re proposing. Business drives growth. Housing is only an avenue as a result of growth. We have to be very careful that this transfer tax does not move families out which will reduce the amount of money that comes into the state.
I’ll reiterate that the substantial increase is our major concern here because those increases can go upwards of $2 to $5 or $6, depending upon the county. One thing that wasn’t mentioned in regard to this increase is that you’re going to raise all the counties up to the standard of Clark County, which would be $2.50 per thousand. That’s a substantial increase in Washoe County, which would go from $1.50 to $2.50, and then you’d put your 0.5 percent on top of that. I think that is truly an affordability problem with regard to families buying real estate.
Penny Mayer, Chairman, Nevada Association of Realtors:
[Introduced herself.] Our National Association of Realtors says that the average home buyer moves every three to five years. It used to be every seven to ten years, but people are moving a lot more often now.
We don’t always have ready buyers and ready sellers or willing buyers and willing sellers. Oftentimes sellers don’t have an option. Perhaps they’re being transferred, perhaps there’s been some loss of income or job and, therefore, they need to move down. In the case of senior citizens, oftentimes they have to sell their homes to either move to a smaller home, or into assisted living, or to a nursing home. They need everything they can get, so it’s not always a correct statement to say that people sell by choice. In the last 30 days I’ve had two escrows close where the seller was not selling out of preference; it was a requirement.
There are also certain sales that are exempted. One of them that hits us often is a Fannie Mae, Federal National Mortgage Association (FNMA), property that has been foreclosed upon and that the quasi-governmental agency is selling. As an example, we had written in an offer that the seller would pay the transfer tax, so when I figured all the buyer’s costs for my buyer, I assumed he was not going to have to pay the transfer tax because, in Washoe County, it’s usually the seller, although it can be negotiated. At the very end we found out that, on Fannie Mae repossessions, the buyer has to pay the transfer tax.
On new construction, most of the time the buyer pays the transfer tax. It is a negotiable tax in many cases, but when you’re dealing with new construction, it’s never negotiable, and when you’re dealing with the federal government, it’s never negotiable.
[Penny Mayer, continued.] One other point is that the average and median prices of homes are getting close to the $200,000 price range. I jokingly say sometimes that $150,000 in Reno-Sparks is entry-level housing. If you have a buyer who can go no higher, those $150,000 properties are off the market within hours of being listed. Many of us check our computers two or three times a day to find the perfect house for our entry-level buyer, show it within an hour or two, and get that offer written before the other ten offers come in.
It’s a good market. We’ve done well with it over the years. We do the best we can for our buyers and sellers, and we don’t think that this is a broad-based enough tax that will give the state the money it needs.
Chairman Parks:
Are there questions for either Mr. Jameson or Ms. Mayer? [There was no response.] I have looked at different Offer and Acceptance (O and A) forms that different franchise realtor organizations use. There are a fair amount of differences in them, but one thing that seems to be fairly consistent is the fact that there’s an entry line on them which allows for any amount of money, and I’ve seen it all the way up to $500, to be added on, which seems to be simply an office charge not related to the actual O and A. Could you comment on that because that certainly seems to be something that is a surprise to a lot of people who get into escrow and then realize that they have all these additional costs they never dreamed they would have such as FedEx charges, document fees, and all those sorts of things. We expect commissions, certain recording fees, and other things like pre-paid taxes and insurances. Could you comment? Is it a prevailing practice? I have seen it on the Offer and Acceptance forms that have been produced and are used by the franchise real estate organizations.
Penny Mayer:
There are several questions there, so I’ll try to hit each one of them. Regarding the standardization of the purchase agreement, there is no standardization. In the Reno-Sparks Association, which I’m most familiar with, we have 1,800 members. I would think that probably 95 to 98 percent of those realtors use the form that is issued by the Reno-Sparks Association of Realtors. I can’t speak for the rest of the state, although I have heard that, in Las Vegas, there’s a different form on every other block.
