Las Vegas Sun

March 28, 2024

Ruling gives political cover to all

The unprecedented decision Thursday by the Nevada Supreme Court to throw out the constitutionally required supermajority vote on taxes has essentially provided political cover for every faction in the debate.

Democrats see victory, as the decision lets the Legislature pass a tax plan with a simple majority vote.

The Assembly Republicans see an immediate setback but believe the decision will energize their fiscally conservative political base and lead to future victory at the ballot.

Special interests such as educators, gaming and unions believe the decision will help usher in the broad-based business tax they champion.

And business leaders and tax activists, so angered by the ruling, believe the landmark decision could lead to an equally historic reversal -- not by a court, but through future citizen or legislative action.

As legislative leaders returned to Carson City this morning to hammer out a compromise tax plan, they pledged a quick resolution to the impasse on taxes and education budget that has dogged them since the regular session of the Legislature adjourned early June 3.

"Any legislator could rely on this opinion in explaining to their constituents why they had to raise their taxes," Assembly Majority Leader Barbara Buckley, D-Las Vegas, said.

In a rare opinion issued from the bench, the court by a 6-1 vote ordered lawmakers back to work but also lifted the two-thirds majority requirement that had left the Legislature one vote short on a tax plan and education budget in one regular session and two special sessions.

"Public education is a right that the people, and the youth, of Nevada are entitled, through the Constitution, to access," the majority opinion stated. "If the procedural two-thirds revenue vote requirement in effect denies the public its expectation of access to public education, then the two-thirds requirement must yield to the specific substantive educational right."

The court said a procedural requirement should not trump a basic right guaranteed by the constitution.

Assemblyman Bob Beers, R-Las Vegas, and one of the 15 GOP holdouts on taxes, called the decision the "most one-sided political issue that I can remember seeing in my 10 years watching politics in Nevada."

He said as word of the decision trickled down to the average taxpayer there would be complete anger and distrust of the system.

Beers and his colleague Ron Knecht, R-Carson City, both predicted a citizen initiative to force a supermajority, or two-thirds, vote on all budgets and spending.

The constitutional amendment, pushed by then-Assemblyman Jim Gibbons and authorized by voters in 1994 and 1996, requires a two-thirds majority on any tax or fee increase.

Dan Burdish, chairman of Nevadans for Tax Restraint, called the court's decision "an unprecedented usurpation of the separation of powers."

He is now exploring a recall effort of the six justices who supported the ruling.

Senate Minority Leader Dina Titus, D-Las Vegas, said that while she was shocked by the court's ruling, she believes it supports her party's call for a tax plan that includes the gross receipts tax.

"I think that combination tax package, the one with the gross receipts and the payroll, comes back," Titus said.

Assembly Speaker Richard Perkins, D-Henderson, is expected to call his house back into session Sunday to discuss the tax deal leaders will craft today. Although past tax packages originated in the Republican-led Senate in order to win support from conservative Assembly members opposed to taxes, lifting the two-thirds requirement gives the Democrats in that house more leeway to craft their own plan.

"I think the invalidation of the two-thirds requirement is squarely on the shoulders of those 15," Perkins said. "But for their actions, the Supreme Court wouldn't have taken the action they took."

Perkins said he now expects the tax number to be $859 million over the next two fiscal years.

"We closed the budget in a bipartisan and bicameral fashion at $860 (million), and that's the most appropriate amount for this state," Perkins said.

Senate Majority Leader Bill Raggio, R-Reno, has supported $860 million in new taxes in the past. With the simple majority requirement now in place, just two Republicans in the Senate will have to join the Democrats in support of a tax plan.

The decision also provides cover for Republican Gov. Kenny Guinn, who in January was derided for proposing nearly $1 billion in new taxes. Guinn got more than he had sought from the court.

When Guinn filed his suit against the Legislature, just moments into the start of the new fiscal year July 1, he asked the court to intervene in the stalemate and direct the Legislature to finish its work.

The court did that, but in removing the two-thirds majority rule, also cleared the way for the main tax Guinn proposed in his plan -- the gross receipts.

"In granting our writ, the court has agreed that the Legislature has a constitutional obligation and deadline to pass a balanced budget and provide funding for education," Guinn said in a statement. "Legislators had almost six months to decide on a proper level of funding for the budget, and an equal amount of time to decide how to pay for it."

During his State of the State address in January, Guinn referred to those who did not support increasing taxes as heartless, in light of the state's fiscal problems, and said they would be rendered irrelevant.

After the Supreme Court ruling removed the 15 Assembly Republicans' position of strength, Beers reluctantly agreed with the governor.

"Kenny is right," he said. "We are irrelevant."

Special interests championed the decision, with gaming lobbyists immediately huddled in a conference call with their bosses and educators learning the news from the teacher's union and district.

Mary Ella Holloway, president of the Clark County Education Association, said she is hoping the decision will break the legislative impasse.

"I hope we can take care of the children," Holloway said. "I want a broad-based tax. I believe Nevada needs to have a broad-based tax in order to fund education."

But business representatives believe the decision is completely out of touch, and that the court had no right setting policy for the state.

"This is a landmark decision," said Catherine Levy, spokeswoman for the Las Vegas Chamber of Commerce. "The court is basically saying that it has a role setting the tax policy in this state.

"That does not eliminate our opposition to the gross receipts tax and we'll have to wait and see what happens."

The decision won accolades for Republican Attorney General Brian Sandoval who prepared the legal case. Guinn said Sandoval did "an excellent job."

The ruling thus could bolster political careers of not just Sandoval -- touted as a rising Republican star -- or Gibbons, now a congressman with eyes on future bids for the U.S. Senate or governor.

"Today the Nevada State Supreme Court willfully ignored the wishes or more than 70 percent of Nevadans who twice voted in favor of requiring a two-thirds majority to pass a tax increase," Gibbons said in a statement. "The court failed to protect the will of the people of Nevada and has denigrated our state's constitution."

Assemblyman Ron Knecht, R-Carson City, said the decision might have proven an immediate victory for the "tax-and-spend liberals," he vowed fiscal conservatives will eventually win the battle.

"Their decision presents 'absurd consequences' and has brought on 'public mischief,' " Knecht added, quoting from a passage in the court's decision that says those outcomes are to be avoided.

Assemblyman Josh Griffin, R-Henderson, who has supported tax increases and broke away from his 15 colleagues, said he did not agree with the court ruling either.

Griffin worked on Gibbons' campaign to initiate the supermajority rule and said he has personal and political affection for it.

"I also think this will help energize fiscal conservatives," Griffin said.

Sun reporter Launce Rake contributed to this report.

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