Budget Watch Nevada

This morning I participated on a conference call with Governor Gibbons and other conservative bloggers, discussing the budget, legislation, and taxes.

Organized and moderated by Citizen Outreach’s inimitable Chuck Muth, right-thinking scribes Eric Odom, Richard Disney, Sonny Minx and yours truly spent about 20 minutes with the Guv discussing the 11th hour negotiations going on in Carson City prior to the legislature’s June 4 “sine die.”

Noteworthy from the call:

1. Mainstream politicians are paying attention to the blogosphere. Governor Gibbons and his staff understand that legitimate bloggers like the aforementioned are increasingly important players in the realm of news, commentary, and popular opinion. Members of mainstream media also monitor political blogs in search of new angles and viewpoints that many reporters overlook. Particularly in light of Gibbons’ lagging popularity, he knows that positive reportage among his conservative base is crucial to his success. Conversely, alienating them would only add to the piling-on by the liberal media.
2. Gibbons mentioned more than once that he is leading and governing based on principle. How often do you hear that from a politician’s lips? Not very, so it’s refreshing. Of course, some liberals also lead from what they consider to be principle, even though it‘s the principle of collectivism. In Gibbons’ case, he said that he pledged to the citizens of Nevada that he would veto any attempts to raise taxes, and so far he has stuck to his guns. I applaud this.
3. The governor reiterated his intent to spend more money on transportation infrastructure in Nevada without raising existing tax sources. Instead, he wants to reallocate monies from other accounts or agencies that don’t need it as much. In particular, he wants to seize some of the booty that the LVCVA reaps every year from the Room Tax. Instead of the Authority spending $2 billion-plus over the next 10 years to advertise a city that everyone already knows about, why not use some of that cash to build roads, bridges, on-ramps, and other critical improvements to move people around more quickly and efficiently? He also wants to tap into the Entertainment Tax. Now, from where I stand as a true libertarian-conservative, I’d like to eliminate the Live Entertainment Tax altogether, and slowly roll back the Room Tax to about half of where it is now and starve the LVCVA (see my previous column on this below), but this is a decent start.

The only disappointing part of the call was that we did not hear anything from Gibbons about cutting any programs or reducing spending. He acknowledged that this biennium’s budget is still 15% greater than that of 2 years ago. That means that any reported “cuts” are really just reductions in the rate of increase in budgetary spending. As anyone who has visited BudgetWatchNevada.com knows, there are dozens of bureaucratic hogs in state government that deserve to be slaughtered. Perhaps we can encourage the governor’s staff to review these in the interim before the 2009 session, and make real reforms to the jacked-up, statist largesse we now have.

Real Property Transfer Tax Adds Big Bucks to the Cost of Your Next Home

Nevada Revised Statutes’ chapter 375 outlines one of the most insidious, perverse taxes of them all, the Real Property Transfer Tax (R.P.T.T.). The following example will walk us through the imposition of this multi-layered tax and how it affects the purchase or sale of your next home.

This new homes development process is very common, and affects nearly every new home purchased in Las Vegas. Since over the last 3 years a large percentage of new homes have been built in master-planned communities like Mountain’s Edge, Providence, Summerlin, and Aliante, you’ll quickly see one of the reasons the cost of housing has risen so fast and why cities and counties around the state are flush with windfall revenues.

This is a common path for development of new homes, from acquiring the raw land all the way through to purchase of a new house by Mr. and Mrs. Workerbee.
1. A developer of master-planned communities purchases raw land from the federal government (BLM) or from a long-time private property owner. (In the case of the BLM auction, not only does the developer pay a tax on the purchase, but there is a hidden tax in the form of regulations which demand that a percentage of that privately-purchased land be turned over to the city or county for so-called “public uses.” But we’re not including that cost in this exercise.)
2. The master developer sells large parcels to builders to build homes and apartments. Builders now subdivide the parcels into plats, or buildable lots, often enduring long approvals from the municipalities (another hidden tax).
3. Builder then builds the house (paying thousands in fees to the county, along with “water connection” fees of between $5,000 and $10,000 per unit – again, not a part of this analysis), before finally transferring ownership of the house and lot to the happy homeowners, Mr. and Mrs. Workerbee.

