Government Affairs Report – May 2019
Do not arouse the wrath of the Great and Powerful Oz!
I said come back tomorrow!
If you were really great and powerful, you’d keep your promises!
Do you presume to criticize the Great Oz, you ungrateful creatures?
Think yourselves lucky that I’m giving you audience tomorrow, instead of 20 years from now!
The Great Oz has spoken!
Pay no attention to that man behind the curtain! The Great Oz has spoken!
-The Wizard of Oz
Sometimes, when the chips are down and circumstances require radical, “out-of-the-box” solutions, you take a chance. You stick your neck out for a concept, not because it’s in your best interests, but because it’s the right thing to do in the long-term. It’s what we do when we sear a steak – we take a chance on ruining the whole thing because locking in that flavor is just plain worth it!
Such was the reasoning behind NAIOP’s support of SJR 14 in 2017. Nevada’s state and local governments, agencies, school districts, and everyone else you can think of, are revenue-starved, and have been for a long, long time. With state and local services cut to the bone, education per pupil funding nationally ranked last, and growing infrastructure concerns, the time had come to support a revision of Nevada’s real property tax “caps.” SJR 14, an initiative to amend Nevada’s Constitution to allow the concept of “reset on sale,” seemed to be the vehicle to start a conversation, which would move Nevada to a more financially-secure place. So, NAIOP conditionally supported the Resolution, not for its substance, but for the purpose of starting what was promised to be 18 months of tax policy discussions in the interim leading up to the 2019 Session. It was a position, which, though benign, drew a lot of fire. Senate Minority Leader Roberson publicly questioned whether we even represented NAIOP during our testimony. Members unaware of the caveat in our positioning questioned our sanity and sobriety.
As we know, despite our best efforts, those discussions never took place during the interim. Discussions did not take place for the first 60 days of the Session. In fact, the first stakeholder meeting took place on April 24, 2019 – Day 80 of the 120-day Session. More, a study was commissioned by proponents of the Resolution. It was not shared until that same day of the 120-day Session. The financial impact report consists of 377 pages detailing the impact reset on sale will have on every single one of Nevada’s taxing districts and entities. As you can imagine the stakeholders in the room were both elated to finally have something to pour over, yet concerned about the abbreviated timeframe in which to do so. Of greater concern was the ask that stakeholders put their money where their mouths are and support the ballot question in the upcoming election, should it get that far. At this time, the Resolution has not come up for a committee hearing and there is no proposed date for one. We are hearing rumblings of another stakeholder meeting, but that has not been confirmed either. So, as it stands, we have to date had one stakeholder meeting, in conjunction with receiving a very lengthy report, and still no substantive discussion.
All that said, the narrative has shifted this session, putting the focus of the additional funds solely on bettering Nevada’s schools. While there is no denying the need for increased funds in our schools, there is a dyer need for more and better transparency. The Resolution would not change in any way the allocation of tax revenue; it would just increase the amount of revenue flowing into the General Fund. With respect to education, additional revenue into the State General Fund would then be allocated into the Distributive School Account, or “DSA,” which is, in essence, another general fund for public schools. Given this, the business community and municipalities have grave concerns about what the money moved into the DSA will actually be used for. Much of the increased revenue could be subject to collective bargaining agreements, which only increases the concern about transparency. With this now being the main focus for getting this Resolution passed through both houses and then by the voters, it raises a number of red flags as to how this additional revenue will actually be spent and how it will benefit Nevada as a whole. Given there are only 34 days left in the Session as of the date of this article, a number of existing budgetary concerns, not the least of which is the school funding formula (for which a major overhaul has also been proposed, but no bill language has been seen), and the Economic Forum coming up May 1, 2019, there is precious little time left to have the robust discussions required when considering a complete shift in how property taxes are calculated in the State of Nevada. As ever, we remain vigilant on this issue, so as to help NAIOP craft a position that accurately represents its membership and the CRE industry. What that position looks like will depend on just exactly what’s behind the curtain.
ODDS & ENDS
History is always the best teacher, even though we sometimes don’t want to listen. Take, for example, the instant situation of overhauling real estate tax policy with just over a month left in the Session, and consider the following:
The current Nevada state flag was designed as part of a contest in 1926. Although a man by the name of Louis Schellbach III won the contest and the $25 prize which went along with it, the Legislature got involved, and of course, the two houses disagreed – this time over the placement of the word “Nevada” on the flag. Although a compromise was eventually reached, the Legislature waited until the last minute to push the amendment through, and it got lost. The bill nevertheless passed, and Gov. Balzar unknowingly signed the bill without the proper amendment. The flag used from 1929 until 1991 was not the flag approved by the Legislature, and thus, not the official state flag. The oversight went unnoticed for more than 60 years.
Jonathan Leleu, Director
Kerrie Kramer, Government Affairs Analyst
Fennemore Craig
jleleu@fclaw.com | kkramer@fclaw.com | T: 702.692.8037
