Rural Nexus: Tribes, Counties, State, and Infrastructure (art. 16)
AB519 touched on the largest set of overlapping rural issues of any legislation in a long while. It is an odd look at where a whole range of policy fractures lie in Nevada.
On Tuesday, 13 June 2023, Gov. Joe Lombardo signed AB519 into law. The bill funded a new school for the Duck Valley Reservation in northern Elko County. The current school, built in the 1950s under federal auspices but transferred to the county in the early 1980s, has been deteriorating for years and has a severe hazardous waste issue in its water supply.
The first attempt to fund a new school in the 2023 Legislative Session was proposed by Assemblywoman Alexis Hansen (R-AD32) and Senator Ira Hansen (R-SD14), in whose new districts (after the 2020 Census redistricting) the Duck Valley Reservation was located. They proposed a direct state general fund allocation of $64.5 million for the school, with the tribe contributing a further $17 million in land and construction costs. This bill, AB273, was killed in committee when legislators from Las Vegas balked because they viewed it as a county school issue, not the state’s responsibility.
The bill reappeared as a Democrat-sponsored bill sponsored by Assembly Ways and Means Committee chairperson Daniele Monroe-Moreno (D-AD1, North Las Vegas) right at the end-of-May deadline. The new bill included the same funding of $64.5 million—but also included a requirement for Elko County to raise property tax rates for future school capital construction. It also established a state fund for rural school districts to draw on for capital construction—with about half set aside for schools on tribal lands. The final enrolled text of the bill can be read here.
Let me start by stating that a new school is needed, as I have argued in several different contexts. And the work that the Shoshone-Paiute Tribes of the Duck Valley Reservation have undertaken to fight for their children is impressive. In particular, the efforts of Tribal Chair Brian Mason and Owyhee Combined School Vice-Principal Lynn Manning-John deserve significant praise for their action and perseverance. And kudos to the Hansens as well for championing this project. While not the perfect bill, AB519 is a very good and much-needed one.
AB519 is a nexus of rural issues that need to be considered in policies going forward.
However, AB519 intrigues me because of the overlapping issues that combined to generate such heated debates over the measure. In many ways, the simple question of finding emergency funding for a single new school has illustrated the pernicious interaction of many of the myths about rural communities that we have already discussed. It also illustrates the continued history of indigenous communities getting caught in disputes between different non-native governmental entities that are fighting separate issues. In short, AB519 is a nexus for a range of rural issues that need to be considered more seriously in policies going forward.
One final note: this will be a bit different from my usual posts, more theoretical than data-driven. I may go back and cover these topics individually with more data in the future, but I am more interested in the broad parameters of this dispute than the quantitative minutiae.
Devolution of Tribal Obligations
Much of the initial controversy the funding a new school for the Duck Valley Reservation concerned who ultimately was responsible for the school: the federal government, the state of Nevada, or Elko County. Rightly or wrongly, many in Elko County feel that being held responsible for a failing school building that the federal government built and then contaminated and that state believes they are not paying enough in taxes for is grating, to say the least. But this debate reflects an important issue in the field of “Indian law,” which I can best describe as a devolution of tribal obligations to lower tiers of government—from the federal government to the states and, now, to counties.
I have mentioned Matthew L.M. Fletcher’s 2017 American Indian Law Review article previously in discussing some of the complexities of data for Native American communities. As a summary of the history in Fletcher’s argument, the U.S. government has been attempting to reduce its costs for treaty obligations since the late 19th century, starting with the allotment program up to the current efforts to incorporate tribal communities into existing federal service programs for housing and other services.
However, the strongest effort was during what is known as the Termination Period from the 1940s to the late 1960s, which resulted in policies such as Public Law 280 (P.L. 280) which transferred several law-enforcement tribal jurisdictions from the federal government to the states. Other similar transfers and re-arrangements followed. While subsequent lawsuits and memorandums of understanding have adjusted the original arrangements, the results have not been perfect and lay at the heart of a number of the policing and other disputes in Indian country today.
And the responsibilities did not stop at the state level, since many state functions are carried out at the county level—education being a prime example. This was likely the reason for transferring the Owyhee Combined School to the Elko County School District in the mid-1980s. The resultant confusion over which government was responsible for the school reflects Fletcher’s arguments.
The devolution of responsibility is creating a four-way fight between tribal, federal, state, and county governments which is going to take decades to untangle.
In my opinion, three fundamental issues with this shift have become apparent with AB519. First, there is the feeling that a special obligation has been forced on counties that benefit only a minority group—and one that is granted exemption from paying county taxes. One could argue—and many critics of Elko County have—that this reflects an underlying racism. I think that is a bit too simple. You have a community that has been debating school funding for years amid concerns over overcrowding—only to be told that their priority should be another part of the community which is admittedly suffering the same issues but has been disconnected from the funding debates. In other words, multiple issues are generating backlash.