In the above illustration, R.P.T.T. is paid 3 times on the same property! Each time, government coffers benefit and the productive sector is penalized.

The current R.P.T.T. tax rate in Clark and Washoe counties is $2.55 per $500 in value, equal to $5.10 per $1,000 in value, or .51% of the transfer value.

Land costs vary wildly year to year, and area to area, but I will use some realistic, conservative, average values in order to calculate the tax on property transactions from original to final purchase.

1. Purchase of BLM land from the Feds for $300,000 per acre. Let’s use an example of 2,000 acres, of which the developer must deed over to the county/city for public use, easements, and rights of way. R.P.T.T. tax: $3,060,000.
2. Developer sells 1,600 acres to 10 builders, 160 acres each, for $400,000 per acre, which includes some improvements and infrastructure. R.P.T.T.: $3,264,000.

A builder will typically build 5-8 units per acre for single family detached housing, and 16-20 per acre for townhomes and condos. For the sake of this argument, let’s look at a pretty common house and lot in a subdivision with a density of 8 houses per acre (this is very conservative; many communities only get 5-6 units per acre, net). To this point, an individual property from raw land to buildable lot has cost $494 in R.P.T.T.

So far, the only people making any money on this development are the government and some contractors and bankers. The builder hasn’t made a dime. And, of course, local governments are raking in property taxes that were nil before the BLM auction purchase.

3. Finally, Mr. and Mrs. Workerbee close escrow on their new house, which costs $300,000 (again, a fairly conservative estimate). R.P.T.T.: $1,530.
4. Keep in mind that in 2004-05 between 10-20% of new homes were purchased by investors and then re-sold within 2 years, adding even one more level of R.P.T.T. burden, but we’re not including that in this analysis.

Bottom line: In this example, the total Real Property Transfer Tax alone in the cost of Mr. and Mrs. Workerbee’s new home is $2,024. And they now start paying property taxes of about $2,000 per year. And in the case of the master plans mentioned above, they must also pay a Special Improvement District (S.I.D. or L.I.D.) tax of about $800 per year for 15 years.

If we now multiply this by the 10 builders in our example, time 1,280 houses each, the total amount of money extracted by government from buyers of new homes in R.P.T.T. alone is $25,907,200. Since roughly 25,000 new homes are sold each year, the figure could be doubled to estimate the cost to consumers just to buy into the American dream in the Las Vegas metro area.

With huge run-ups in property values between 2003 and 2006, local governments, especially Clark County, enjoyed unprecedented and obscene windfall profits from property taxes and Real Property Transfer Taxes. Cries for more money by the state and municipalities in Southern Nevada are shameful and disgusting. Governments should have been lowering tax rates or rebating money to taxpayers during that boom.

By Mark Warden
The author is president of Budget Watch Nevada and has worked in the new homes development industry in Las Vegas for 10 years.

We like to give credit where credit is due, and last week a couple democrats in the legislature did the right thing.

The Nevada politics show on PBS, Capitol Issues, reported Saturday that Assemblyman Kelvin Atkinson used his position as chairman of the Transportation Committee to kill a bill sponsored by Senator Dennis Nolan that would have made not wearing your seatbelt while in the car a primary offense. Such a change in the law would give cops and troopers the “right” (in Orwellian double-speak) to pull you over simply for forgetting or choosing not to buckle up before driving the car that you paid for on roads that your taxes paid for.

I’d like to think that Atkinson snuffed the bill in committee because of its authoritarian, nanny-state, liberty-robbing essence, but he probably just thought that it would give cops cover to pull over more minorities. Whatever the reason, we’ll take it, and we’re proud of you, Assemblyman Atkinson.

Assemblywoman Kathy McClain, who is rarely lauded in conservative political channels, gets kudos from me for her amendment to cut funding for Nevada participation in the REAL ID act from $30 million down to $200,000. Wow! That’s the kind of budget cutting that Budget Watch Nevada can get behind. Lamentably, she said that it may come up again next session. She said that the bill’s ramifications and costs were an “imposition on the citizens of this state” and an “expensive project.” Now if she would only use that logic on EVERY BILL she voted on, we’d be in good shape.

