One-third of Nevada lawmakers who report owning rental properties did not disclose receiving income from them — which could be a violation of campaign finance disclosure laws if they are making money from them.

But most of the lawmakers approached about the issue said the omission was an accident or a result of not taking income from the properties. A review of financial disclosure forms shows that Nevada’s stipulations for filing aren’t always clear-cut to lawmakers or detailed about how to report rental income, leaving room for errors.

Under Nevada law, almost all political candidates and public officials must disclose sources of income and any major real estate holdings other than their personal residence, though the amount of income they generate from any of the sources is not required.

But eight Nevada legislators across both the Democratic and Republican parties who own rental properties did not initially report receiving income from the properties on their most recent financial disclosure reports published in January, a Nevada Independent analysis found. A total of 24 legislators reported owning rental properties on their financial disclosure reports.

In conversations with The Nevada Independent, the majority of the eight lawmakers said the omissions were unintentional or occurred because dependents were living on the property or income wasn’t generated. Four of the five lawmakers who earned rental income said they would amend their reports — as of Friday, three of them had.

The secretary of state’s office said it asks officials to amend their reports if an error is discovered, and that it does not penalize them for having to amend their reports.

Gov. Joe Lombardo also disclosed a household member's commercial rental property, without explicitly noting whether that produces rental income on his campaign finance disclosure. 

Elizabeth Ray, a spokesperson for the governor, said that Lombardo’s financial disclosure report accurately reflects his income, in addition to the income and various investments of household members. Rent revenue from the commercial property is reflected under “investments” within sources of income, she said.

UNLV political science professor Kenneth Miller said financial disclosures are vital for ensuring there aren’t conflicts of interest and for enforcing existing anti-corruption laws, which are toothless if there’s no information on lawmakers' financial dealings. 

The way to think about the lack of disclosure of rental incomes from citizen legislators and other state officials depends on what you’re evaluating, Miller said. 

Voters, he said, may not want a Legislature and state government exclusively made up of upper-class individuals, which sources of income can indicate. 

For example, the review of financial disclosure reports indicates that about 38 percent of lawmakers own rental properties, and reporting from The Nevada Current indicates that about 90 percent of state lawmakers own their own home — much higher than Nevada’s homeownership rate of nearly 60 percent as reflected in data from the U.S. Census Bureau.

This information could be valuable for voters to know as the state is facing a housing crisis and during a legislative session where lawmakers are discussing landlord-tenant issues, including proposals to temporarily cap rent increases for seniors and Social Security recipients and overhaul the state’s summary eviction process.

Still, Miller said if the concern is about monitoring for potential corruption or conflicts of interest, then reporting rental income isn’t as big a deal because the disclosure form already lists what properties a lawmaker owns.

“When we have ambiguity in how we've written these disclosure rules, you're then subject to how people in their own minds are thinking about their assets, and so they can interpret them differently,” Miller said.

The errors also highlight the differences between state and federal financial disclosures.

“Nevada and a lot of areas of campaign, finance and lobbying and disclosure is looser than federal level,” Miller said, noting that it’s standard for the federal government to be ahead of state governments on issues of financial or lobbying disclosures. 

Federal law is stricter when it comes to reporting sources of income, requiring members of Congress to report the amount of any outside income, including from real estate. Nevada law does not require officials to report the amount of income received from rental properties as a separate line item, but does ask for all sources of income, which could include profits from a rental property.

Errors ‘not unexpected’

Asked to clarify the policies and whether it believes there is sufficient understanding about what income must be reported, Cecilia Heston, a spokesperson for the Nevada Secretary of State's Office, provided the office’s instructions manual for financial disclosure reports outlining requirements for all elected officers and appointed officers with a salary of more than $6,000. 

The manual notes that financial disclosures are required to include any sources of income by the officer themself or an adult member of their household. State law also requires the disclosure of any use of real estate that is not a person’s residence, as long as it has a fair market value of at least $2,500, is located in Nevada or an adjacent state and the officer or a member of their household has a legal or beneficial interest in the property.

Miller said there is all sorts of ambiguity in state disclosure reports because of interpretations of what the disclosure rules are trying to accomplish.

One person could treat rental income as cash, he said, but another could think of it as revenue-neutral, such as using the rental income to service the mortgage payment of a rental property that is already mentioned on the disclosure.

“You can have individuals filling out these forms that are doing so in good faith, but they can interpret things differently,” Miller said. 

Assm. Gregory Koenig (R-Fallon) said the source of income and property sections are next to each other on the financial disclosure reporting form, and he did not realize he had to report rental payment revenue as income if he already disclosed he owned a rental property. 

“If I was trying to hide this, I’m not going to list that as my very first property that I own and put ‘rental,’” Koenig said. “I just didn’t put ‘rental’ under income, but the very next line, I put ‘rental’ as my property.”

He said he filed an amended report with the secretary of state’s office as soon as he became aware of the issue.

Sens. Edgar Flores (D-Las Vegas) and Skip Daly (D-Sparks) said they would amend their disclosures to indicate receipt of rental income, noting in a written statement from the two senators that “any omission was unintentional and resulted from the duplicative reporting requirements.”

With a citizen Legislature, Miller said it’s “not unexpected that [legislators are] going to be unaware of some rules around their finances when they become a public official, because it's a part-time gig for them.”

Sunlight Research Center’s Audrey Nielsen provided research and data analysis for this reporting.