NAC354.650. Explanation by local government; reduction of debt rate.

     1. If the ending fund balance in the general fund of a local government has been budgeted for less than 4 percent of the actual expenditures from the general fund of the local government for the previous fiscal year, the local government shall provide a written explanation to the Department that includes the reason for the low ending fund balance and the manner in which the local government plans to increase the fund balance.

     2. If that portion of an ending fund balance in a debt service fund of a local government which is attributable to revenue from property taxes exceeds the principal and interest payable from that portion of the fund for the ensuing year, the local government shall provide a written explanation to the Department that includes the reason and any authority for the excess.

     3. Except as otherwise provided in subsections 5 and 6, if the Department finds that there is no authority for the excess, the Department shall require the local government to reduce the debt rate.

     4. A local government may propose to the Department a plan to reduce the debt rate over a period not to exceed 3 years. The Department may consider the plan and require the local government to reduce the debt rate in phases.

     5. The Department shall exempt a local government from the requirement to reduce the debt rate pursuant to subsection 3 if the local government demonstrates to the satisfaction of the Department that:

     (a) The debt rate is levied pursuant to subsection 4 of NRS 350.020; or

     (b) A reduction in the debt rate would decrease the balance in the debt service fund to an amount less than the amount required for the reserve account pursuant to subsection 5 of NRS 350.020 for any fiscal year during which a bond issued pursuant to subsection 4 of NRS 350.020 is outstanding and would reduce the debt rate below the rate approved for that bond.

     6. The Department may exempt for a period determined pursuant to subsection 7 a local government from the requirement to reduce the debt rate pursuant to subsection 3 if the local government demonstrates to the satisfaction of the Department:

     (a) That at least one of the following conditions exist:

          (1) The estimated annual revenues from property taxes are not sufficient to pay the scheduled principal and interest of current outstanding and proposed bonds;

          (2) Projects to be financed by bonds are delayed for a reasonable cause; or

          (3) A temporary increase in assessed values of taxable property within the boundaries of the local government caused an increase in revenues from property taxes; and

     (b) A need exists to issue bonds during the subsequent 3 years which:

          (1) Would be used to finance projects included in the 5-year capital improvement plan and debt management policy of the local government; and

          (2) Would result in that portion of the ending fund balance in a debt service fund that is attributable to revenues from property taxes being at a level that would not require the local government to provide a written explanation to the Department pursuant to subsection 2.

     7. The Department may exempt a local government pursuant to subsection 6:

     (a) Only for the period during which the local government has voter authorization for the debt; and

     (b) For a period specified by the Department which does not exceed 3 years.

     [Tax Comm’n, Local Gov’t Reg. part No. 13, eff. 1-11-73; A 2-29-80]—(NAC A 1-10-84; 8-2-90; A by Com. on Local Gov’t Finance by R201-01, 4-5-2002; R028-08, 9-18-2008)