The Southern Nevada Water Authority Board of Directors voted unanimously Thursday to ask the Clark County Commission to make permanent a quarter-cent sales tax that has collected $1.5 billion dollars since 1999.
A letter of approval will be drafted and sent to the Clark County Commission with the caveat that none of the funds from the tax be used on the controversial SNWA proposed 300-mile pipeline that would send 58 billion gallons of water from Eastern Nevada to Las Vegas annually.
“This sales tax is critical not only for the water authority but for the water and wastewater system across Clark County,” said Southern Nevada Water Authority General Manager John Entsminger.
County commissioners have the authority to remove the Sunset Clause by a two-thirds vote of the commissioner’s thanks to a vote by the Nevada Legislature in 2011.
The vote comes after criticism that the tax was being used to “subsidize water rates for hotels” by County Commissioner Tick Segerblom, and concern that the tax revenue could be diverted toward the proposed pipeline project.
“There’s the question, well, why did the pipeline even come up in this discussion?” said Patrick Donnelly, the Nevada state director of the Center for Biological Diversity during the hearing. “I think that’s because there’s somewhat a lack of transparency about the pipeline.”
Marilyn Kirkpatrick, chair of the SNWA board as well as the county commission, attempted to quash the idea that the tax subsidizes hotel water rates.
“I don’t know how that works. I don’t think that is a thing,” Kirkpatrick said.
Segerblom has argued the SNWA portion of the sales tax, a regressive tax which is levied disproportionately on low-income households, lowers water bills on the Strip at the expense of residential customers. He maintains the tax could be offset by charging higher rates on the resort industry.
SNWA general manager Entsminger assured the board that the tax is largely used to help pay the debt service on the bonds that funded nearly 200 individual capital projects valued at almost $5 billion dollars.
The sales tax revenue paid for about 18 percent of debt service funding on critical water facilities, including structures and improvements, pumping stations and wells, water transmission, distribution and mains, equipment, and power plant improvements, according to the authority.
“Again it is extremely easy for me to guarantee you we are going to use 100 percent of the revenue for infrastructure projects,” Entsminger said. “By statute, this can only be used for capital water and wastewater projects.”
Las Vegas Metro Chamber of Commerce Vice President of Government Paul Moradkhan took issue with the idea that industry was being subsidized by the tax.
“Our members and their industries are paying more than their fair share,” said Moradkhan. “This community is not being subsidized by residential ratepayers.”
Continuation of the tax has broad support from labor, municipalities and are chambers of commerce — supporters ranged from the City of Henderson and the City of North Las Vegas Utility Department to Boulder City, the Asian Chamber of Commerce, and the Southern Nevada Operating Engineers local 12.
According to Entsminger rural areas like the Virgin Water Valley District, Moapa Valley Water District, and Searchlight would be most affected by the elimination of the tax due to their inability to replace that revenue stream if it went away.
The county-authorized quarter-cent sales tax has generated about $1.5 billion dollars for water and wastewater infrastructure projects in Southern Nevada. Expanding revenue for water and wastewater project in Southern Nevada via a sales tax was chosen in order to provide a single source for multiple needs and as a way to ensure that tourists paid “their fair share for infrastructure they require,” according to the authority.
Seventy- two percent of voters approved the tax in a 1998 ballot initiative after the Legislature gave taxing authority to the Clark County Commission, who then deferred to the voters.
Collection of the sales tax is set to expire June 30, 2025, or when $2.3 billion has been collected; whichever is earlier.
Currently, the law asks the commission to renew the tax every 10 years. The last time the commission renewed it was in Dec 2008. In 2011, the Nevada Legislature voted overwhelmingly to allow the Board of County Commissioners to remove the sunset clause by majority vote.
The funds from the tax have been distributed as follows:
- $489 million for wastewater infrastructure to the region’s wastewater agencies – the Clark County Water Reclamation District, City of Las Vegas, City of Henderson and City of North Las Vegas.
- $51 million to small water systems, including Blue Diamond, Boulder City, Kyle Canyon, Laughlin, Big Bend, Moapa Valley, Searchlight, Jean and Virgin Valley.
- $56 million for environmental improvements and infrastructure in the Las Vegas Wash.
- $899 million for SNWA water infrastructure projects in Southern Nevada.