Nevada governor getting heat for tax break

LAS VEGAS -- Nevada Gov. Jim Gibbons had hoped for a fresh start. After an inglorious 18 months in which his public approval sank below President Bush's, Gibbons shook up his senior staff and successfuly prodded state legislators to make painful budget cuts instead of raising taxes. The governor seemed poised for a do-over.

But another damaging story has emerged, this one about a questionable tax break the governor received after putting pressure on a county tax assessor.

Now an ally of the governor's fears the story originated with first lady Dawn Gibbons, from whom the governor filed for divorce in May.

If true, this development would be a setback, politically and personally, as the Gibbonses had recently declared a truce in part to stanch the bad publicity.

First, the story: In 2007, Gibbons bought 40 acres of land for $575,000 in Elko County with plans to build a retirement home. As the Associated Press reported last week, the elected Elko County assessor, Joe Aguirre, said Gibbons had placed him in an "awkward" and "uncomfortable position" when he asked him to characterize the land as agricultural rather than residential.

Doing so would reduce Gibbons' tax liability on the land from about $5,000 to virtually nothing. If Gibbons used his position as governor for personal financial gain beyond his salary, he could be subject to an ethics complaint.

The tax break was created to help struggling ranchers and farmers.

Although Gibbons isn't using the land for agriculture himself, he leased the land back to the original owner, former District Judge Jerry Carr Whitehead, who reportedly left the bench while under federal investigation in 1996.

Whitehead uses the land for grazing. By law, the land must yield at least $5,000 in revenue to be classified agricultural. Whitehead wrote checks totaling about $5,700 to Gibbons in exchange for the land.

But Aguirre doubted the 40 acres was really worth what Whitehead was paying. In essence, he said, the land isn't truly producing $5,000 in agricultural revenue, and the Whitehead payment was inflated so that it crossed the threshold for the tax exemption.

On Tuesday, Aguirre, a Republican, fleshed out some details during a TV interview. He said the governor visited him at his office in September and asked for the agriculture designation.

Aguirre said he refused, but then Gibbons hired John Marvel, a member of the state tax commission, to be his attorney in the matter.

"I felt like they backed me into a corner," Aguirre told Ralston. If Gibbons wanted to appeal Aguirre's decision, he wouldn't do so at the state tax commission. He would go to the county and then to the state Board of Equalization.

Still, the tax commission sets tax policy and rules on exemptions, and as such, has tremendous power over county assessors such as Aguirre.

Gibbons spokesman Ben Kieckhefer said, "The governor dropped into the assessor's office about maintaining the agricultural deferral. As a property owner and taxpayer it seems appropriate. I think it's reasonable that anyone would do the same."

Of possible greater concern to Gibbons: One of his allies, who declined to be named discussing the governor's divorce, said the tax break story likely originated with a leak from Dawn Gibbons or her divorce attorney, who would have access to the financial records -- including the money from Whitehead.

The recent public truce between the Gibbonses hadn't ended the sensational stories about Gibbons' personal life, but the detente did seem to eliminate significant obstacles -- accusations and recriminations -- to finishing the divorce.

Now, though, "the truce is over," the source said.

Dawn Gibbons' attorney, Cal Dunlap, did not return a phone call from the Sun.

E-mail J. Patrick Coolican at patrick.coolican(at)lasvegassun.com

(Distributed by Scripps Howard News Service, www.scrippsnews.com.)