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Washoe County, school district at odds over Tahoe tax deal

December 21, 2020 GMT

RENO, Nev. (AP) — Washoe County school district officials are fighting an effort by the county commission to force them to foot part of the bill for a $56 million settlement with Lake Tahoe property owners in a 17-year legal battle over property tax assessments.

Courts have ruled that the county wrongly overtaxed and collected millions of dollars in property taxes in Incline Village and Crystal Bay from 2003-06.

The county earlier appealed rulings that have been to the Nevada Supreme Court five times.

A judge most recently ruled last year that the valuations violated the state constitution because some residents received vastly different assessments and taxes than next-door neighbors with essentially the same residential lots.

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The county commission agreed to the settlement in August that divides the costs between the county, the school district, the state of Nevada, Incline Village General Improvement District and North Lake Tahoe Fire Protection District.

School administrators told the Reno Gazette Journal they never had a say about the deal and that the district shouldn’t be held responsible for an error by a county official.

“This stems from an error by the county assessor who either used a flawed or illegal appraisal system,” said Washoe County School District Chief Financial Officer Mark Mathers.

“We are not disputing that those residents are owed that money, but this was a mistake (the county assessor) made,” he said. “It was the county’s decision to appeal this.”

County commissioners are recommending withholding funds from the school district beginning in July to cover $10 million for reimbursement to taxpayers and nearly $10 million in penalties.

It comes as the school district is facing a budget crisis from lower enrollment, state cuts and pandemic costs.

The commission scheduled a vote on the matter last Wednesday, but pulled it from the agenda and is expected to take it up again at a future meeting.

Commissioner Chair Bob Lucey said the agenda items were pulled because the county has agreed to have conversations about the settlement with the school district.

The district said in a statement to the Gazette Journal that it appreciated the opportunity to discuss a decision that will affect students and employees.

“This is an issue of critical importance to our 62,000 students, their families, and our staff members, and could potentially have an extremely detrimental effect on our educational mission,” the statement said.

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According to a Washoe County staff report, if the board decides not to withhold any future tax distributions from other entities, including the school district, the county would be responsible for the entire $56 million, which could mean layoffs for as many as 500 county positions. The commissioners could also vote to hold the other entities responsible for the original amount and not the penalties and interest.

The district is already facing a massive budget crisis. It anticipates losing more than $12 million in revenue from lower enrollment this school year. State lawmakers cut $16 million from the district in July, and the district could face more than $50 million in cuts when the 2021 Legislature faces a financial crisis amid COVID-19.

“When you add this to all of the other cuts, there is no way this wouldn’t have an impact on salaries and benefits,” Mathers said.