The previous issue is magnified by the second fact that skills for dealing with the necessary government-to-government relationships are often missing at the county level. To go back to the funding issue, federal funding for Native American students through Title VI—which is intended to address the tax issue—requires extensive tracking of students as well as managing a separate set of federal funds (which are assigned on a basis as the Pupil-Centric Funding Plan discussed below, with all the same issues). Understanding this and other programs requires staff expertise that often is lacking in rural counties which face severe labor shortages for routine administration to begin with. Should counties be required to provide this new layer of expertise? Yes—but that means even more expenditures and problems beyond just building a school.
I will also note that it is not just county governments that are impacted. Tribal governments have spent decades developing staff knowledge of federal and state programs—an accomplishment given the even tighter labor pool on most reservations. But if services are going to devolve to counties, that requires another layer of expertise in tribal governments as well. They will have to play “catch up” with new responsibilities just as much as county governments.
This brings up the third—and in my mind the most important—of the problems with this devolution of responsibility. Unlike the federal government and states, counties are often heavily restricted in their ability to rapidly fund-raise and easily secure funds. In Nevada, the property tax cap and the need for tax policies to be approved by the state government create a limit to what counties can do with revenue. Federal and state mandates to assume what had formerly been their obligations run the risks of placing counties in untenable financial positions—creating problems both for tribes and rural populations generally.
In a sense, this devolution of responsibility is creating a four-way fight between tribal, federal, state, and county governments which is going to take decades to untangle. The likely result, unfortunately, is that tribal governments will continue to see increased failures to provide services. The situation unfolding puts tribal governments in between competing non-tribal powers. The difference is that rather than competing colonial powers as in most recent centuries, the conflict is between different levels of the American government.
Infrastructure and Capitalization Priorities
Setting funding priorities is the core battleground in any legislature—I would argue even more so than ideology. Education matters largely dominated the 2023 Nevada Legislative session. The final tally was a K-12 education budget of almost $12 billion, a $2.6 billion increase as this Nevada Department of Education press release details. Most of the increase went to salary and benefits, the most significant costs in any modern education system. And the increase was largely funded by the 25% increase in the Pupil-Centered Funding Plan.
Since 2021, the Pupil-Centered Funding Plan (PCFP) has been the way to allocate state education funding. The problem is this ties funding exclusively to the number of students, under the presumption that there is a more-or-less direct correlation between the number of students and the costs of a public school system. The problem with this is issues such as transportation (Elko County School District runs one of the largest school busing programs in the country because of distances) or, importantly, capital expenditures which are not fully reflected in merely the number of students.
The ongoing argument about the PCFP has been precisely to what extent this correlation is correct. Urban areas might have more students but also benefit from economies-of-scale on everything from transportation to hiring and benefits costs to capital construction. But if one accepts the “dying rurals” myth the problems are easy to ignore in the belief that the lack of children in the rurals will eventually result in lowered costs and the short-term disadvantages seem worth it.
This is exactly why the consistent enrollment in Elko County schools over the last decades is an important component of the story. There is not a reduction in the number of students attending Elko County schools. So the PCFP will (and is) resulting in decreased resources for the school district over time. One can debate the best way to spend those resources (see the next section below), but the PCFP is making providing a vital public service more difficult for this rural county.
But this debate must also include other public funding priorities since education is only one of the state’s responsibilities. In the 2023 Nevada Legislature, the majority—or at least the representatives of the majority—decided that one issue of public concern stood above all others in terms of funding. Of such centrality to the res publica that a special session of the Legislature had to be called That public issue was guaranteeing future revenues for the miserly owner of a third-tier major league baseball team (the A’s) by publicly footing part of the bill for a new stadium. Per hoc circo panem populus dabitur. Or something like that.
The 2023 Legislative Session ended with about $380 million in public funding being designated for the proposed A’s stadium. The decision was heralded in part as an example of government restraint, representing only about 25% of the proposed stadium cost; the team is supposed to foot the rest (whether that happens is up in the air at the moment). Of course, the baseball stadium was not the first stadium supported by the state. By 2020, the state of Nevada had given close to $750 million towards the Allegiant Stadium project for the Las Vegas Raiders.