One of your other concerns was costs. There’s a federal law that requires lenders, once they’ve talked the borrower or potential borrowers, to give them a form that the borrower signs showing all the costs the borrower is going to have to pay. The lender makes estimates on the insurance and the taxes because, when they’re qualifying or pre-qualifying, they don’t know what the taxes will be because they don’t know what the people are going to end up buying.
[Penny Mayer, continued.] Regarding your first question on transaction fees, my firm does not charge those and I’m not sure if that’s prevailing in a different part of the state. I would hope that most buyers would have some sort of brokerage agreement with their realtors so they would know what they are paying their agent. Curry Jameson represents a franchise and might have more answers about that.
Curry Jameson:
That is not standard practice, but it’s a practice being strongly looked at on the federal level because of disclosure laws. At one time in our industry, unfortunately, it was tied to something described as almost a governmental fee, which was not true. That’s what started this whole problem. As far as an additional fee on top of it all, this may suggest to you that if an additional fee was put on, why not include a transfer tax which would just be another fee? In this particular case, we’re finding that they’re getting away from those kinds of issues across the country because it’s a fee that’s hard to justify. More importantly, when you talk about justifying the fee, you get back to the affordability issue with regard to the buyer and the seller. That’s an additional issue that would probably force the real estate profession to re-look at any kind of extra figure or number they choose to charge. It’s not illegal, but it depends on what it’s called and how it’s disclosed.
Chairman Parks:
I didn’t mean to imply that it was anything that was not disclosed, but it was usually somewhat of a surprise. I had an individual who, upon completion of a transaction, was really surprised at what his entire escrow amounted to. After the sale, I made a comment in passing that I had found errors in the closing statements on several of the properties I bought, and that I always wanted to check closely. When one document was shown to me, I was surprised to see an additional fee that didn’t seem to tie to anything. I was rather surprised that realtors would put a fee like this on, but would be in opposition to a modest increase in the real property transfer tax.
Assemblywoman Gibbons:
One complaint I’ve had concerning the real estate property transfer tax is the lack of long-term stability. Maybe this would get us through two, three, or four years but, long-term, it wouldn’t address our needs as far as being a broad-based, stable tax. Another concern is from our county recorder. We need to hear what would be involved because she is terribly concerned. I want to make sure you address that.
Curry Jameson:
Let me answer it in a different way. It would be hard for the real estate profession to tell how long this would go because it certainly depends on the marketplace.
Regarding the property tax as opposed to a transfer tax, we support the property tax increase. For example, let’s place a $105 increase on a property and then compare it with the transfer tax. If you took the transfer tax all at once, it would take 9.5 years to make up that $105. The reason we’re supporting the property tax is because state government gets the money now and not when a house sells.
Another problem with pricing is that it won’t stop real estate sales but, as prices get higher, they will slow down. It goes back to the issue of whether it is a reliable source of income, whether it’s today or two or three years later.
Assemblyman Marvel:
Do you negotiate every commission or are they pretty standard?
Curry Jameson:
Commissions are negotiable. Even in a market like this it becomes even more negotiable as prices go up.
Assemblyman Marvel:
Do you always get your commission up front? Do you advertise it? I’ve been involved in ranch sales where the brokers took their commissions as our payments came in.
Penny Mayer:
We don’t get our commission until the escrow closes and it comes out of the seller’s proceeds. It is usually negotiated in the beginning within the seller’s listing contract or within the buyer’s contract with the buyer’s brokerage.
Assemblyman Marvel:
I would say that most of the time you collect it up front when the escrow closes, don’t you?
Penny Mayer:
Not always. It just depends on where the money is and when it’s coming in. Our firm is receiving money on a monthly basis and has been for about four years.
Assemblyman Marvel:
Is that common?
Curry Jameson:
With the example Penny Mayer told you of people not having enough money to close, that also encompasses the realtors, so it is incumbent upon us to make sure that we represent our client and that the commission will be negotiated or carried. [In response to a question from Assemblyman Marvel.] Do we see a lot of it? I think we’re seeing more of it but it’s not a rampant problem.
Assemblyman Marvel:
Is interest charged?
