Casino, mall will get Douglas close to tax guarantee

Douglas County Manager Dan Holler says the "Beverly Hillbillies" casino and Riverwood shopping mall next door won't generate enough sales to get them off the list of counties receiving tax subsidies.

But it will get them a lot closer to that goal.

Holler said he estimates Riverwood will generate upwards of $100 million in sales taxes a year. The hotel/casino project being planned by Max Baer, is much more difficult to project because gaming and hotel rooms themselves don't directly generate sales tax revenue, Holler said. It depends on what restaurants, gift shops, the casino's bars and other operations generate.

Holler said he is estimating about $10 million a year from restaurant activity, but that will go up significantly if they install a large gift shop, several bars and the movie theater complex contemplated during discussions with the county commission.

"Right now, I'm being conservative," he said.

Each county collects 2.25 percent on taxable sales. If annual sales, after the five-year build out of the projects, reach $120 million, the hotel/casino and mall would add $2.7 million a year to the Douglas general fund.

That would sharply reduce this year's state subsidy of $3.5 million.

"We were really close a couple of years ago - less than a million dollars, actually," he said. "But the sales slump pushed us out again."

If the economy recovers and sales pick up, Holler said, Douglas would very close to not needing the subsidy.

And that would please, in particular, Washoe, Clark and Carson City - the primary providers of that subsidy to Douglas, Lyon and seven other Nevada counties.

Lyon and Douglas, with subsidies this year of $5.2 million and $3.5 million respectively, are by far the largest recipients. The payments to the other seven on the list total just $3.7 million. That $12.4 million total statewide is only a tiny percentage of the roughly $1 billion a year the supplemental tax generates.

The subsidies were created by the 1981 Legislature as part of the tax shift. Until then, local governments had relied heavily on property taxes. Lawmakers cut back property taxes to head off a California Proposition 13-style amendment, shifting state and local dependence to sales taxes. To protect smaller counties without a retail sales base from being bankrupted by the shift, they were guaranteed a certain level of sales tax money through a formula based on population and inflation growth. That money comes out of the nonstate portion of the Supplemental City/County Relief Tax collected from nonNevada companies selling to Nevada residents and businesses.

That means it is money the nonguarantee counties - including Carson City - aren't getting. Calculations using the statutory formula indicate Douglas and Lyon this year are getting $123,600 in supplemental tax revenue that would otherwise go to the capital district.

While Douglas is getting close to coming off the guarantee list, Lyon is far from that point.

Commissioner Leroy Goodman said while Lyon is growing rapidly, it has only a small retail base.

"All the people in Dayton and Mound House shop in Carson City so there's substantial sales tax generated in Carson City from the people in Lyon," he said. "The same in Fernley. There's a Wal-Mart under construction and a Lowe's but, for the most part, people still have to go to Reno to shop."

"All our shopping money, so to speak, goes out of the county," he said.

In Lyon's defense, Goodman said, that means most if not all the subsidy is actually tax money paid by Lyon residents coming back to the county through the formula.

• Contact reporter Geoff Dornan at gdornan@nevadaappeal.com or 687-8750.