A Tale of Two Petitions
Signature-seekers have been swarming public gathering places lately, urging voters to support a variety of initiatives. Two of the petitions have diametrically opposed goals. One aims to make life better for the poor, the other to make life better for the rich. Can you guess which one will be endorsed here?
Assemblywoman Sharron Angle, R-Reno, is spearheading a petition modeled on Proposition 13, the property tax rollback approved by California voters in 1978. Her proposed constitutional amendment would freeze Nevada's property tax rate, limit future increases and require a two-thirds vote to approve a tax override, such as a school construction bond issue.
The fact that Prop. 13 was a fiscal nightmare for California does not seem to faze Angle and other supporters. There are numerous reasons why Nevada should not follow in the Golden State's footsteps.
First of all, Nevada is a fast-growing state that needs revenue to provide basic public services to its citizens. Property taxes are a major contributor to schools, police departments and other government services on which we all depend. Under Angle's proposal, property tax revenues could drop by more than $120 million in the first year, leaving a huge funding gap. We saw during last year's contentious legislative session how much of a challenge the state faces in levying sufficient tax revenues to pay for the bare-minimum services it now offers. Angle's proposal would make a difficult situation even worse.
Second, her plan is regressive in nature. Rather than taxing property based on actual value (her plan would reassess a property's value only after it is sold), it would set up an unfair system under which the rich would pay less and the poor would pay more. The state's tax system is regressive enough already without meddling with the one fair part of it.
Nevada has a tortured history of tampering with property taxes. In the wake of California's Prop. 13, the Nevada Legislature enacted the 1981 tax shift – or tax shaft – that reduced property tax collections by 50 percent. This forced the state to adopt a greater reliance on sales taxes, revenues from which fluctuate significantly from year to year, depending on the health of tourism and the overall economy.
As a result of the tax shift, Nevada's property taxes are fairly modest – around the one percent of assessed value that Angle wants to preserve. By contrast, when Californians got agitated enough to pass Prop. 13, they were paying a 2.6 percent rate.
There's no question that recent skyrocketing home prices in Las Vegas will lead to higher property tax bills, posing an additional burden for homeowners (so giddy now over rising values) in the near future. Las Vegas in particular is becoming an expensive place to live, an inevitable and regrettable result of its runaway growth over the past 15 years. And so, from the vantage point of the individual Las Vegas homeowner, Angle's proposal will receive populist support.
But taking a wider view, her plan could put the state in an agonizing bind – and lead to more regressive tax increases in other areas. Jeremy Aguero, a taxation expert, summarized the situation for the Las Vegas Sun: "The property tax is the most stable source of revenue we have in the state. It would dramatically reduce the ability of the state, local governments and special districts such as the school district to remain financially stable in the long run." For this and other reasons, the conservative Nevada Taxpayers Association has decided not to support Angle's petition.
Nobody wants to see his property taxes balloon because of the recent real estate price bubble. Legislative action may be required to deal with it, but Angle's regressive, shortsighted plan is not the solution.
The Nevada AFL-CIO, meanwhile, is gathering signatures for a constitutional amendment to raise the minimum wage by $1 per hour. The federal minimum is $5.15 per hour, set in 1997. States have the option to raise the minimum wage beyond that figure, and a dozen of them, including Washington, Oregon and California, have done so. Some cities also have higher minimum wages.
Not surprisingly, the union-backed plan has met with automatic opposition from business and industry leaders, who relish the fact that they can employ tens of thousands of Nevadans at $5.15 per hour – or $10,712 per year for full-time work.
It is nearly impossible to live in Las Vegas on $5.15 per hour. Knowing this and responding to a competitive marketplace for employees, many businesses are paying more than minimum wage for what traditionally are considered entry-level jobs. But a significant segment of Nevada's work force – the AFL-CIO estimates 50,000 people – is coming home from an exhausting eight-hour shift having earned $41.20 – minus taxes.
Paying this paltry sum takes advantage of thousands of hard-working Nevadans and contributes to growing pockets of poverty in the state. A legislative remedy is needed to bring basic fairness to the job market. Frankly, considering inflation, the minimum wage should be at least $8 per hour to adequately cover the cost of living at subsistence level in 2004. But a $1 increase would be a good start.