ANSWERS TO RECENT QUESTIONS ON THE TAX INITIATIVE –

 7 Reasons Why Nevada Needs a Change

 Here’s Why We Need Constitutional Property Tax Reform  

The History:  In the 1980 general election Nevadans  voted by over a 3-to-1 margin to add Proposition 6 –A Nevada Prop 13 - to the state constitution.  Hyper-inflation in the 1970's caused ruinous property taxes on real estate.  With the threat of a Nevada Prop 13 the political establishment pledged tax relief.    Instead of systemic reform to reduce taxes overall, there was a "tax shift," reducing property taxes, while raising other taxes and fees. The voters were assured there was no need for a Prop 13 in Nevada and the establishment was able to defeat Proposition 6 at the 1982 polls.  Over the next 20 years Nevada state lawmakers and governors raised taxes and fees justifying them with the 1981 cut in property taxes but Nevada property owners at the end of the period were paying higher property taxes than at the beginning with the added burden of all those other new taxes.   Both Nevada's First District court and the state Supreme Court in 2006  found that for over two decades systemic and pronounced indifference to existing Nevada appraisal law, within the state's county assessor offices, the State Board of Equalization and the State Department of Taxation.  
Alert #137
Alert #161

• This initiative promises  that you will not be taxed on unrealized gain or future estimated profits on property
• This initiative promises stable and predictable property taxes 
• This initiative promises transparency  (i.e.: nothing hidden) in property taxation
• This initiative may not reduce your property taxes depending on each county assessor.

(1)  QUESTION:  Isn’t the measure really just a big tax cut?

       ANSWER:  NO.  The present system is a tax on unrealized gain or future estimated profits.  Under the initiative, the actual increased value of a property can only be determined when the property is sold.    Under the initiative, the increased value of a property can only be realized when the property is sold.  It is not a tax cut or a tax increase but a tax postponement.    Individual properties may see an increase or a decrease when the measure is passed depending upon such factors as the taxable value at the roll back year 2003-2004 or the appraisal methodology of each county assessor.   Each assessor must decide if he will tax to the maximum of 1% of the base value.    The initiative clearly states the assessor may not exceed 1% of the base value but does not prohibit a lesser percentage assessment.

The measure gives hope for those on the brink of losing their homes to pay their taxes, it may just be enough to save their homes.  By raising assessments of newly sold properties to their full cash values, the measure provides a substantial source of increased revenue to local government, which even exceeds in many cases what the current 3% cap provides.

Government will always have enough revenue even when our initiative is passed to provide needed services.    Governments tend to have unlimited appetites and need to be restrained.

•         When a property is sold and is taxed on market value, it produces growth in revenue.  If 10% of properties in the state are sold and taxed on market value, this adds approximately 6% additional growth in government revenues each year.   Nevada property resale’s averages 3-5 years.  Under the current system, 3% and 8% abatements, revenue growth is a maximum of about 4%.   (Note:  The LCB fiscal note does not account for this in their analysis.)

•         History proves that governments make more money in California under “Prop 13.”  “Even in down times in the real estate market, thanks to Proposition 13, local governments can anticipate some increase in revenues. During a recessionary period in the early 1990s … the structure of Proposition 13 continued providing a nearly three percent increase in property tax revenues.”  In 2007, “Los Angeles County … 9.3 percent jump in revenues…Napa County … up 9.4 percent…Kern County … 12 percent…Ventura County … at only 8.1 percent.  Due to declining home prices, Santa Cruz County … 3 percent increase … after a 10.6 percent increase the previous year.”  Jon Coupal, Howard Jarvis Taxpayer Association

 (2)  QUESTION: Wasn’t the 3% cap enough? Wasn’t it enough to solve the taxpayer’s problem?  

         ANSWER:  NO.  In a front page Reno Gazette Journal on 10/20/07, the headline shouts, “Tax bills to go up as values go down”.   In the story Washoe County Assessor, Josh Wilson, explains why the abatement is not a real cap.

 “Under Nevada's property tax cap law,” Wilson said “their property taxes will actually go up -- not down… Even though taxes are capped, the assessor records new values for every parcel in the county. For the first three years, those values generally have exceeded the tax caps. Taxes not paid on the excess values are recorded as tax abatement.  But when residential property values drop … the tax cap law allows the treasurer's office to draw on the tax abatement accounts to raise property taxes to the full tax caps levels…As long as the county and other local governments can draw on these tax abatement accounts, Wilson said the falling property values will not translate into falling property tax revenues.” 

 The "tax abatement accounts" are the taxes that you would have been charged if there was not a 3% cap. I believe that this is the tax money that the county believes that you should have paid and still owe if it was not for the 3% cap. They are holding this "amount" in reserve for you in "your account" so that they can collect it at a later date if your property values go down or when (not if) the legislature changes the law. 

The 3% cap is only a temporary measure and the unconstitutional split-roll of 3% for residential and 8% for commercial including rental property abatements make the present system a ticking time bomb ripe for court challenge.   Our initiative constitutionally places a real cap on all property at a uniform and equal 2% or Consumer Price Index (CPI –cost of living, inflation) whichever is less.   It also provides for reductions based on disinflation. 

(3)  QUESTION:  Aren’t people moving here from California precisely to get away from the inequities of prop 13 in California, and to take advantage of our lower property taxes in Nevada?

