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Nevada panels take up local tax distribution

Sandra Chereb, Associated Press

CARSON CITY, Nev. (AP) -- Senate and Assembly tax committees begin dissecting a bill Thursday to revise how Nevada distributes taxes to local governments.

AB68 is the outcome of months of hearings conducted by Assembly Speaker Marilyn Kirkpatrick, D-North Las Vegas, to address complaints by some local entities that they are being short-changed under a complicated formula enacted in 1997.

The consolidated tax — called the C-tax for short — involves distributing six taxes collected by Department of Taxation that are then doled out to 175 counties, cities, town and districts. The taxes include sales, liquor, cigarette, real estate transfer and government services taxes.

Some cities, North Las Vegas and the city of Fernley in particular, have argued the distribution formula is outdated and hasn't kept pace with population growth.

Fernley, a city 30 miles east of Reno, didn't incorporate until 2001 and is the only city formed after the tax system was established. The city sued the state last year over the tax formula. The Nevada Supreme Court recently threw out some of the city's claims but kept the case alive, sending it back to a lower court to proceed.

In its suit, Fernley argued its share of the funding pie has remained relatively unchanged, despite a more than doubling of its population to around 19,000.

Fernley in 1997 received $86,000. According to court document, its share in 2011 was $143,000.

In comparison, lawyers argued that other small cities two years ago received much more: Fallon $1.4 million; Boulder City, $7.9 million; Elko, $11 million; and Ely $4.9 million.

North Las Vegas also opposes the tax system. In a previous hearing, Finance Director Al Zochowski said his city loses $20 million to $30 million a year.

North Las Vegas is expected to propose an amendment to AB68 at Thursday's hearing before the Assembly Taxation and Senate Committee on Revenue and Economic Development. The amendment seeks to funnel $26 million to the city before other distributions are made.