Senate Joint Resolution 14, which would affect property taxes on home sales in every county, will be up before the Legislate during the 2019 session.
Washoe County Assessor Mike Clark wants Nevadans to be fully aware of the hidden costs associated with a proposed amendment to the Nevada Constitution that could significantly raise the property tax in every county.
Mike Clark spoke at this month’s luncheon of the Churchill County Republican Central Committee to give his take on Senate Joint Resolution 14 (SJR14) that was passed by the Legislature in 2017. Since this is an amendment to the state constitution, the Legislature must vote again on the proposed amendment during the next session in 2019, and if both the Assembly and State Senate approve it, SJR14 goes on the 2020 ballot for voters to act.
The 2017 vote to approve was done along party lines in the Democratic-controlled Assembly and Senate.
According to Clark, SJR14 removes property tax and any depreciation, and if the proposed amendment passes through every step including voter passage, property tax will be based on the property’s sale price, and the cap and depreciation will have been removed.
“SJR14 could result in the largest property tax increase in Nevada history,” Clark said.
Many in attendance said residents need to know the ramifications of this proposed amendment.
“It’s frightening to learn what this potential change in our state Constitution could mean for every Nevadan for years to come,” Fallon resident and homeowner Jim Falk said. “And it’s sad to hear that probably no more than one in a hundred of us really knows what is happening.”
In a handout, Clark outlines the effect it will have on a home.
“Depreciation is a reduction in the value of an asset (your home) with the passage of time, due in particular to wear and tear,” Clark explained. “Properties depreciate with age. Things like roofs, plumbing, stucco and siding need to be repaired or replaced. With no depreciation and no cap in your property tax, you would pay more taxes in addition to the cost of needed repairs.”
Clark added that when an actual physical structure such as a home breaks down over time, it will then be assessed as a “brand new physical structure each time it is sold.” He said the proposed change could price potential buyers out of the market, especially with first-time home buyers or people on a fixed income trying to qualify for a loan.
For example, Clark gave an example on a 1,200 square foot home built in Old Northwest Reno in the 1960s. He said the property tax would jump from $677 annually to $2,264 the first year after the sale, thus resulting in an increase of $133 each month.
Overall, the passage of SJR14, said Clark, will have a devastating impact for the state’s homeowners. Under the proposed amendment, he said property that is sold or transferred will see the value of its improvements “skyrocket to replacement cost-as-new regardless of the age of the improvements.” He said all depreciation would be wiped out, and the 3 percent cap eliminated; furthermore, the market value ceiling would also be eliminated.
“Under recent conditions, buyers of property would now have to pay tax on values much higher than the market value — in many cases more than double what the tax was before SJR14.”
Audiences such as the one in Fallon who heard Clark’s concerns are learning that this move by the Legislature is nothing more than a “stealth tax” kept under the radar, wrote Jim Clark (no relation), president of Republican Advocates.
“Finally, when the cost of owning property goes up the value of the property goes down,” Jim Clark continued. “Those of us who own property know very well the meaning and feeling of declining property values. Under SJR14, regardless of whether property remains unsold, the prohibitive reality of the new tax burden would cause all property values to drop dramatically.”
Las Vegas Review Journal columnist Victor Joecks said in a May opinion piece every Nevada Democrat in the Legislature voted for SJR14, and gubernatorial candidate Steve Sisolak also favors it.
“Compared to other states, Nevada has low property taxes and low overall tax collections,” Joecks pointed out.
Joecks added states with higher property taxes are not solving their budget problems, such as Illinois, which saw a decline in population in 2016.
“The outmigration is so noticeable that the Chicago Tribune is doing a series on the ‘Illinois exodus caused by high costs, high taxes and poor public services,’” Joecks noted.
He added Illinois has an unfunded pension liability in the millions of dollars, and the Midwest state is slowly going bankrupt.