Curry Jameson:
Do we charge interest? I don’t charge interest, but that’s up to each individual broker.
Penny Mayer:
That’s negotiable also.
Assemblyman Arberry:
I can understand some of the dilemma the real estate folks are in because, when you mention escrow and you do the final closing, sometimes those clients look at the final amount of the costs and walk out of the deal because they don’t want to pay that extra money. By law you have to give good-faith estimates to all clients to let them know approximately what their fees are going to be when this process is at its end. Sometimes it comes down to the end and the tax or insurance charge, and you’re trying to get the insurance company to lower their rate. Now you want to add on an extra fee. My concern is that the Federal Housing Administration (FHA) limit on loans in some areas is $159,000. We’re pushing people out of the ballpark. We want to keep people at FHA limits so they can have that low down payment. Once they’re over that limit, they’re conditional and they have to come up with a lot more money, so I understand your dilemma.
Penny Mayer:
It’s been said oftentimes that the price of a home is determined by a willing seller and a willing buyer. That is not always the case. A third part of that is the appraiser. Appraisers have now become licensed in all states so oftentimes properties sell for what the appraisers say they will. Oftentimes the seller doesn’t get what he wants. We’re not able to adjust the sale prices as often as people seem to think we do. They think the realtors establish prices.
Assemblywoman Gibbons:
Not that much.
Curry Jameson:
There has been some question about whether the real property transfer tax is “financeable.” That fee is not “financeable” by the buyer. That is not classified as a buyer cost.
Assemblyman Hettrick:
I need to respond to a couple of the previous points. You can’t put the real property transfer tax in as a listed item, but, if the house appraises high enough, you can put it in as part of the total borrowed amount of money. You can finance it if you do it right.
In terms of counting on the property tax money now, the 15-cent property tax increase that was proposed raised $90 million a year. That’s approximately a 5 percent increase in most of the counties in the state of Nevada in terms of the cost of property tax each and every year to each and every resident. This is just 0.5 percent once every five years, by your numbers, and this raises $137 million a year. To say this isn’t stable and isn’t going to continue to raise money is just not true. It took a 5 percent property tax increase to raise 30 percent less, and it’s far more burdensome on people with fixed or low incomes. They’re going to pay this each and every year they’re in the house. If they don’t sell the house, they pay nothing. Zero. You can’t say this is unstable.
The other problem I have with “money now and count on property tax”—and this is one of the biggest beefs I have about this whole thing—is that state government should get its money no matter what. Why? We should have to move with the people. If the economy is down, we shouldn’t keep our revenue no matter what. We should flex with them. Why should we be guaranteed our income? State government is serving the people, not to have them serve us.
We have to think about what we’re trying to do here. We’re trying to fund the necessary services, not just the wish list.
Finally, it’s a broader base than a 5 percent property tax increase, because it generates 35 to 40 percent more money. It’s better than the property tax and, in addition, we talk about the gross receipts tax being broad-based. By the time we give a $450,000 exemption, 65 percent of all businesses do not pay the gross receipts tax.
There is no such thing as a broad-based tax. What you want to call “broad based” depends on your definition. Nobody likes any tax that affects their industry. I don’t blame you folks for coming up here and not liking the real property transfer tax. We don’t like it either, but somewhere we have to pick something that’s going to fund state government and do it fairly, and I don’t think there’s a tax that’s fairer.
Alan Glover, Carson City Clerk-Recorder:
[Introduced himself.] I would like to enlighten you on the position of the county recorders. We do not believe that it is our job to tell this body what the real property transfer tax rates should be. However, if you’re going to substantially increase the real property transfer rate, we need to advise you that there are some problems you might create for the recorders.
Real property transfer tax has traditionally been a county tax. The counties collect the tax and they audit. As the tax has increased, more and more people have tried to claim one of the 16 exemptions. The recorders have attempted over the past few years to work on a reduction or a rewrite of these exemptions, but we were told last summer that this might not be a good year to come with anything in this area since you had other tax issues before you. Therefore, we did not draw up anything for your consideration.
