A tale of two taxes

In December of 1998, a lame-duck Washoe County Commission passed two one-eighth cent sales taxes. “Lame-duck” means the vote came in the days after the 1998 election, when Commissioners Sue Camp and Mike Mouliot had already been voted out of office, but before newly elected commissioners—Ted Short and Pete Sferrazza—had officially taken their seats.

One tax provided some funding for Reno’s ReTRAC project and was controversial, generating lots of public commentary, angry letters to the editor, and sensational coverage in this newspaper (see “Sales Tax Shootout,” RN&R, Dec. 3, 1998) and other local media.

The other tax’s intended use, given the still-vivid memories of the flood of 1997, was for public safety and flood control and enjoyed some public support.

In the days leading up to and immediately following the New Year’s Eve Flood, the question as to what the county had actually spent the money on became a topic of interest in newsrooms and public houses.

On Jan. 4, the Reno News & Review asked county public information officer Mike Wolterbeek for an accounting of the revenue and the spending of the county-administered Infrastructure Fund. We asked that they be broken down on a quarterly basis. We wanted to know how much money was provided for the county’s spending on public safety and flood control and how it was spent.

The same request was made of the City of Reno regarding the ReTRAC money. That document was provided a few days later.

Without any real explanation, the county didn’t provide the results for nearly three weeks, and when it did, they were inaccurate. The delay was peculiar, since two sources—Duerr and County Finance Director John Sherman—said the report had been prepared earlier for Duerr’s use. The “inaccuracy” rests on a line item in two years,—"Transfer-Infrastructure,” totaling $6.5 million, which throws the accounting off in the rest of the document. Sherman blamed the error on the “analyst” who prepared the document.

Reno City Councilman David Aiazzi said he’d also asked how the tax had been spent, and the county had failed to provide the information.

“Whenever we’ve asked them, I’ve gotten accused of attacking them,” he said. “And all I want to do is just know where it is. They may have spent it legitimately, I just don’t know where.”

Aiazzi went on to say that the reason the ReTRAC money was easily produced was because of the controversy that surrounded its inception. Since the City Council knew the public was going to watch the money closely, a separate and transparent account was set up.

“Here’s where the money went, here’s how far the project is along, here’s how much we’ve spent on property—from what we projected and what it really is,” is how Aiazzi describes the city’s accounting of the trench fund.

The city’s accounting of the tax was much simpler than the county’s: All the city’s trench sales tax money went to either debt-service payments or the ReTRAC project.

On Feb. 10, Naomi Duerr presented new, apparently more accurate, numbers to the Flood Project Coordinating Committee. For purposes of this report, numbers are taken from the second document.

In short, from the sales tax, bond sales, interest earnings and other sources from 1998-2005, the infrastructure fund controlled $89.1 million. It spent $57 million, essentially on four things: 1) Debt payments and costs, $20.3 million; 2) Emergency Operations Center/Dispatch, $8.4 million; 3) Public Safety Training Center, $18.6 million; 4) the Truckee River Flood Project, $9.6 million (most of which, $6.2 million, was for the East Steele Ranch purchase). That left an ending fund balance of $32.2 million. A tax that was imposed partly under the guise of flood control has been barely used for that purpose.

The differences between the one-eighth cent tax that went to the city and the one-eighth cent that went to the county are peculiar but probably not of great significance. The bigger question is this: With $32 million in the bank, why did Washoe County spend so little money to prepare the Truckee Meadows for the next flood after the Flood of 1997 caused $600-$700 million worth of damage, destroyed many businesses and affected an incalculable number of lives?

The answer may surprise you. According to Paul Urban, it’s important for the community to put off making improvements to our flood mitigation efforts until the Army Corps of Engineers decides whether the Truckee Meadows are worth protecting.