       ANSWER:  :  No. Many Californians move here because the cost of housing has been lower in Nevada.  Californians who move here for tax reasons do so primarily because Nevada has no personal income or capital gains taxes.   Paying property taxes based on the full cash value of property has never discouraged buyers in California or any of the other 49 states which tax on the basis of the full cash value of property.    Those who complain about prop 13 will generally complain about any sort of property tax limitation, and would only be satisfied with absolutely unlimited sources of funds for government spending. Such critics need to understand the pain of retired folks and others on fixed incomes forced to sell their homes because they can no longer pay the increasing property taxes. Property tax increases are usually passed on to tenants in leases (approximately 1% increase per year)- a population that can least afford this tax burden.  Our experience in collecting signatures has been very favorable from Californians who have moved to Nevada as well as Nevada residents.   A poll, done in 2005, shows a 68% approval rating across party lines. 

(4)  QUESTION:  Isn’t it unfair that an owner who buys a property will have a much higher tax bill than his neighbor?

       ANSWER:   NO.  The U.S. Supreme Court and the California Supreme Court both said, “No!” 

• This is an issue of justice already decided by both the California. Supreme Court and the US Supreme Court.  Both courts have ruled that the “Acquisition value” system of prop 13 provides a greater degree of fairness than a “current value” approach by addressing the interest of taxpayer reliance, and satisfies the constitutional needs of “Equal protection under the law”. In the words of the Courts, “Not only does an acquisition value system enable each property owner to estimate with some assurance his future tax liability, but also the system may operate on a fairer basis than a current value approach.”  (SEE Amador Valley Joint Union High School District vs. Board of Equalization 1978 California Supreme Court). “The protection of reasonable reliance interests is not only a legitimate government objective: it provides an exceedingly persuasive justification.”  (SEE Nordlinger v. Hahn, US Supreme Court case).
• The home buyer makes the choice with full knowledge of the new rates.  The same standard of taxation applies to all prospective property owners, just as the same stability and limitation applies to all current property owners.   Property tax will be more equitable since homeowners will no longer be subject to the whims of tax-and-spend legislators. They will not be subject to the volatile movement of home values that a home owner can’t enjoy until they sell their home.  Home foreclosures will slow down by limiting tax increases that   cause house payments to go beyond the homeowner’s ability to pay.

(5)  QUESTION:  Why are we rolling the taxes back only to 03 / 04?

        ANSWER:  This rolls back to values before the unconstitutional split roll was passed in AB 489 of 2005.  It is also the year before the most dramatic increases in property taxes across Nevada.

 (6) QUESTION: Why do we have to pass a Constitutional Amendment by voter initiative instead of letting an elected legislature pass a law?

      ANSWER:   The Legislature meets every two years and can change any law at that time making all laws temporary. Their freedom to raise taxes at will has sadly proved to be just too tempting. The Constitution can only be changed by a vote of the people in two general elections. Thus, even the Constitution can be changed, but the people have to really want it before it can be changed.

 The Legislature is gearing up for tax increases when they next meet in 2009.  Senate Majority Leader Bill Raggio was interviewed in a 10/26/07 Las Vegas Sun article titled Senate Majority Leader to governor: Reconsider taxes, please “The state’s No. 2 Republican broke with Gov. Jim Gibbons on Thursday, criticizing him and other politicians for not being willing to talk about raising taxes.”   “The people in this state are not over-taxed… I’ve served since 1972…I’ve never said, ‘I’ll never raise taxes.’…there may be a time when you have to.  Which tax?   I guess that depends on what the needs are.”  Nevada Newsmakers Interview August 2, 2007

This initiative sends a message to Majority Leaders Raggio of the Senate and Buckley of the Assembly along with Assemblyman Marvel to cut pork and spending instead of raising taxes.   The measure has been introduced three times in the Legislature.   Assemblyman Marvel made motion to kill the “Nevada Prop 13” bill in 1999.

Government will spend every penny you earn unless you fight back!

Government will always interpret silence as consent. The way to fight back is to financially support the people who have the time, energy, and dedication to carry the fight.  Help us fight the endless attacks on your pocketbook from greedy special interest pressure on government.

(7) QUESTION:  Why is the AFL-CIO and the Nevada Teacher’s Union (NSEA) filing lawsuits against the petition?

       ANSWER:    The first lawsuit and second lawsuit the AFL-CIO and NSEA tell why in their own words:   

“…Nevada State AFL-CIO, its affiliates and their members would be directly and adversely affected by passage of the Initiative through a reduction in work hours or the elimination of jobs, a reduction in income or a loss of income from employment, and a deterioration in working conditions caused by reductions in state and local spending.”   “NSEA and its members would be directly and adversely affected by passage of the initiative through a reduction in work hours or the elimination of jobs, a reduction in income or a loss of income from employment, and a deterioration in working conditions caused by reductions in school spending.”

In an effort to hide their agenda, Danny Thompson, lobbyist for the AFL-CIO, expressed a concern for taxpayers paying higher taxes in the Las Vegas Review Journal, “Our motivation for doing it is they would put people in a position where they will pay more in taxes in some cases. I don't even know if revenue to local government would be reduced if her petition passed."   

The Union double-speak is apparent.   Either our initiative lowers tax revenues or raises them.