Since this issue has come up, the recorders attempted under Nevada Revised Statutes, Chapter 375.090, and I think you have a copy (Exhibit E), of what our ideas are about reducing or rewriting exemptions. The reason we offer these amendments is not to create more revenue but to make the tax easier to administrate.
With a substantial increase in the transfer tax, and the addition going to the state, this becomes primarily a state tax now. Two sessions ago the Legislature decided to pool these funds in a state account, thus the counties lost the interest they used to earn on this money. If the legislative body decides to increase this tax and does not clean up the exemptions, it will be very difficult to administer this tax. One problem is the interpretation of the exemptions. When the recorders have questions on the exemptions we go to our district attorneys. There are 17 county recorders, there are 17 district attorneys, and you get 17 different opinions on what an exemption means. The tax is not administered fairly or equally throughout the state and this could trigger a court challenge.
Another problem with NRS Chapter 375 is the mechanism used to appeal the tax and the decisions of the county recorder. We placed that in the statutes last legislative session when we did the major rewrite of the recorders’ laws. You could have thousands of appeals generated each day if this law is not clear. Clark County does anywhere from 4,000 to12,000 recordings a day and about half of those are deeds. If people decided to appeal each one of those, you could bog the whole system down by having this lengthy appeal process go on. You could literally have 2,000 appeals a day. That is a problem for us.
[Alan Glover, continued.] A third problem is that only Clark and Washoe Counties have tax auditors. The rest of us do what we call “audit at the front counter.” We review the documents as they come in, look at them to see if they generally meet the statute, and if the exemption applies, we record it. In the rurals it’s been very helpful in the last two years that title companies will call ahead and say, “We’ve got one we’re not sure about, what do you think?” and they’ll sometimes give us a couple of weeks to work it out. Then we give them an opinion saying, “Yes, the tax is due,” or “No, it isn’t due,” and they’ll come in and record.
When you audit at the counter it can slow the process down, and the idea is to get this on the books, to get these documents recorded, and on the record. I think the figures are coming to you fairly quickly on how much revenue you would generate if you eliminate exemptions. Without cleaning up these exemptions, we will not be able to fairly collect this tax. We’re recommending that you reduce the number of exemptions, rewrite some of the others, and give the county recorders the authority to go directly to the Attorney General’s Office to get a legal opinion. That way it would apply statewide and there would be no question about what that opinion said. When Paul Laxalt was Governor, the Department of Taxation used to give us these opinions.
If you’re going to have the counties collect this tax you need to give us some compensation for doing so. We’re now collecting a state tax and, like other areas, should be allowed a compensation for doing that.
Chairman Parks:
Mr. Bob Spencer, from the Clark County Recorder’s Office, presented quite an informative presentation to the Senate Committee on Taxation. Several people have questions.
Assemblyman Hettrick:
I wouldn’t have any problem at all with your list of changes and amendments to the exemptions. When we checked with the Legislative Counsel Bureau Research Division, I was under the impression that some of these were mandated, but if they can go, I’d be happy to support having every one of them go. You said you didn’t know what the amount of money was that might be generated if you eliminated the exemptions, but I was told at one time that the exemptions currently exempt about half the transfers. If this list cut it down to 20 percent of that, you would increase the revenue generated by a very significant number. This tax would become even more stable and beneficial in the long run.
[Assemblyman Hettrick continued.] Finally, you said we should do something about paying the counties. Clark County presently collects the tax at a rate of $1.25 per $500; every other county collects it at a rate of $.65. We propose to raise all the counties equally to $1.25 to start. The way Clark County distributes the extra $.60 is $.30 goes to the County and $.30 goes directly to the school district. That makes nothing but sense given the situation the state of Nevada is in right now. We have several rural counties that are hurting and would love to have the additional revenue.
