Tightening the belt

The cooling housing market has left the taxman cooling his heels as taxable sales dip and even dive in categories that include everything from home furnishings to auto sales.

Belt-tightening has become the fashion as counties cope with the tax shortfall through hiring cutbacks and elimination of non-essential services.

Washoe County projects a $12 million revenue shortfall in its budget, due in part to sales taxes that came in at 9.1 percent below budget, says Washoe County Director of Finance John Sherman.

Adding to the county's woes is a recent Nevada Supreme Court decision on Incline Village property taxes that could reduce revenues by $4.6 million.

From July to December, says Sherman, the tax take from construction dropped 10 percent. A broad category, it includes building materials and durable goods such as furniture and appliances. Meanwhile, the take from auto sales was down 6 percent.

In the face of a stalled home buying market, the reliable summer tsumani of new home decorating was a bust. Furniture and home furnishings took a hit in June, say figures posted by the state department of taxation. The result? A tax take of $18 million compared to over $42 million that same month a year before.

Meanwhile, Lyon County reports an 8 percent dip $2 million below its projected income, says Comptroller Josh Foli. He attributes the shortfall to a slowdown in housing and other taxes.

In fast-growing Lyon County, the tax take from building permits took a high dive: 50 percent lower than the same period a year earlier, says Foli.

Carson City Manager Linda Ritter says the city needs to cut $3 million in operating expenses. The culprits? Soft auto sales, along with building materials and supplies.

"The slump was seen since the start of this fiscal year," says Ritter.

Auto sales in the year ended June 2005 sent $322 million to city coffers but the year ended in June 2006 delivered only $306 million.

Carson City's budget runs on hot wheels: in 2005, auto sales tax supported 33 percent of the city's budget, says RItter. That's fallen to 30 percent and she expects the downhill run to continue, at least this year.

The 25 percent sales drop last year follows the joy ride car dealers enjoyed the year before, when major auto manufacturers offered employee-pricing discounts, triggering a land rush in vehicle sales.

"We watch the national auto news," says Ritter. "In another year you'll see things turning around."

But for now, Carson City is on a diet. From July to October auto sales tax revenues were down 7 percent while building-related taxes dropped 11 percent, says Ritter.

However, food and drink tax was up a healthy 7 percent, she adds, while the general merchandise tax was boosted 16 percent by the arrival of Wal-Mart.

Douglas County is just putting its budget together, says assistant county manager Michael Brown.

"We anticipate a shortfall, but don't have a handle on it yet."