Washoe County officials originally demanded that the state return $21.5 million. That demand and a bigger sum sought by Clark County came after a Nevada Supreme Court ruling last year that said the state couldn't take $62 million from a southern Nevada sewer fund.
The ruling forced Gov. Brian Sandoval to rework his proposed budget in the waning days of the 2011 Legislature and led to an extension of taxes that otherwise would have expired in June of that year to fill a $620 million budget gap.
Afterward, the counties said the same legal arguments applied in their case and they demanded refunds.
Sandoval is chairman of the state board that approved the Washoe County settlement Tuesday. Other members are Secretary of State Ross Miller and Attorney General Catherine Cortez Masto.
Washoe County negotiated with the state. Clark County, which is seeking $102 million in diverted taxes, filed a lawsuit in June.
Under the Washoe County deal, the state will give the county $1.25 million cash, the Nevada Appeal reported (http://bit.ly/OqdQci). Another $6 million will come in highway and road projects through the Department of Transportation.
Jeff Mohlenkamp, administration and budget director, said the agreement doesn't approve construction of any projects that haven't already been adopted by the Transportation Department in its annual plan. But the deal moves them up in priority, bumping some projects in other parts of the state down the ladder.
Now the city of Reno is seeking a piece of the siphoned property taxes.
The newspaper reported Reno City Manager Andrew Clinger submitted a claim last week seeking a refund of about $2 million previously taken by the state.
Clinger was the state budget director who four years ago recommended taking the property tax money from the state's largest counties and cities to help cover the state's budget shortfalls.
Tuesday's settlement, along with another vote to fix a $274,000 error in tax distributions to the Reno Development Agency, nearly drains the state's Statutory Contingency Fund.
Mohlenkamp told the board he will have to ask the Legislature's Interim Finance Committee to put at least a couple of hundred thousand dollars in the contingency fund, which is used to cover unexpected costs between legislative sessions.
Figures show the contingency fund balance will fall to $197,399 after the monetary portion of the settlement is paid.