I believe Washoe County is not having the best time with its budget and is very near the cap. They would love to have the extra $.30. I believe the Washoe County School District is in the exact same boat and would love to have the extra $.30, which would relieve the state government of two things: additional costs to the educational system, and having to fund the rural counties that are going broke and that sooner or later we will have to make payments to. This won’t be a huge amount of money. I don’t want to imply that $.30 will fund county government in Elko, Eureka, or Esmeralda Counties, because it won’t, but every dime you give them is better than the state having to make it up. That would also mean that you would be collecting the money to collect the tax. It would mean you would get an offset in every county but Clark County, and they’re already doing it and have an auditor.
It appears to me that this can be taken care of. I like the amendment, and, if it is constitutional, I would support it.
Alan Glover:
The only amendment we had taken out is number 12 on bankruptcy because of the supremacy clause. These amendments are from our point of view. You must be careful with some of them because you do change how people hold property and pass property along to their heirs. You need to consider that as you’re going through. There are a couple of them that are particular problems for us during auditing and that’s what we’re concerned about.
Assemblywoman McClain:
I missed what you said about the number of transactions you do. Do you know what the number would be in Clark County?
Alan Glover:
Carson City does about 16,000 deeds a year. Clark County does somewhere between 4,000 and 12,000 a day. The end of the month is always a huge time for us. They will have all these statistics for you and I believe they can break it out on how many by exemption also, which will give you a pretty good feel for what we’re talking about here. Those figures should be coming in the next few days.
Chairman Parks:
I think Mr. Spencer provided a document to the Senate Committee on Taxation. We’ll get copies of that and make sure they are distributed to all Committee members along with the state comparison that I received on the first of February.
Assemblyman Marvel:
Don’t the title companies more or less calculate all the fees?
Alan Glover:
We certainly encourage them to do that. When the state started taking their portion out of it, they would come in with a lump sum, but we insist that they break it out for us. Most of them will do that. [Assemblyman Marvel asked if they could be made to do it.] You still have a large number of people who come in just to record a deed. Maybe Mom and Pop are transferring title to their kids. That’s a zero transaction, but, if they were selling to someone else, we have charts we can pull out and give them the tax rate. Attorneys never break out the taxes. They always want us to do that for them. We check them because a lot of times they’re incorrect, and that’s part of the audit process.
Chairman Parks:
For the benefit of the Committee members, there is a card that shows, if the sale value of a home is a particular amount, how much the transfer tax is for that transaction.
Alan Glover:
If this Committee decides to process this type of legislation, the effective date becomes quite important because we would need two things: to inform the industry that there is a rate change they have to gear up for; and, in Washoe and Clark Counties, they would have to reprogram their systems. We, in the rurals, basically do it manually, but they have very sophisticated programs. Washoe and Clark Counties would need to make those changes. The other thought that has the recorders somewhat terrified is, if you were to make this go into effective July 1, 2003, we could have so many people in our office trying to beat the tax rate or get the exemption that we don’t know how we would handle that. We have to work on that at our conference in July.
Chairman Parks:
Have you shared this with other recorders and are they generally in support of this?
Alan Glover:
Yes. These amendments were done by about six of us and then we passed them by Clark County and Mr. Spencer, who is the guru of property transfer tax. We call him when we don’t know what to do. This concept has the support of all the recorders in the state.
Chairman Parks:
We will submit this to our legal staff to have them review it to see if it would cause any problems that might need clarification.
Mr. Warden, did you have a comment you would like to make?
Tom Warden, representing the Howard Hughes Corporation:
I wanted to address the feeling of developers and home builders in southern Nevada because they have a little different take on the subject from that of the realtors. We’ve been looking at this for a couple of weeks. Some of the top CEOs (Chief Executive Officers) from the building and development community in southern Nevada got together in Carson City and talked about where the industry stands on the real property transfer tax (RPTT) issue. It was a united front in terms of how everyone in the group thought about this. The group included representatives of the Howard Hughes Corporation, Olympia Land Corporations, Pulte Homes, and Nevada Title Company. We all want to do our part. We acknowledge that there is a revenue issue, and we want to step up to the plate and do our part in something that is broad based and do our fair share. That’s never been an issue for this industry.
