Assembly halts tax breaks for 'green' business buildings

Amid conflicting reports whether Gov. Jim Gibbons will veto the bill, the Assembly unanimously joined the Senate on Thursday in suspending the law allowing major sales and property tax breaks for businesses that construct energy efficient buildings.

The tax breaks were created during the 2005 special session to encourage businesses to build efficient "green" buildings. Businesses that qualify are exempted from all but the base 2 percent of sales taxes on construction materials and fittings. They also get a property tax break of up to 50 percent for 10 years.

But no one considered the potential impact to state and local government budgets.

Now, experts say, the four or five projects already approved for the breaks will cost the state about $85 million in sales tax revenue alone and much more down the road in property taxes.

And there are several more projects that have applied for the tax breaks. Assembly Speaker Barbara Buckley, D-Las Vegas, said Clark County school officials estimate the tax breaks as written could cost them up to $900 million over the next decade.

The revenue shortfall hits the school districts, which rely on the portion of the sales tax being exempted as well as a chunk of the property tax revenues. But it also affects the state budget because, under law, the state must make up any shortfall suffered by the school districts.

Lawmakers want the tax break law suspended for a month so they can take a much closer look and probably reduce the financial impact.

Sen. Randolph Townsend, R-Reno, made it clear when he introduced the measure lawmakers didn't intend to completely eliminate tax breaks for "green" buildings, just to modify the system so the state doesn't suffer unaffordable revenue losses.

Assemblywoman Debbie Smith, D-Sparks, told that body the same thing in urging support for the bill.

"We have a huge responsibility in this state to make sure we are taking care of pupils in our schools and citizens in this state," she said.

The Senate passed SB567, which does that, on Wednesday 19-2. And the Assembly followed suit Thursday.

But as they did so, Gov. Jim Gibbons told reporters he would most likely veto the legislation.

An hour later, however, his legal counsel Josh Hicks told Assembly Speaker Barbara Buckley, D-Las Vegas, the governor didn't say that.

Assembly Minority Leader Garn Mabey, R-Las Vegas, said that surprises him because lawmakers discussed the legislation with Gibbons earlier this week at lunch.

"I got the impression from the governor he supported this," said Mabey.

The conflicting statements left the issue in limbo.

Lawmakers should get an answer soon since SB567 should be delivered to the governor's office today.

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