County could raid improvement district funds
June 20, 2017
With the governor's signature on Senate Bill 462 the notion of Douglas County taking general improvement district funds to fix county-maintained local roads remains alive. Let's compare that with the recommendations of the County Road Maintenance Funding Task Force on which I served.
The task force focused on county-maintained roads: most collector roads plus local roads in the "unincorporated area" outside our towns and GIDs.
We made three recommendations:
1. Use regional taxes to maintain regional collector roads, and local taxes to maintain local roads.
2. Redirect some existing Douglas County revenues to fund the maintenance of regional collector roads.
3. Ask the one-third of county residents who do not do so to pay the cost of maintaining their local roads.
Recommended Stories For You
With that, Douglas County's road maintenance funding problem could largely be solved.
The county commission adopted the first two recommendations but deferred the third. Let's examine each briefly.
Regional taxes are those paid by all county residents, such as property taxes assessed by the county. Local taxes are those paid in only a portion of the county, such as by residents of a GID.
A good principle is to align the impact of taxes (who pays them) with the benefits derived from those taxes. Hence regional taxes for regional roads and local taxes for local roads.
We identified existing "regional" funds that could be transferred to maintenance of regional roads. The county commission did that.
It also passed a countywide (regional) gas tax increase dedicated to the maintenance of regional collector roads. With those steps regional roads can be brought up to good repair.
That leaves unincorporated local roads, which have no source of funding for their maintenance. The two-thirds of us who live in towns and GIDs pay extra taxes to maintain local roads in those areas. But the one-third who live in the unincorporated area do not.
Creating a taxing entity in the unincorporated area to fund unincorporated local road maintenance could correct that. But that hasn't happened.
You see, the task force worked closely with then-County Manager Steve Mokrohisky, who fully supported its recommendations. Steve reported the results to the county commission but then left for a new job.
We then had an interim manager, followed by a manager who departed after less than a year. By then we'd had an election resulting in a new tax-averse philosophy on the county commission. I think the task force's recommendation got lost in the shuffle. And the idea of taking funds from the GIDs surfaced in its place.
If the county is going to pursue this new idea, shouldn't we at least finish consideration of the old one? So let's take a closer look at the task force recommendation and how it might work.
Nevada law limits the total local tax rate. The total of all local agency tax rates applicable to any given property cannot exceed that limit. At the same time, any agency's tax rate must be uniform throughout its jurisdiction. The net effect of this is that Douglas County's tax rate is limited by the highest combination of rates set by other agencies anywhere in the county. This is most significant in a comparison of tax rates in GIDs with tax rates in the unincorporated area.
The task force made that comparison. What we found was that the taxing entities and rates for comparable properties, one in a GID and one in the unincorporated area, are identical, with one exception: the GID property pays taxes to the GID. The unincorporated property pays no equivalent tax. Everything else is the same.
That GID tax is essentially an infrastructure tax because that is all GIDs do, build and maintain infrastructure. So, about two-thirds of county residents (those in towns and GIDs) pay an "infrastructure tax," while the one-third in the unincorporated area do not.
It is tempting to think that Douglas County has funds to fix unincorporated roads without raising taxes. The task force studied that carefully. It's not true.
When the task force was meeting, the county's road maintenance backlog was on the order of $50 million. As noted above, the county has already taken steps to address the problems with regional collector roads, so the unincorporated local roads that remain account for only a portion of the backlog. But there are a lot of them, so the backlog is still large, a problem that won't be solved by moving money around within the county budget or from GIDs to the county. If unincorporated local roads are to be fixed we need more money. The alternative is to spread what we have more thinly, meaning a worsening maintenance problem, possibly expanding from the unincorporated area into our towns and GIDs.
The task force recommended a "least tax" approach to this, adding an infrastructure tax only where one does not exist (the unincorporated area) and only in an amount that would bring those taxpayers up to parity with their neighbors in towns and GIDs.
I'm not in a position to "do the math" (the county is) but my educated guess is that such a tax, if applied uniformly throughout the unincorporated area, would bring in several million dollars per year. Conservatively, let's say three. Over 10 years that would be $30 million, which I believe could come close to eliminating the County's unincorporated local road maintenance backlog.
Regardless of the math, it remains patently unfair to simply rob Peter to pay Paul. If there are potential savings in GIDs those should be returned to GID taxpayers, not given to others who don't pay for infrastructure.
If the county is going to evaluate moving resources from GIDs to the unincorporated area, essentially asking those who already pay to pay for those who don't, the county should also flesh out the task force's recommendation with actual dollar amounts to see what the costs and benefits would be, and compare that with the "rob the GIDs" approach. Then do what works best.
Terry Burnes is a Gardnerville resident.