How the Decisions Made During the 2009 Nevada Legislative Session May Affect Your Business

During the 2009 Nevada Legislative session, lawmakers were faced with several challenges – a looming budget deficit; a high unemployment rate amidst a national economic crisis; the highest foreclosure rate nationwide; residual concerns from the Hepatitis C exposure scandal in Las Vegas; and additional decreases in Medicaid reimbursement while health care costs remain on the rise. The budget, job creation, renewable energy, homeowner foreclosure relief and health care reform were key issues in the public policy spotlight for the 120-day session that adjourned on June 1, 2009.

So what do the new taxes that were passed by the Legislature mean for your business? Let’s review the new taxes that were passed in Senate Bill 429 and Assembly Bill 146:

- For all businesses that must have a license in the state of Nevada, license registration and renewal fees will increase by $100.
- The modified business tax (MBT), or payroll tax, was amended so if your business’s calendar quarterly payroll total $62,500 or less, your payroll tax has been decreased from 0.63 percent to 0.5 percent. If your calendar quarterly payroll is over $62,500, then the business pays $312.50 plus 1.17 percent of the amount by which the sum of those wages exceeds $62,500.
- The governmental services tax (GST), or auto registration tax, has been modified by extending the depreciation schedule on automobiles, and increasing the minimum tax to $16.
- The sales and use tax rate imposed by the Local School Support Tax Law has been increased by 0.35 percent.

All taxes captured by SB 429 and AB 146 begin July 1, 2009, with the exception of the GST tax, which begins September 1, 2009, and sunsets on June 30, 2011. Additionally, early in the session, Legislators passed a measure previously approved by Nevada voters in Clark and Washoe Counties to increase the hotel room tax by 3 percent.

Before the 2011 session begins, the Interim Finance Committee will have an opportunity to review the current revenue structure and with an appointed Vision Stakeholder Group comprised of community and state groups and industries, develop short- and long-term strategic plans for improving the state’s quality of life. We can expect to see legislative proposals for the 2011 session come from this group.

RENEWABLE ENERGY

In an effort to increase and attract new renewable energy businesses to Nevada, several laws were passed creating incentives. For example, the property and sales and use tax abatements for renewable energy projects, scheduled to sunset this year, were extended. Additionally, the program offering rebates for households and businesses that install solar panels on rooftops was expanded.

Senate Majority Leader Steven Horsford was successful in passing his Green Jobs Initiative legislation which, with the help of federal stimulus funds, establishes training and certification programs geared toward job training and creation in the renewable energy industry.

Additionally, a new change in the Renewable Portfolio Standard (RPS) requires that, of the total amount of electricity sold, 25 percent of it must be generated from renewable energy by 2025.

FORECLOSURE RELIEF

Homeowner assistance with foreclosed properties was on the forefront of several bills that affected financial institutions. Assembly Speaker Barbara Buckley’s AB 149 requires mortgage lenders to allow borrowers an opportunity to discuss possible loan modifications through mediation. The mediation process will be guided by rules established by the judiciary. In response to the rise in lack of tenant notification with respect to defaulted and foreclosed properties, a new law will require sufficient and direct notification to tenants, and not just property owners. Additional legislation was passed in response to the negative impact foreclosed and abandoned properties have on overall property and neighborhood values.

HEALTH CARE

Hospitals were successful in staving off an additional 5 percent cut in Medicaid reimbursement cut, which could have negatively impacted already rising health care costs. The trickle down effect was likely to have resulted in increased health insurance costs for employers. Other bills that passed require increased transparency and accountability among health care facilities; mandatory insurance coverage for autism screening, diagnosis and treatment; and the adoption of new regulations to recalculate the formula for the disproportionate share payments to hospitals throughout the state.

With several study committees, new commissions needing appointments, and ongoing regulatory work, the 2009-2010 interim session will perhaps be one of the busiest the state has ever seen in decades. Stay tuned to future newsletters from The Ferraro Group for updates.

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