The biggest issue is that RPTT falls hard on the shoulders of development. It is a cyclic business, as has been mentioned today. We, as a development company, are not builders; we do not build houses. We just master plan and build the infrastructure for the community, so we sell land to builders. The real property transfer tax would be imposed in the sale of parcels of land to the builders. When the builders sell the home lots, the tax is once again imposed. It is feasible to imagine that all those taxes would wind up in the cost of a home in a master-planned community, and roughly half the people in southern Nevada live in master-planned communities now. We feel the exposure is considerable for the development industry in terms of this tax.
One other issue that has come up and we’ve talked about is in the mix of whatever the solution is for some of the revenue issues that are out there, it seems there is potential for another kind of tax, say a gross receipts tax of some sort, that would wind up being a double tax on the dollar. That’s an issue that’s also gotten the attention and the concern of the development industry. Those are the concerns I wanted to express on behalf of the businesses I mentioned earlier.
Assemblyman Hettrick:
I want to say that Mr. Warden and his associates did visit me. I appreciate it very much that when they have concerns, they come to everybody involved, not just the ones who are sympathetic to their position but also those of us who proposed the tax.
Of course, the gross receipts tax would hit you double, triple, or even more, so you’re right that some of these taxes do compound. I don’t like the ones that compound. I think that is a problem that might need to be looked at here. I don’t see any way out of it altogether, because, if you did many of the other taxes, they compound as well. Almost every tax does. You can hardly pick a tax that doesn’t compound in some fashion.
It is an issue. I don’t think it’s any greater than it is with any of the other taxes. I appreciate the fact that you came and spoke.
Russell Rowe, representing the Focus Property Group:
[Introduced himself.] Focus Property Group is one of the largest land developers in southern Nevada. We would echo the comments Tom Warden made and also focus on the point of the real property transfer tax in consideration with other taxes that may be considered, namely the gross receipts tax. If the transfer tax was adopted, and a gross receipts tax was adopted, the concern we have is that you may be taxing the same dollar twice. That’s one of the main points we want to get across, and we ask for your consideration when you’re looking at both of these taxes and any other similar vehicles.
Assemblyman Hettrick:
I am the most vocal opponent of the gross receipts tax and I would not be sympathetic to doing both. I clearly oppose the gross receipts tax.
Carole Vilardo, representing the Nevada Taxpayers Association:
[Reintroduced herself.] Unfortunately, there was not enough detail with the last couple of proposals to get a consensus when I put them to my Board of Directors, so I am testifying with no consensus. Most of you know that, for me, the devil is in the details. Here are some problems I see that have not been previously addressed. I think you need to amend them if you consider the tax.
Mr. Hettrick, unless Clark County has changed dramatically how they handle the $.60 that they get, it’s strictly school district money used for school district capital projects and the school district is bonding against it. That is the way the legislation was written in 1997 or 1999. It was for school district capital projects only.
One of the reasons it was put into capital projects was because of the concern of the fluctuation on the rates. If you’re going to do this in the other counties, and I think it is a huge jump that could be problematic, you might want to look at it for capital projects and not for general expenditure. One of the interesting things about the way the tax is constituted right now is that there is no measurement of this tax. Usually, with a tax, you have a basis; it’s on your property and there is an assessed value, or it is on tangible goods, et cetera. There is no definition currently in statute to explain whether this tax is because of the transfer of property or the recordation of a title. I would think you would want to establish, given the level at which we’re using this, what the basis for the tax is.
There’s another interesting phenomena. There is no requirement in statute to record the title, which is basically the way we’re imposing the tax right now. I would think that’s a serious amendment you would want to do.
You have another issue that I think may be the most serious issue of all. Obviously, when you look at any tax, you’re looking at the tax to provide a level of funding for government, and government is budgeting based on their needs and cash flow. You have no event identified or a time frame after that event in which the tax is due. You can have two years before this tax is paid. There is absolutely no event, so people who are much more familiar with this particular industry are going to have to figure out if it’s logical, and if you want to use this as a viable revenue source and be able to say, “thirty days after the close of title.” Or, if you figure out the basis on which the tax is being collected, you could say, “This tax is based on recordation of a title, which must be done within 15 days or 30 days or whatever after the consummation of the sale or exchange of money or the financing agreements, et cetera, and you then have 30 days in which to remit the tax.” You have something that is basically an honor system right now and structured in statute as a very poor excuse for a tax because of all the things that are missing that would make it viable.
