In Carson: Douglas, Carson officials discuss tax sharing plan

Officials in Carson City and Douglas County have been discussing how to cool off their fiery, protracted competition for sales tax revenue.

"Let's put a stop to the madness," said Supervisor Robin Williamson. "If there's a way we can do what's best, we owe it to people in both of our communities."

Neither side has come up with a remedy. Elected officials in both areas, however, will consider, during their scheduled meetings on Thursday, allowing study of the topic.

Sales tax revenues aren't increasing in either community. Carson City and Douglas were down this February when compared to taxable sales in February 2006.

Carson was down by 4.9 percent and Douglas by 8.6 percent.

Similar discussions a few years ago didn't work out. For example, Carson ended up suing Douglas and the U.S. Bureau of Land Management to halt a plan for an auto mall in North Douglas County. Federal land in Douglas was auctioned off and purchased by Michael Hohl and Dink Cryer.

The matter was eventually settled in late 2003 by putting a two-year hold on Douglas' auto mall plan. This was to give Carson time to devise ways to protect and potentially enhance auto sales near the Carson-Douglas border.

Auto sales comprise more than one-third of Carson's total sales tax revenues.

"Both jurisdictions have been concerned about how divisive this has become in recent years," said Supervisor Shelly Aldean.

The goals sought this time include broadening both tax bases, removing the need to compete for retailing, providing incentives and improving older commercial sites in both communities.

Carson and Douglas have potential for fostering new sources of revenue through retail development within their own borders but share customers. Carson residents go to Douglas to spend money and vice-versa. Cooperation "just makes more sense," than the current climate where the two counties try to out bid each other for retail development, according to Linda Ritter, Carson City manager.

"We're not walking into it with preconceived notions," said Dan Holler, Douglas County manager.

Also proposed is a way to provide tax revenue to each county for its infrastructure needs based on demand.

Sales tax allocation to Nevada's localities "is a formula-driven process," he said. "We'd likely have to try to change state law."

Carson would bear the cost of any study, but the agreement calls for Douglas County's "support." The Northern Nevada Development Authority would administer the study, Ritter said.

"If we're successful, it could be quite groundbreaking," Aldean said. "It could become a template for other communities to use around the state."

It wouldn't have an immediate impact, however. If changes in state law were required, a proposal couldn't be presented until the next legislative session at the earliest, Holler added.

The Economic Forum cut state revenue projections back $109.5 million Tuesday " $21.2 million from the current fiscal year and $88.3 million from the coming two-year budget.

But that still leaves lawmakers with a record $6.83 billion in general fund revenue to spend in the budget they're now working on.

Budget Director Andrew Clinger said, however, those cuts don't include the more than $81 million the state owes K-12 education budgets, which also fell short because of weak sales tax revenues or the potential $31 million shortfall in property tax revenues to public schools. The state, by law, guarantees per-pupil funding to the schools so the Legislature must make up those amounts.

Senate Finance Chairman Bill Raggio, R-Reno, said he has heard the Legislature may get some good news on the property tax issue.

Clinger said earlier in the day that $31 million deficit may disappear and actually reduce the state's obligation to schools.

Clinger said that after the more than $112 million state agencies have already cut anticipating the shortfall, the forum's action means they will have to cut another $74.2 million to balance the budget.

The largest single share of the cut was to projected gaming revenues which were reduced $6.8 million for the remainder of this year and $38 million over the coming budget cycle for $44.8 million of the total reduction.

The sales tax projections were cut back $12 million this fiscal year and $17.6 million over the biennium for another $29.6 million. And the Modified Business Tax projections were cut back $6.25 million this year and $24.5 million over the biennium for a total of $30.75 million.

Assembly fiscal analyst Mark Stevens told the Ways and Means committee that doesn't include the business tax reduction Gov. Jim Gibbons is supporting, which would reduce revenues there by another $14 million each year of the biennium.

In addition, a long list of smaller revenue sources were cut back by $21.8 million.

The biggest change there was in revenues collected by the secretary of state's office where projections were revised downward by $17.6 million.

There were a few bright spots, however, including interest income collected by the treasurer's office which was increased by $11.4 million and the casino live entertainment tax which was increased more than $18 million.

When everything was added up, the total reduction in projected revenues was $109.5 million for this year and the coming biennium.

Assemblyman John Marvel, R-Battle Mountain, said the news was depressing for lawmakers throughout the building who had hoped to fund programs including all-day kindergarten.

"We don't have the money," he said.

Gov. Jim Gibbons said his staff should have numbers on the amount of sales and property tax the state will need to make up for school districts later this week.

But he wasn't ready to give up on permanently lowering the business tax rate.

"I'm still committed to tax reductions, but let me talk to you tomorrow."

He said the forum's cuts weren't as steep as he had feared they would be.

"We had heard it was going to be a lot worse than it was," he said.

He also pointed out that the reduction is only a tiny fraction of the state's $6.8 billion general fund budget.