Taken together, the $1.13 billion spent to support two sports enterprises in Las Vegas would pay for 17 Owyhee combined schools. Even the amount dedicated to the A’s Stadium alone would go a long way to solving many of the most pressing issues with rural Nevada schools. Based on the consultant report done in 2022, the Elko County School District would require roughly $135 million to bring schools other than Owyhee to excellent status. White Pine County needs about $62 million to replace two century-old schools with a single, modern K-8 school. Their bill for state funding died in the Legislature last year. Tonopah in central Nye County, on the cusp of a mining boom, received $15.2 million for Nye County for a new elementary school in 2022—and by early 2023 when the Nevada State Legislature met costs had already grown to $21.5 million, a 41% increase in a year.
Let’s create a standard measurement unit for this discussion. For $380 million, Nevada gets 1 A’s Stadium, so $380 million = 1 asu (A’s Stadium Unit).
I am going to break my promise because these numbers need to be put in perspective. Let’s create a standard measurement unit for this discussion. For $380 million of state funding, Nevada gets 1 A’s Stadium, so $380 million = 1 asu (A’s Stadium Unit). So White Pine County needs 0.16 asu in K-8 school construction. The new Owyhee Combined School is more expensive at 0.17 asu. Even at the inflated price of $21.5 million, Tonopah’s new elementary school is a relative bargain at 0.06 asu. Together, these three current major rural school projects come in at a whopping state expenditure of 0.39 asu. Elko County would need an additional 0.35 asu for the rest of its schools alone. The remaining 0.36 asu spent on the stadium could have helped other rural school districts as well.
My point here is Nevada clearly has the money to assist rural county schools (and other rural infrastructure). The issue is setting priorities. Right now, a Las Vegas-dominated Legislature is convinced that sports stadiums are a more vital public interest than rural education. And Las Vegas still has to acquire a professional basketball team, which undoubtedly will require yet another stadium.
Taxes and Representation
This question of priorities brings us to the issue at the heart of provisions in AB519: who decides county taxes? Part of the “discontent” over the request for state funding is the failure of Elko County citizens to vote to continue a 75-cent Pay-As-You-Go capital projects fund in 2020 or for a $150 million school construction bond issue in 2021. The failure of both projects was a combination of disputes over school board policies during COVID and the perception of unneeded projects, such as the $19 million performing arts center for Elko High School.
For the record, I voted in favor of both plans; the fact that the average age of an Elko County school is over 45 years old was (and is) an indication to me that something needs to be done. But I understand the frustration of voters who voted against it. The Pay-As-You-Go fund was raising about $15 million a year for decades. For Elko County Schools infrastructure to have fallen into such disarray given this funding stream does raise legitimate questions. Furthermore, it should be noted that the $150 million bond issue vote in 2021 included a new elementary school, with only repairs planned for the Owyhee Combined School. But the failure of both these sources of revenue at the exact moment the state was pushing through the Pupil-Centric Funding Plan which reduced regular funding was a disaster.
However, once these tax proposals failed, Elko County did not reduce tax rates. Driven partially by state-level mandates that make it more difficult for counties to raise taxes once repealed, the county, municipalities, and the TV District moved to “capture” the tax by reserving it for other projects (50 cents for the county, 20 cents for each municipality, and 5 cents for the TV District). The idea was that these funds would be available to cover new projects that local governments needed—including some school repairs on a case-by-case basis (this recent opinion piece by Elko County Commissioner Rex Steninger covers the basics fairly well).
These tax debates led to the most grating issue for many with AB519: the rather pointed “calling out” of Elko County. Seriously, the text reads like one of Boss Hogg’s weekly schemes to trap the Dukes of Hazzard: “a county whose population is 52,500 or more and less than 57,500.” This was followed by a parenthetical comment “currently Elko County.” Leaving aside the ridiculous presumption that population alone somehow defines an area (a theme of this series, if readers have not noticed), the text presented the bill almost as the State of Nevada v. Elko County—hardly a step towards working together to solve a problem of funding rural infrastructure.
Ironically, many criticisms against Elko County were similar to what voters expressed—that the school district was spending money on vanity projects instead of basic maintenance. These critics also pointed out that the school in Owyhee should have had priority, even as other parts of Elko County such as Spring Creek were seeing accelerated growth. Finally, items such as a new recreation center, a sheriff’s office, a jail, and a new justice center were all seen by outside observers as being prioritized over schools. From the perspective of those outside Elko County, it appeared that a tribal school was being ignored for vanity projects.
This discontent is the origin of the provisions in AB519 that require Elko County to raise property taxes to receive state funding for the construction of the school in Owyhee—or the state would automatically raise the tax rate for the county. The extent to which this threat is legal is debatable and the county is currently suing the state over this provision. On setting the tax rate, the proposal is to use part of the taxes “captured” earlier and re-dedicate them to schools. Although generating significant local controversy, the impact on Elko County taxes for this is minimal since the reason for retaining the tax in the first place was such an eventuality.