Mr. Glover said he was concerned about it going in July 1. I believe that, because of the amount of detail that is needed, we will require regulations that the Tax Commission has the authority to adopt. You have so many things being put on the Tax Commission because of all the changes and regulations. These regulations will be extremely important, because we’re now doing something we’ve never done before insofar as the administration and compliance of the tax are concerned. In all fairness, they need at least six months, so you can’t consider this much before January 1, 2004. You’re going to have notification and everything else. One thing I don’t think you want to see is a tax that can’t be administered and that results in numerous appeals that subsequently wind up going to court. That is inefficient and a waste of money on the other end.
[Carole Vilardo, continued.] There is another issue that I do not think Alan Glover spoke too strongly about. That is the fact that the recorders are elected officials but do not control their own budgets. Their budgets are determined by county commissioners, just like the assessors. To that point, particularly in rural counties that are strapped for money, there is a problem sometimes with getting necessary staff that you need. I would rather do without audits on taxes, but, to have a viable tax, the tax has to be auditable.
To do audits you have to have auditors, so I would suggest, at least at this point in time, that you consider offering a 6 percent collection allowance for the recorders, which they would keep in order to be able to take care of this. The 6 percent is a number I am just using for comparison because that is what assessors in rural counties get if they do the registrations and titles and licensing for the DMV (Department of Motor Vehicles). I would further suggest that this be identified, if you agree that an oversight committee is needed for implementation, and that this be one of the specified items you track. This would give the recorders, as they are working their way through this, and the title and mortgage companies, et cetera, the ability to come back to you and identify any problems so they can be handled immediately. We’ve got 24 days left to write a bill that, hopefully, is going to have sufficient detail. I would like to think it would, but our experience has been that it won’t.
I’ve had an accountant call me who is involved with a number of development transactions and is extremely concerned about stacking of the tax given the rate. He made a suggestion, and I will try to get it in writing, that may alleviate the stacking problem. That’s not as much of a concern on industrial development, but on homes, given the increases we have had—I think the median home price is $189,000—you don’t want that tax being applied over four times. That is creating a major problem. Looking at the scenario Mr. Warden just presented, from the developer to the builder or to the person buying a lot, then going to a builder to possibly be subcontracted out or resold; I count four times on that transaction. Even three times is an awful lot, considering that this is an extremely high increase for one shot. On commercial properties, there is a potential for “sticker shock.”
Assemblyman Arberry talked about the stability of the tax. In the long run it may be stable, but in the short run it may have very serious fluctuations. There is always that chilling effect if interest rates go up too high, so I want to use this as a point to pitch for not spending more than 80 percent of whatever your projected revenues are, particularly from the new taxes. We’ve made this one of our recommendations, and the reason behind it is that when we came out of the 1981 and 1991 Legislative Sessions, we took those new revenue sources and spent every cent that was projected. When that revenue did not materialize, we had to make more cuts. If you spend only 80 percent of projected revenues, you surely should not have to cut expenditures. If it comes in greater than that, you don’t lose the money because you could use it for capital or to fund the Rainy Day Fund, and it’s not going to be lost revenue, but you don’t want to have cuts. Of the reform measures that, hopefully, will make their way into the tax bills, I think this should probably be one of them.
With that point I will try to get, for your consideration, a possible amendment to avoid the stacking on development properties. That’s what I see, and, if it’s helpful, I’ll put these concerns in writing.
Assemblyman Hettrick:
I think we have to seriously look at the stacking because you can hardly pick a tax that doesn’t stack. If you’re going to get into avoiding stacking in every tax, you’re going to have an awful lot of stuff going on. However, I understand the point, and I think we ought to look at the amendment.
