Due to a miscalculation of a complicated gaming tax formula that was recently discovered, since 2009 local casinos have been under-billed by Washoe County; totaling nearly $5 million in shortages to local government coffers.
Last month an independent auditor confirmed the discovery by the Nevada county’s new budget manager, Mark Mathers. What the auditor found was that an average of $400,000 a year was being shorted to county government by Washoe County; the city of Reno an average of $100,000, and the city of Sparks, an average of $50,000 annually in gaming tax revenue was being shorted. Also on the losing end were general improvement districts and local fire districts, which also rely on the tax, according to the Reno Gazette-Journal.
Remedying the mistake means a 30-fold increase in gaming tax bills for local casinos and other gaming establishments, which will begin on July 1. That’s when the county will start billing the legally required amount. The mistake applies to what the county refers to as the “Chapter 491” tax, which accounts for a small portion of the overall gaming license fee of a gaming property. County Manager John Slaughter said, whether or not the entire $4.8 million in lost revenue will be billed to the casinos will be decided by the Washoe County Commission at a future meeting. So far, local governments and casinos are waiting to see what decision the commission makes.
Reno City Manager Andrew Clinger said efforts by the county to fix the problem are supported by the city. Reno is owed $743,265 in back taxes, according to the audit. The city of Sparks is owed $367,425 in back taxes, and it also appreciates that the county found the mistake. The audit shows back taxes in the amount of $3.2 million would be owed to Washoe County.
Mather began reviewing all of the department’s policies and procedures when he took the budget manager position with Washoe County. Slaughter said, during the review, a precipitous decline in collections of the gaming tax revenue was noticed that couldn’t be explained by the recession. The issues revolved around a complicated formula designed in 1991 by the state legislature called “The Fair Share” bill, which was designed to more adequately distribute tax revenue to northern and southern Nevada local governments.
Slaughter said, the incorrect amounts began in 2009 and they progressed. He also said he’s not certain what the county’s legal authority is for collection of the back taxes owed resulting from the miscalculation. Among the properties affected would be the Carano family’s three casinos in downtown Reno, including the Silver Legacy, Circus Circus Reno and the Eldorado.