While Reno councilman Devon Reese has made repeated social media posts about the city of Reno’s budget deficit, blaming slowing revenues and rising costs, adding “C-Tax, our largest revenue source, just isn’t keeping up,” a detailed, public presentation was made about this important C-Tax before Council on Wednesday.
Reese likes to add hashtags to his posts such as #factsmatter insinuating others weighing in or reporting on this Reno budgeting problem aren’t being factual.
In this light, some clarity was brought to the city’s table yesterday for all to listen to, along with promises to take shortfalls seriously.
The initial projected deficit for the City of Reno for the current fiscal year was announced at $24 million before being adjusted to $25.6 million due to lower than expected property tax revenues.
Financial analyst Jeremy Aguero came from Las Vegas Wednesday to make an enthusiastic and drawn out slide filled presentation about the crucial C-Tax in its present state.
In its emailed highlights, the City of Reno indicated “Council heard a presentation on consolidated tax (C-Tax), which is a significant local government revenue source and the largest contributor to the City’s General Fund. The General Fund helps pay for public services like police, fire, and parks. The presentation gave an overview of the tax structure and how the funds are distributed, with details on the City’s share. Since its inception in 1997, the C-Tax structure has remained largely intact, with only minor changes aimed at improving its distribution formula to local entities. At this time, the City receives about $0.69 in C-Tax revenue for every $100 spent on goods subject to sales tax. In addition, the City launched a C-Tax dashboard that can be viewed at reno.gov/ctax.”
That website indicates “Consolidated Tax, or C-Tax for short, consolidates six distinct taxes into a single revenue pool. These funds are then distributed monthly to local governments and districts using a two-step allocation formula.”
The six taxes are Supplemental City-County Relief Tax (SCCRT) (Part of the total sales tax that is paid when purchasing a good. SCCRT is the largest component of C-Tax), Basic City-County Relief Tax (BCCRT) (also part of the total sales tax that is paid when purchasing a good. BCCRT is the second-largest component of C-Tax), Governmental Services Tax (GST) (Tax paid annually when registering a vehicle), Real Property Transfer Tax (RPTT) (Tax paid during real estate transactions, by the buyer or seller), Cigarette Tax (Tax on each pack of cigarettes, paid by wholesalers. (Excludes e-cigarettes, cigars, chewing tobacco, etc.) and Liquor Tax (Tax on spirits over 22% alcohol content, paid by wholesalers.)
It gives examples of buying a $100 lawnmower in a hardware store in Washoe County which results in 69 cents for the City of Reno, a $30,000 car registration results in $63, while buying or selling a $500,000 home in Washoe County results in $169.
City Manager Jackie Bryant says there are important budgeting and transparency efforts underway, with a better job needed to identify where money is coming from and how it is being spent.
Aguero said that in fiscal year 2024 the city received over $96 million in C-Tax distributions, accounting for 33% of total general fund revenue. For this fiscal year, the adopted budget estimates the city to receive over $100 million in C-Tax revenue.
Next month, city council will have Aguero back for another discussion and presentation on property and fuel taxes, and how much revenue the city gets from those.
The way the system works in terms of the C-Tax is that money is collected by the state and then redistributed to local governments, but there are questions on whether Reno is getting a fair amount back into its coffers.
Councilman Reese expressed concerns of a “current formula which was written decades ago” and which does not reflect current population growths and service demands. “Our share of the C-Tax has not kept pace,” he said. Aguero said that was “100% correct,” addressing an “eroding” sales tax.
“It’s about modernizing an outdated formula,” Reese responded.
“We’re really just beginning to collect the facts,” Bryant said at the end of the discussion. This included possible duplicate payments to the county, setting up some interesting regional debates up ahead.