VICTOR JOECKS: Coronavirus isn’t a reason to gut property tax caps

The fiscal situation facing governments throughout Nevada is ugly. But it shouldn’t be an excuse to eliminate property tax caps.

On Tuesday, the Clark County Commission received a presentation on the fiscal impact of the coronavirus shutdown. The numbers are stunning. From March to June, the county is estimating a 52 percent drop in general fund revenues.

The next fiscal year starts in July. Those numbers aren’t much rosier. Revenue from the consolidated tax, which is mostly the sales tax, is projected to be 35 percent lower than anticipated.

After some mostly one-shot fiscal moves, the county faces close to a $58 million budget hole next year. That will require an 11 percent reduction in pay and benefits. The average compensation — pay and benefits — for a county employee is around $100,000. If county unions don’t agree to concessions, the alternative is more than 500 layoffs.

Incredibly, that’s the good news. In fiscal 2022, the county is potentially looking at a $152 million budget gap if revenues don’t improve.

Eventually, the conversation turned to the property tax. It takes longer to see a decrease in property tax revenue, but members of county staff think there will likely be a reduction in assessed values. Nevada caps property tax increases at 3 percent a year for residential homes and 8 percent a year for commercial properties.

“Do you have a sense for — but for the property tax caps put in place years ago — where we would be financially?” Commissioner Justin Jones asked.

“Justin, that’s an open question,” Commission Chair Marilyn Kirkpatrick said. “You and I have been trying to fix property tax forever.”

“Let’s just say better, right?” Jones said.

Think about this. More than 300,000 Nevadans have lost their jobs in the past few weeks. The economy has collapsed as businesses were forced to close. Families are worried about putting food on the table and paying the mortgage. Yet these politicians are bummed out that they didn’t figure out a way to squeeze a few more dollars out of county residents and businesses before the bottom fell out. Shameful.

Jones is also wrong. Absent the property tax cap, the county would be facing a bigger crisis.

During the Great Recession, property tax values dropped precipitously. As the recovery progressed, caps limited the increase in assessed value to 3 percent a year. Actual home values have increased quite a bit more. Without the property tax caps in place, the government would have collected more money. Politicians who share Jones’ worldview would have doled it out in raises and hired more staff, padding baseline budgets for years to come.

Even if they had tried to save the extra money, Nevada’s collective bargaining laws ensure unions control a large portion of local government budgets.

The property tax caps actually helped limit how much now needs to be cut. These caps also moderate how much money the county loses from falling property values because most assessed values are above actual values.

Nevada is facing a host of problems. Property tax caps aren’t among them.

Victor Joecks’ column appears in the Opinion section each Sunday, Wednesday and Friday. Contact him at vjoecks@reviewjournal.com or 702-383-4698. Follow @victorjoecks on Twitter.