Over the past few decades, liberal activists have successfully weaseled their way into all aspects of state government. Two major venues for their success are with state attorneys general (AGs) and in utility regulation, where the environmental, energy conservation and consumerist interests sometimes overlap. Over time, volunteer activist groups such as “Citizen Utility Boards” have sought funding and institutionalization as state agencies anywhere the bureaucracy would house them, and ambitious statist AGs, governors and state legislators have been complicit in their schemes. Once these erstwhile citizen groups get institutionalized within the bureaucracy, they tap public funding via utility ratepayers to pay for their activist crusades without having a shred of real public control over them or meaningful accountability.

While Democrats, our true statist and simple-minded party animals, have led the way in such excesses, some shallow unprincipled Republicans, grubbing for votes, headlines and acceptance by the equally shallow press and activist communities, have also gotten on the bandwagon. So it is in Nevada, where State Senator Randolph Townsend, R-Reno, became the proud father of the Bureau of Consumer Protection (BCP) housed within the state AG’s office. While the BCP has various activities, the one of interest here is its standing as a party in all Nevada Public Utilities Commission (PUC) proceedings.

The PUC is supposed to make decisions based on the public interests in any matter on which it rules, such as setting utility rates, approving new energy facilities, etc. It has a staff of various professionals who are charged to provide testimony and assistance to the PUC, illuminating what the public interest requires or allows in each matter. So, if taxpayers must also pay for the BCP to be a party, then we are either paying twice for a single service and getting contradictory or misleading information, or we are paying the political activists at BCP for advocacy not in the public interest and therefore contrary to it. As it turns out, it is mostly the latter, but in any event, the whole enterprise is a complete waste of tax dollars and is undermining the public interest.

What ultimately needs to be done is obvious: repeal the statute giving the BCP any role at the PUC. Without even waiting for the Legislature to take such action, the AG, Catherine Cortez-Masto, should fire the lawyers, administrators, other bureaucrats, and outside contractors, and cut other expenses related to BCP’s activism before the PUC. Quit wasting public resources in that area and mucking up utility regulation.

A rough estimate of the annual savings that might be achieved by doing so is $1,000,000. However, the benefits of ending this boondoggle would be much greater than simply ending a drain on taxpayer dollars, because BCP’s ideologues are not meaningfully accountable for their actions, but instead spend their time and taxpayers’ dollars pursuing their personal ideological agendas that are often contrary to the public interest. BCP’s analyses, testimony and recommendations are almost always incompetent, misleading or at least contrary to the public interest, to the point that the PUC has noted such problems in some of its decisions. There’s no reasonable consistency in its positions from one case to the next, and in fact BCP tends to pick one outside consultant or staff member to argue a viewpoint convenient in one proceeding and then switch to another person for the next case to argue a contradictory point. BCP makes no meaningful contributions over time, except to delay and mislead PUC proceedings and run up all other parties’ costs while getting paid by taxpayers to fleece them by furthering its statist agendas.

Jeff Wright, Reno activist and guest contributor to Budget Watch Nevada.

Here is my letter to the editor sent to the Las Vegas Sun newspaper on in response to Jon Ralston’s editorial of May 06, 2007.

Dear Editor,

In Sunday’s editorial by Jon Ralston, he accurately reflects many policy-watchers’ sense of “deja vu” in this year’s legislative session. To many, it seems that the Gang of 63 is constantly whining that they need more money, and it’s always for nice-sounding, nebulous expenses like “better” education or transportation or to help the mentally ill.

The problem is that legislators, and the special interests that author many of their bills, rarely talk about accountability in the agencies they want to throw money at, or point to less-important programs that should be cut, minimized, or de-funded.

Independent voters and citizens who want lower taxes and limited government, who represent a significant base in Nevada, seem to have been forgotten by our elected officials.

