Business groups sue to stop tax petition

Tuesday, Oct. 3, 2000 | 11:12 a.m.

CARSON CITY -- A lawsuit has been filed in District Court seeking to stop the initiative petition that calls for a 4 percent business profits tax to support public schools.

The complaint filed in District Court in Carson City was brought by a coalition of businesses, including chambers of commerce from Las Vegas, Reno and Carson City, the Nevada Taxpayers Association, the Associated General Contractors and the Nevada Association of Employers.

The suit, filed by Reno lobbyist Sam McMullen, charges that the petition is invalid because it imposes a personal income tax, which is banned by the Nevada Constitution.

The group asks for additional time to supplement its arguments because the issue is so complex.

The Nevada State Education Association gathered more than 86,000 signatures on its petition. And county clerks certified there were 63,795 valid signatures of registered voters -- far more than the 44,009 required.

"We knew there were holes in the petition initially," said Kami Dempsey, a director in the fight by the coalition to stop the tax. After examining the petition when it was filed, she said, more defects were found.

"We have a responsibility to the taxpayers and the legislators not to let them vote on something that is unconstitutional," said Dempsey, who works at the Las Vegas Chamber of Commerce.

"The provisions of the legislation proposed by the instant initiative are unconstitutional to the extent that they set forth a de facto personal income tax or a direct personal income tax or an indirect personal income tax in Nevada," says the complaint. Ken Lange, executive director of the teachers' union, said his organization anticipated the arguments about the constitutionality of the petition.

"We had a complete constitutional review by outside counsel to make sure it passed constitutional muster," Lange said.

In addition, he said the suit was premature because no law exists to challenge.

"It's too early to reach the issue, if one exists," he said. "It is not ripe at the present time for challenge."

The union will go over the petition point-by-point and "pick it apart," Lange said.

The petition would levy a tax on business profits over $50,000 and is expected to yield $250 million a year to be spent in education.

The lawsuit says hundreds of people sent in cards to withdraw their names from the petition but were ignored in the count. In addition, some petitions were defective because signatures were "blacked out or otherwise tampered with," says the complaint filed Monday.

With those changes, the suit suggests the petition qualified in only 11 of the 17 counties, short of the 13 counties needed.

Lange said the association worked closely with the secretary of state's office and the county clerks to make sure all of the rules were followed. He said the chambers conducted an "expensive campaign to thwart the process" by encouraging people to withdraw their names from the petition.

But they were late in submitting the signature cards and now "they want more time," Lange said. And there is a question whether the withdrawal cards are actually from registered voters, he said.

The suit asks the District Court to order Secretary of State Dean Heller to decertify the petition.