The major party primaries are over and it is on to the General Election this November. The candidates will be making the rounds shaking hands and asking for your vote.
So, stick out your right hand and firmly clutch you wallet with your left, then ask where this candidate stands on the question of whether to alter the current property tax law.
Back in 2005, when property values across the nation and especially in Nevada were skyrocketing, Nevada lawmakers passed a law capping the annual increase in residential property tax bills at 3 percent and business property tax hikes at 8 percent. (The fact the Nevada Constitution states that all “property belonging to corporations now existing or hereafter created shall be subject to taxation, the same as property of individuals …” is a topic for another day.)
The law also created two other caps based on two economic measures — the 10-year average percentage of change in assessed values of homes and the average percentage of increase in the previous year’s Consumer Price Index multiplied by two. The higher of those two figures became the cap so long as it was less than 3 percent.
When the housing bubble burst and property values plummeted the law had the perverse effect of allowing some property tax bills to continue to increase even though the property values were on the decline. But values are on the upswing again.
In the 2017 Legislature a bill was introduced to basically change the property tax caps from ceilings to floors. The bill’s digest stated flatly, “This bill revises the formula for calculating the partial abatement so that the annual cap on increases of the property taxes on certain single-family residences and residential rental property cannot be less than 3 percent.”
The bill, backed by a majority of Democrats, eventually died because it could not garner the requisite two-thirds majority required for a tax increase under the Constitutional amendment successfully ushered in by former Gov. Jim Gibbons.
You see, with inflation currently in check and the 10-year average of property values now including the years of slumping values, the property tax caps in urban counties have been well below 3 percent.
According to the Nevada Department of Taxation, for Fiscal Year 2016-2017 the residential tax cap in Carson City, Clark, Douglas, Lyon, Nye and Washoe counties was 0.2 percent. Still an increase but one that left the local governments crying poverty. The caps in Elko, Esmeralda, Eureka, Humboldt, Lander, Lincoln, Mineral and Pershing counties were 3 percent, with the rest lying somewhere in between — 1.9 percent in Churchill, 2.9 percent in Storey and 1.5 percent in White Pine.
But it is not like Nevada has low property taxes. According to Tax-Rate.org, in 2018 Nevada ranks 24th in the nation in order of the average amount of property taxes collected and 28th in property taxes as a percentage of median income.
According to Zillow, Nevada home values have gone up 15.4 percent in the past year and predicts they will rise 6.7 percent within the next year. This is what has the property tax cap change proponents salivating.
If those seeking to remove the current caps have their way, property taxes could easily double or triple in a matter of years.
So, be sure to ask the candidates with extended hands whether they are really reaching for your wallet. — TM
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