Ralston correctly notes that “Republicans . . . bleat about cutting spending and waste and then can’t provide a list longer than a half-page.” How (sadly) true that is! So I’ve provided real ammo for their blank-shooting rhetoric with a comprehensive offering of suggested cuts to our bloated state spending in www.BudgetWatchNevda.com. With a non-partisan analysis of common-sense approaches to helping government be more efficient, more constitutionally true, and more lean, the site provides over $500,000,000 (yes, half a billion dollars) in possible spending cuts that would improve our economy and prioritize taxpayer dollars where they are truly needed.

I’ll have to agree with Chancellor Jim Rogers’ assertion that “sooner or later, the free ride is over.” That could not be more applicable than to his own NSHE (Nevada System of Higher Education), where the customers (students) only pay 15% of the total cost of our universities and colleges. We taxpayers pick up 85% of the tab. This kind of socialistic subsidy makes us all look like suckers, especially when large numbers of entering freshmen, even Millennium Scholars, require remedial math and English classes.

So let’s stop “enabling what happens . . . in far away Carson City” and ask our elected officials to make the tough decisions, and exercise more fiscal and moral responsibility. Let college students pay a little more of their own way, end massive subsidies to colleges and businesses, scrap the inflationary, union-rigged “prevailing wage” construction contracts, and go build some roads!

Mark Warden
Las Vegas

According to the L.V. Review-Journal article on May 17, the “Clark County School District’s general fund budget for the upcoming year will exceed $2 billion for the first time.” Of course, Superintendent Ruffles and his lapdogs at the School Board ALWAYS remind us that the budget “represents the tremendous growth in the CCSD.”

But the growth in the budget far exceeds projected student enrollment changes. In fact, enrollment grew between 2003-04 and 2007-08 (estimated) by 17.1%. Okay, so the budget should grow at roughly the same rate, right, with maybe a slight bump for inflation?

That’s correct, if you think in linear mathematics terms and use common sense. But when it comes to spending your money, the District uses exponential mathematics. So to cover this 17% growth over 5 years, CCSD is spending 58.5% more money. That must be the “new math,” or “fuzzy math,” or as I call it, “monopoly power bureaucracy math.”

In responding to public cries for deconsolidating the CCSD, the District always argues that they enjoy economies of scale that smaller districts wouldn’t achieve. By their very logic, then, the rate of spending increases in the budget should decrease, and the cost per student should go down, not up.

It is high time the legislature take responsible action:
1. Break up the inefficient monster that is the CCSD.
2. Enable vouchers and credits for private schools, charter schools, home schooling.
3. Welcome competitive forces into this bureaucratic, monopolistic morass.
4. Demand accountability from educators, administrators, and students.

Not even a year has passed since his election, but is it time for Secretary of State Miller to resign?

According to conservative political watchdog Janine Hanson of Nevada Families Eagle Forum, “The Secretary of State Ross Miller is promoting AB606 & 604, which severely interfere with the Constitutional right to petition. It is because of his support that these two terrible bills may pass. AB606 turns the SOS into the Speech Police for petitioning, creating a very anti-petition climate.”

Yours truly has worked exhaustively on a few petition drives, and I’m here to tell you it is very difficult to qualify for the ballot. The last thing we need is Ross Miller making it even more difficult for YOU to have YOUR VOICE heard in Nevada politics.

Here’s the note I sent to the SOS-NV comment line; you might consider doing the same.

“Mr. Miller should not be involving himself with changing the political aspects of the ballot petition process. He can weigh in on small technicalities, but to get behind legislation that would INCREASE HIS POWER in deciding what is and isn’t “free speech” is unconscionable and a clear conflict of interest.”

“Miller should recuse himself and his staff from any testimony on AB604 and AB606 in regards to who can gather signatures and what they can be paid, and determining what people “think they heard” about petition language before signing. Any such regulation is hostile to free speech and to the people’s right to participate in the legislative process.”

The biggest joke of all in this legislation (AB606) is a new section that a person collecting signatures “shall not intentionally misrepresent the contents of a petition or the effect that such a petition would have if enacted into law.” (Emphasis added by me)

Do you see the sick irony and hypocrisy? Politicians and elected officials are CONSTANTLY misrepresenting the effect that their legislation will have on the populace. That’s what they do. They obfuscate, misrepresent, twist, and spin the facts into feel-good sound bites. But if YOU DO IT, there is hell to pay.

