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Sisolak weighs lifting property tax caps, cutting sales tax rate, broadening base 

By ThisIsReno
Published: Last Updated on

by Dana Gentry, Nevada Current

Gov. Steve Sisolak, a Democrat seeking reelection, says he won’t raise taxes.

But would removing the caps lawmakers imposed in 2005 on property tax amount to an increase? 

The question drew a chuckle and a lengthy pause from the governor during a phone interview Thursday, a week and a half before voters decide whether he’ll serve a second term. 

“That’s a tough question you’re asking. Believe me, I’ve thought about it,” he said. “Whether you’re removing the caps, or whether you’ve got a proposition similar to California — I don’t know if we’re going to have to do that.” 

In California, property tax is reassessed upon sale, with inherited properties largely exempted. Seniors are also permitted to transfer their existing lower rates to new properties if they move.

Doing the math

The Nevada Commission on School Funding is about to make public its recommendations for augmenting per pupil spending by thousands of dollars a year. Sisolak says he doesn’t yet know the price tag, 

A preliminary report from the commission issued earlier this year suggests possible funding mechanisms including removing property tax abatements, changing the way the tax is calculated, and taxing discretionary services such as cosmetic procedures while cutting the sales tax rate.

Sisolak has long blamed property tax caps for depleting local government coffers, requiring the Clark County Commission in 2015 to turn to a regressive sales tax increase to fund the More Cops initiative at the behest of Sheriff Joe Lombardo, a Republican who is now challenging Sisolak for the state’s top spot.  

“We’re taxing necessities, and not taxing luxuries” Sisolak complained at the time, after lawmakers rejected a proposal to tax services. 

Right now the state is flush – and then some. The Economic Forum says revenue exceeds projections by $1 billion.

“I don’t know if we’re going to have to increase more revenue another way, but I think there can be some creative ways,” Sisolak said. “If you talk about putting a sales tax on services and reducing the overall rate, I don’t know if that’s an increase.”  

Services comprise two-thirds of the economy, according to experts. Sisolak says a “frank discussion” is in order to determine whether it’s fair to tax “a new pair of shoes for your kids” but not expensive cosmetic procedures and other discretionary services.  

Sisolak says the biggest surprise of his first term, the COVID-19 pandemic, and subsequently the economic disparity it laid bare, changed his view of governing.

In 2019, the newly-minted governor said he had no interest in creating minimum-wage jobs and was laser-focused on higher salaries. 

“Whatever the minimum wage is, it’s not going to provide enough money — if it’s $10, $12, $15, whatever it is, it’s not going to provide enough money for individuals to support themselves and their families,” he said at the time.

Today, confronted by the reality of the economy he governs rather than the one he aspires to oversee, he’s recommending  an increase in Medicaid reimbursements for home care workers, who perform back-breaking tasks helping the disabled and elderly.

“They weren’t making enough money to fill their gas tank, so I’m glad we’re able to move them to at least $15 an hour,” he said. 

The governor says the minimum wage problem “has kind of fixed itself with the shortage of employees right now. But there’s an awful lot of skilled jobs that are available that pay a lot more money that we need to get people into.” 

Toward that end, he’s shaking up the way the Governor’s Office of Economic Development does business. GOED, which offers tax incentives to companies in exchange for providing jobs, was born during the tenure of former Republican Gov. Brian Sandoval.    

“Every governor comes in and says I want to improve the economy and that’s what GOED was,” Sisolak says. “It started as a good idea, I’ll give you that. But a lot more needs to be done and I don’t think you can hit a home run with these big companies like Tesla and Panasonic.” 

Sisolak says GOED previously calculated “annual salary amortized over the entire population of the company. I want to see the average wage, the mean and the mode, because if you’ve got one person making $300 an hour and 50 people making $8 an hour, those aren’t the kinds of jobs I want.”  

The governor says he toured a pretzel factory in Northern Nevada that created several hundred jobs paying $20 to $25 an hour. “At least at $25 an hour you’re making $50,000 a year. Those are great jobs. That’s what I’m looking for.”   

Last week, state agencies made their budget requests for the next biennium. The Department of Health and Human Services alone is asking for 500 positions.  

Sisolak says the state needs to focus on getting “more students in the pipeline for all these mental health jobs.” He opposes a salary cap that tethers some employees’ pay to the governor’s salary.   

Failures and shortcomings

Earlier this month, the Department of Justice determined Nevada is needlessly institutionalizing children with behavioral health needs.  

“This is one of those things that frankly, people don’t like to talk about – our biggest failures and our biggest shortcomings. I think those are the things we need to talk about most. And there’s clearly been a breakdown, not just in my administration. This goes way way back,” he says of the state’s failure to fund mental health services. The state is cooperating with the DOJ by allocating millions from the American Rescue Plan pandemic relief money to community-based organizations, many of them nonprofits. 

The infusion of one-shot money is not a long-term fix. 

“We’re going to have to be very diligent in terms of analyzing them individually, and which ones we can keep on and moving forward,” he said of the recipients. “The Legislature is going to have to make some tough calls prioritizing services, and there’s an awful lot of need out there.”

An unexpected occurrence

The last thing Sisolak anticipated when he took office was shutting down the Las Vegas Strip, the lifeblood of the state’s economy. 

The governor says he first heard of COVID while attending the National Governors Conference in Washington, D.C. in January 2020. 

“I remember President Trump said ‘We’re going to have a presentation,’ and he brought in Dr. (Robert) Redfield and Dr. (Anthony) Fauci, and I had never heard of either one of these men at the time,” Sisolak recalls. “And they said, ‘Look, we’ve got this virus in the East. It’s COVID-19. We don’t think it’s a problem. It’s not been discovered here in the United States. We just want you to be aware of it. We think it’s under control, but it’s not a major concern right now. Just keep your eyes open.’ And then two months later, you know what happened next.” 

What happened next was an unprecedented closure that turned the Entertainment Capital of the World into a ghost town.  

“The resort folks were pushing me to close it down,” Sisolak says. “They made it through the recession. They made it through One October. They knew if this got as bad as people were saying it was going to get and we’re having dozens of people dying in properties, they didn’t think they’d ever come back from that, in terms of being a tourist capital.” 

The decision to essentially close schools and much of the economy for what amounted to an extended period, remains one of the most frequent criticisms Sisolak’s detractors cite today. 

“At the time, honestly, we were looking at, you know, 30 to 60 days, something like that,” he says. “I never thought that it could last like it has. Never in my wildest imagination.” 

Nevada Current is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Nevada Current maintains editorial independence. Contact Editor Hugh Jackson for questions: [email protected]. Follow Nevada Current on Facebook and Twitter.

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