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The City of Henderson will take up a proposed tax increase on Tuesday that could raise property taxes on homeowners and businesses in the city. This would be the first increase in the property tax rate in the city in 23 years.
The City Council will consider an increase of as much as 20 cents per $100 of assessed value at its meeting Tuesday night. The Council can raise property taxes by up to 3 cents without a vote of the residents of the city. Any increase above that would have to be approved by voters.
The Special Budget Ad Hoc Committee recommends that the City Council [Tuesday] consider raising property taxes up to 20 cents per $100 in assessed valuation, according to the committee report released Tuesday. The money would generate up to $16.5 million per year, helping the city address its $2 million annual operating shortfall and $17 million annual infrastructure needs.
City spokesman Bud Cranor said the council would be able to implement a property tax increase beyond 3 cents only with a vote of city residents. The city is limited by state law in how much it can raise property taxes without a ballot initiative.
Since they are based upon the value of the property, property taxes rise as the value of the properties rise. Last year, home values across Nevada rose more than 23%, meaning many homeowners will be paying higher property taxes this year regardless of whether the tax increase passes. Despite this increase, most properties in the area are still well below their values from before the recession, and approximately 40% of homeowners still owe more on their homes than the homes are worth, as the value of the average property plummeted by more than half during the downturn.
The Legislature imposed a 3% cap on annual increases in property taxes in 2005. As property values rose during the next couple of years until the housing market collapsed, the cap limited the property tax increases to 3%. Even after values began falling, property taxes continued to increase for a while as the levies that had been limited to 3% annual increases still had some lost ground to make up.
Today, however, the value of most properties is well below the level of a few years ago and property tax collections are far below the levels of before the recession. The decline in property values during the recession resulted in a significant drop in tax collections, but also in the ability of property owners to pay. The Las Vegas Review-Journal has editorialized against the Henderson proposal.
But there’s a very good reason why local governments haven’t raised property taxes in recent years: Despite last year’s housing recovery, more than 40 percent of valley homes are still upside-down on their mortgages. Asking people to pay more to keep properties with no equity is bound to upset them.
Are Henderson’s finances in such bad shape that the city can’t function without the increase? Hardly. General fund spending has actually increased since the Great Recession, from $206.6 million in 2008 to $219.1 million today, despite reductions in Henderson’s workforce. And, according to TransparentNevada.com, nearly 1,200 of the city’s roughly 1,850 workers received at least $100,000 in total compensation in 2012.
Voters have rejected a number of proposed tax increases in the last few years, including an initiative during the last election to raise taxes in Henderson.
Tags: business, business owner, cost, Henderson, property taxes, recession, taxes
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