What does charity mean to you? To most people, it means giving money or time VOLUNTARILY to a cause you believe in strongly. To legislators, charity means FORCING you and me to pay higher taxes to give money to the bureaucrats in programs and agencies that THEY believe in strongly.

See the difference? One is accomplished through love and true generosity; one is done through special-interest nepotism and coercion.

We at Budget Watch Nevada are a philanthropy-loving, non-coercive group. We like to highlight examples of private sector, private citizen solutions to perceived public problems or issues. Take books for children, for example.

While some legislators are trying to fleece the taxpayers by allowing school districts to spend unused/unneeded DSA dollars on new library books outside of the normal library books budget (thus spending up to the maximum possible even when districts don’t need it for textbooks) local student groups and citizens are simply taking matters into their own hands when they see a need. As reported in the R-J, Las Vegas-area schools and students, along with individual and corporate sponsors, raised $30,000 and collected over 23,000 books to distribute to youngsters. A non-profit group called Spread the Word Nevada coordinated the activities.

Lesson to legislators: we don’t need you and your omnipotent government to do EVERYTHING for us. Sorry to disappoint you.

Mark Warden

Post Script: I dare say that most students would be better off reading some of the books in my library, with authors such as Ayn Rand, Robert Kiyosaki, John Ross, Andrew Carnegie, Adam Smith, Harry Browne, Henry Hazlitt, Stephen Covey, and Milton Friedman than much of the statist gobbledygook they currently get in classrooms. I’d be happy to donate them (again, voluntarily) to school libraries or summer programs for children and teenagers.

Recently in the R-J it was reported that Gibbons is asking the Legislature to cut spending by $118,000,000 in order to meet the REVISED revenues estimate by the Economic Forum, an appointed board that estimates state revenues. Although the estimate is a difficult academic exercise, they almost always overestimate revenues, giving the idiots in Carson City carte blanche to spend all the money that’s expected, whether it’s needed or not.

So when an estimate is actually revised downwards, everyone panics, especially the friends of government employee unions and teachers unions.

Of course nobody bothers to mention that overall spending is up 50% in the last 6 years, but they are only concerned about next year. There’s never any going back to more conservative spending; no, it’s all about the future and the newfangled programs they have in store for the masses.

Budget Watch Nevada has dared to shine a light on this misspending, to unveil the wizard behind the curtain. Go to www.budgetwatchnevada.com to see some easy, common-sense recommendations for cutting government largesse and finding normalcy in state spending of your tax dollars. With April 15 fresh in memory, we should all be hypersensitive to the government’s abuse of your pocketbook to satisfy its special-interest spending urges.

In a recent Assembly hearing, according to the R-J, Speaker Buckley said, “that she wanted to protect her typical constituent — an elderly woman who is 70, living on fixed income, doesn’t want a government subsidy for phone service, doesn’t have a cell phone or doesn’t use the Internet,” referring to a proposal by regulators to cap phone bill rates.

Of course, the leftist legislator has no qualms about increasing property taxes. The basic phone bill from Embarq is about $15 per month, or $180 per year. An average property tax bill on a home valued at $200,000 is around $1,800 per year. Where’s the outpouring of concern for her typical constituent on that? An elderly woman may use the phone every day, but she may only drive the local roads a few days a week, and chances are very high that she doesn’t have children in government K-12 schools, which are funded in part through property taxes.

Another burst of disingenuousness came from our state’s “consumer advocate.” Keep in mind that doesn’t mean taxpayer advocate. “I think rate caps are a good idea,” Eric Witkoski, chief of the attorney general’s Bureau of Consumer Protection and state consumer advocate, said during the first hearing on a bill that would eliminate price regulation of basic residential phone service.

The article continued: “Witkoski also suggested that the Public Utilities Commission be directed to monitor the land-line telephone industry each year and determine that local telephone markets remain competitive.” It seems to us at BudgetWatchNevada that the simple economics of deregulation as seen in lower prices in long distance phone service, air travel, etc. are lost on this taxpayer-supported bureaucrat. I wonder if he supports price caps on government-imposed taxes and fees.