But all this debate over whether Elko County should have imposed the tax or not hides a much deeper problem: county tax rates are no longer able to keep up with the infrastructure needs. The maximum rate authorized by AB519, 25 cents, would raise about $5 million a year (0.01 asu). At this rate, paying the roughly $65 million for the new Owyhee Combined School would require 13 years of revenue—and that is if no other projects for the approximately 9,600 students in Elko County schools outside Owyhee were pursued. Even if the $15 million from the continuation of Pay-As-You-Go was passed in 2020, the Owyhee Combined School would require 5 years of revenue—again, assuming no other school capital projects were attempted.
The problem is less parsimonious tax rates than the massively escalating costs for rural infrastructure. Even the 2021 $150 million bond issuance would have barely covered all the needs of Elko County schools. Nor did it envision the need to build a new Owyhee Combined School from scratch, the cost of which would have absorbed over a third of the bond alone. Moreover, according to the Nevada 2023-2024 Local Government Finance Redbook, Clark County only has a slightly higher tax rate (3.1323) than Elko County (3.0600)—just over 7 cents. However, the Clark County tax rate decreased over the previous year, while Elko’s increased.
I am not sure Elko County voters are wrong in asking why the state did not tell Clark County to raise its tax rate for the A’s Stadium when it was asked to raise its rate for schools.
The problem for rural schools is less parsimonious tax rates than the escalating cost of rural infrastructure. I am not sure Elko voters are wrong in asking why the state did not tell Clark County to raise its tax rate for the A’s Stadium when it was asked to raise its rate for schools.
Partially recognizing this fact but also to avoid the charge that Elko County alone was being targeted, AB519 authorizes other rural counties to establish similar capital tax funds. Moreover, it creates a special fund of $50 million—with half reserved for schools on tribal land—for rural counties to draw on for projects and matching grants for other funding. For the record, this $50 million would be 0.13 asu using the A’s Stadium Unit measure above. This fund was heralded as a piece of state generosity in the Las Vegas media.
The results are likely to be more mixed, however. First, the half reserved for schools on tribal land or under tribal administration—$25 million—would be split currently between 4 schools. Here, it might be useful. The remaining $25 million (0.07 asu) would be split between all the other schools in the 15 rural counties (remember, the state considers Carson City to be rural). If the fund was drawn on equally, each county would receive $1.7 million (0.004 asu). That is for all schools together in a county.
Even if drawn for matching grants, the fund is not useful. Most matching grants are 1-to-1 or higher, so for each $1 million drawn by a county from the fund, a grantor would only give $1 million. To put this in perspective, if White Pine County alone drew on the entire $25 million for matching, it would still be short the entire cost of the proposed new K-8 school.
The Legislature promised that the 50 million dollar commitment was to establish the fund and that future legislatures could add to it. Anything is possible—but rural counties are correct to be suspicious that this will be an unfulfilled promise. Does anyone recall the Aviation Trust Fund (or Fund for Aviation) promise from 2002, where a similar fund was set up to help the development of 18 rural airports? Since that time, the Nevada legislature has contributed roughly 19 million dollars (0.05 asu)—less than $1 million a year. In the 2023 Legislature, AB58 (co-sponsored by my assemblyperson Bert Gurr, AD-33) ups this commitment to a flat $1 million a year for two years.
I fear that a massive misunderstanding is emerging that is going to create tensions and bedevil rural schools and other rural infrastructure projects for years. The truth is that Nevada’s rurals have older decaying infrastructures. Replacing this infrastructure is becoming increasingly expensive and the rurals are not able to benefit from the economies of scale found in urban areas. Moreover, the expenses have grown to a point where even growing counties like Elko will struggle to fund them drawing on internal tax sources alone. The State Legislature will need to play a bigger role going forward.
Conclusion
I stated at the beginning of the article that the concept of a “nexus.” My point is that the debates surrounding AB519 are not easily reduceable to single causes. It is not just a historical ignorance of tribal needs, parsimonious rural tax rates, cheap state legislatures, or debates over bread and circuses. It is a combination that taken together actually points to a more profound problem for the Rurals of Nevada.
The emerging reality of the 21st century is that rural infrastructure has grown so expensive that it is no longer able to be borne by rural counties alone—especially when urban areas demand more of the tax revenue for projects that benefit them but have a dubious value for the rest of the state. There needs to be a new understanding of the division of state resources, perhaps even a baseline of what the state is ultimately responsible for contributing towards.
What cannot be tolerated is what seems to be the emerging rule of thumb in the Nevada State Legislature: stantes ante aerario rustici taceant—”when standing before the Treasury, the rurals should remain silent.”