Gibbons, lawmakers working together on 'green building' law

Gov. Jim Gibbons says he and lawmakers are working together to balance the rights of businesses that have applied for tax breaks for building energy efficient buildings and the needs of the state.

The Legislature passed SB567 suspending those tax breaks this week as an emergency measure after being told the breaks approved in 2005 would cost the state upward of $1 billion in revenue over the next decade.

Sen. Randolph Townsend, R-Reno, said he still supports tax breaks for "green buildings" but that the state can't afford that kind of a financial hit, especially to school budgets.

The tax breaks for constructing energy-efficient buildings were approved by the 2005 Legislature. Businesses that qualify are exempted from all but the base 2 percent of Nevada's sales tax on construction materials and fittings. They also get a property tax break up to 50 percent for 10 years.

But according to records of the hearings, there was never any real discussion of the potential impact those breaks would have on state, school and local government budgets.

And that impact falls on the state because the state is legally required to make up any shortfall in school district revenue.

According to Department of Taxation Records, the sales tax impact on Clark County School District alone for the four projects already approved would exceed $85 million. And the impact from property taxes down the road would be much more.

Reports Thursday were mixed with Gibbons saying he may veto SB567 and his staff denying that.

Friday, he made it clear all parties are working on the problem together, and that he isn't going to veto it Monday.

"We're spending some serious time this weekend going through the details of the bill," said Gibbons. He said that means reviewing the requirements of the original legislation and the regulations implementing the tax breaks.

"There are pitfalls Nevada could fall into, and we must make sure the intent of the legislation is met," he said. "There are people who have detrimentally relied on this," he said referring to businesses that have relied on the tax breaks in committing to major construction projects.

He said those businesses that have fully qualified may legally have to be grandfathered in, even if the state changes the rules.

At the same time, he said, "we have to make sure we address the needs of education."

Gibbons said he, his staff, lawmakers and their experts, will try to reach a consensus on how to change the 2005 law.

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