1. For the purposes of NRS 354.59811, the allowed revenue from taxes ad valorem of any local government must be established by the Nevada Tax Commission for the first fiscal year it is in existence.

2. Except as otherwise provided in subsections 3 and 5, if the local government for which the allowed revenue from taxes ad valorem is to be established performs a function previously performed by another local government, the total revenue allowed to all local governments for performance of substantially the same function in substantially the same geographical area must not be increased. To achieve this result, the Nevada Tax Commission shall request the Committee on Local Government Finance to prepare a statement of the prior cost of performing the function for each predecessor local government. Within 60 days after receipt of such a request, the Committee on Local Government Finance shall prepare a statement pursuant to the request and transmit it to the Nevada Tax Commission. The Nevada Tax Commission may accept, reject or amend the statement of the Committee on Local Government Finance. The decision of the Nevada Tax Commission is final. Upon making a final determination of the prior cost of performing the function for each predecessor local government, the Nevada Tax Commission shall:

(a) Determine the percentage that the prior cost of performing the function for each predecessor local government is of the allowed revenue from taxes ad valorem of that local government; and

(b) Apply the percentage determined pursuant to paragraph (a) to the allowed revenue from taxes ad valorem and subtract that amount from the allowed revenue from taxes ad valorem of the predecessor local government.

The allowed revenue from taxes ad valorem attributable to the new local government for the cost of performing the function must equal the total of the amounts subtracted for the prior cost of performing the function from the allowed revenue from taxes ad valorem of all the predecessor local governments.

3. If the local government for which the allowed revenue from taxes ad valorem is to be established is an unincorporated town which provides a service not previously provided by another local government, and the board of county commissioners has included the unincorporated town in a resolution adopted pursuant to the provisions of NRS 269.5755, the Nevada Tax Commission shall, if the unincorporated town does not receive revenue from taxes ad valorem, establish the allowed revenue of the town from taxes ad valorem at an amount which is in the same ratio to the assessed valuation of the town as the combined allowed revenues from taxes ad valorem are to the combined assessed valuations of the other unincorporated towns included in the common levy.

4. Except as otherwise provided in subsection 5, the allowed revenue from taxes ad valorem of all local governments in the county, determined pursuant to NRS 354.59811, must not be increased, but the total allowed revenue from taxes ad valorem must be reallocated among the local governments consistent with subsection 2 to accommodate the amount established for the new local government pursuant to subsection 1.

5. In establishing the allowed revenue from taxes ad valorem of a county, city or town pursuant to this section, the Nevada Tax Commission shall allow a tax rate for operating expenses of at least 15 cents per $100 of assessed valuation in addition to the tax rate allowed for any identified and restricted purposes and for debt service.

6. As used in this section:

(a) “Predecessor local government” means a local government which previously performed all or part of a function to be performed by the local government for which the allowed revenue from taxes ad valorem is being established pursuant to subsection 1.

(b) “Prior cost of performing the function” means the amount expended by a local government to perform a function which is now to be performed by another local government. The amount must be determined on the basis of the most recent fiscal year for which reliable information is available.

(Added to NRS by 1981, 307; A 1983, 558, 1052; 1985, 1653; 1989, 1046, 1564, 2076, 2088; 1991, 1436; 1995, 143, 2179; 1997, 3295; 2001, 1803)