At their meeting today, the Washoe County Board of Commissioners provided for the reimbursement of approximately $43.3 million in overpaid property taxes to taxpayers in the Tahoe Basin. The Board unanimously directed staff to finance the refunds using current two reserve funds and deferring capital projects, continue to provide funding for staff to process repayments, and allocate proportionate shares of the refunds to other taxing entities which received the taxes by reducing their respective future tax distributions. In a separate action, the Board voted 3-2, with Commissioners Breternitz and Jung opposed, to allocate proportionate shares of the accrued interest to the other taxing entities which have had use of the funds during the time the action has been in litigation.
Refunds Ordered. The Nevada Supreme Court issued a ruling on July 7, 2011 that upheld an earlier District Court order directing the Washoe County Treasurer to issue refunds of overpaid property taxes with interest to affected taxpayers in the Lake Tahoe area. The Supreme Court’s decision came two years after the County had appealed the District Court’s decision. The estimated total cost of the refunds is approximately $43.3 million; the interest portion is estimated to be $6.2 million and the County’s share is approximately $18.4 million dollars. Other agencies affected include: the Washoe County School District, North Lake Tahoe Fire Protection District, Incline Village General Improvement District and the State of Nevada.
Funding Options. Staff was directed to prepare documents allowing for the use of up to $7 million from the county’s Risk Management Fund, $8.4 million from the Health Benefits Fund, and defer $3 million in Capital Projects. Of the 13 other options presented to the Board today, utilizing reserve accounts to finance court-ordered property tax refunds on approximately 8,700 parcels in the Incline Village/Crystal Bay area allows the County to pay the refunds to affected property owners, but does put the County at some risk.
Use of reserves identified for property and liabilities claims, worker’s compensation coverage, health benefits, and capital improvement projects depletes reserves that may need long-term replenishment to meet existing liabilities; however, utilizing current reserves during this trying fiscal time was considered the best option available. Staff noted that there are no other revenue sources currently available to pay the $18.4 million court-ordered property tax refunds to Incline Village property owners. Since the County has already cut spending by $154 million and 769 positions or 20% of its workforce, further budget and subsequent staff reductions would continue to erode the County’s ability to provide essential core public services since 74% of the County’s expenditures are for core services such as public safety.
Allocation of Interest. The Board received a legal analysis of the interest issue in an attorney-client meeting prior to their vote. The interest portion of the $43.3 million estimated refund is approximately $6.2 million dollars and accrues at the rate of approximately $180,000 per month. The interest has continued to accumulate while the parties awaited ultimate resolution by the Nevada Supreme Court. The Commission approved in a 3 to 2 (Breternitz and Jung dissenting) vote to include the accumulated interest in the refund portions required of other affected agencies.
One Cent Governmental Services Tax. In a separate item, the Board of County Commissioners continued the introduction of an ordinance providing for a 1 cent vehicle registration tax as authorized by NRS 371.043 to replenish the affected funds. The continuance will allow time to obtain additional information on opportunities for replenishing the three affected funds and to complete an analysis on cash flow. The County has no authority to increase sales tax and the community is at the statutory limit for property taxes.
Additional information for residents affected by the property tax refund is available online at http://www.washoecounty.us/treas/Inclinevillage/crystalbaytaxrefundinformation.htm