In terms of the recording issue, I would agree with you that we ought to mandate a recorded title. I don’t have a problem with that, but I believe there’s not a bank out there that doesn’t force you to record the title when you mortgage anything because, if they don’t record the title, they have no proof that the lien exists. If they don’t have proof the lien exists, the property could be sold and they’d lose their money. You have to have a recorded title. That’s how you protect yourself in the case of any mortgage. I believe that 95 percent, if not more, of all properties have a recorded title before escrow closes or at the close of escrow because if they don’t, the banker who did that job is nuts.
Carole Vilardo:
Assemblyman Hettrick, I don’t disagree with you on that point but there are private party sales, whether they constitute 1 percent, 2 percent, or 3 percent of all sales, and you don’t want to create a law from the get-go that has a loophole.
Assemblyman Hettrick:
That’s what I said. I agree with you on having a mandatory recordation of title. I just wanted to point out that it’s not a major issue.
The last comment I would make would be in terms of the counties needing staff to do this. If the counties aren’t auditing this for their own benefit right now I think they’re making a mistake. All you’re going to do here is change the formula. You’re not changing the number of transactions they have to handle and you’re not changing whether they have to do the multiplication to make sure the numbers come out right. All you’re doing is changing the formula so the numbers change. I don’t see why we have to get them a huge amount of funding if they don’t think it’s an issue and they’re not auditing their own transactions when it’s all county money right now. I don’t disagree that they should get something. The way I was informed the tax was being split in Clark County was that the extra $.60 was divided, so I was just going by what I was told. I would agree that we should give them something to collect the tax.
Carole Vilardo:
I don’t disagree with you. You would hope that any revenue-generating agency, whether at the state or local level, would have sufficient resources. Two years ago I wrote a letter for a county assessor because his budget was going to be cut further and yet he was responsible for bringing in money. This Legislature has not chosen to adequately fund the Department of Taxation. The problem is there’s got to be more attention paid to revenue generation and to making sure people can do the job that we’re asking them to do. That’s my concern.
Chairman Parks:
Any other questions for Ms. Vilardo? [There was no response.] I, too, have thought long and hard about the fact that, whatever revenues we project to receive, we certainly don’t want to spend the entire amount for fear we will have a repeat of what we had 20 years ago.
As far as signed-in names, is there anyone else who is part of the real estate industry in the audience who would like to speak? [There was no response.] I’ll open the Floor to the first person who would like to come forward.
David Schumann, representing the Independent American Party:
I wanted to briefly address the business license tax, the business head tax. I thought those were one and the same.
Chairman Parks:
We covered those pretty well yesterday, but please, go ahead and make your comment.
David Schumann:
I wanted to comment on this pyramiding or compounding idea. I think the actual effect on the economy of the state would be far more than the tax revenue received by the state of Nevada. Since those aren’t the subjects of today’s hearing, I’m not going to take your time up with them, but I would ask just one thing. We’ve heard a lot from opponents and proponents. I would request that you ask an economist from UNLV (University of Nevada, Las Vegas); UNR (University of Nevada, Reno); and maybe from the University of New Mexico, where they’ve cut taxes and had their economy grow. You should bring in some actual economists to discuss what the effects would be of an expanding tax in a slowing-down economy.
Mr. Hettrick’s tax seems to me to be the least harmful, but this gross receipts tax can tax operations that are running at a loss and will offend people who look at it from a distance and say, “Do I want to go to a state that’s going to tax not my profits but my gross receipts?” Skip guys like me and all the rest of us and bring in some real economists from UNLV and UNR and, hopefully, the University of New Mexico, if they’ll come, and ask them what their opinion would be on the constrictive effects of A.B. 281.
Chairman Parks:
Is there anybody else who would like to comment? [There was no response.] Not seeing anybody else, we’ll take this issue up on Tuesday. We are adjourned [at 3:48 p.m.].
Terry Horgan
Transcription Secretary
APPROVED BY:
Assemblyman David Parks, Chairman
DATE: