Saturday, July 12, 2003 | 3:38 a.m.
WEEKEND EDITION: July 13, 2003
It's unfortunate that the governor had to call upon the Nevada Supreme Court to loosen the legislative knot in Carson City. But owing to the governor's petition, and owing to the Supreme Court's decisiveness, the priority work of the 2003 Legislature can now begin.
From day one, on Feb. 3, and through the end of the regular session on June 3, the Legislature had as its most important priority the job of broadening Nevada's tax base. The primary reason for the priority was to put K-12 schools on the path to adequate funding. The current tax system, relying as it does on fickle retail spending and taxes on the up-and-down gross revenues of casinos, is failing our schools -- a fact not lost on the majority of legislators. Through the regular session and two special sessions, however, the job could not be accomplished because the majority could not sway 15 Assembly Republicans.
Guinn had no choice but to turn to the Supreme Court because the legislative stalemate was rooted in state constitutional requirements that were at cross purposes with each other. The Nevada Constitution has always required that public schools be funded and that the state budget be balanced. And in 1996, the constitution was amended to require that tax increases be approved by a two-thirds majority in each house of the Legislature.
The problem began when the total amount of the state budget was passed by both the Senate and the Assembly and signed by the governor. The tax increases needed to balance the budget, however, were far from agreed upon and in the Assembly they were tied to the $1.6 billion education budget. Fifteen Republicans in the 42-member Assembly, enough to prevent a two-thirds majority, refused to back a tax plan proposed by the Democratic leadership. This plan, similar to what had been submitted early in the session by Guinn, would increase overall taxation by about $860 million -- enough to balance the education budget. Its centerpiece would be a gross receipts tax on large businesses.
The 15 Republicans, led by Assemblyman Bob Beers of Las Vegas, balked at the size of the tax increase and criticized the gross receipts tax as too much of a burden on businesses. Their position conflicted sharply with that of Democratic Majority Leader Richard Perkins of Henderson, who has promised that no revenue bill will clear the Assembly that doesn't include a broad-based tax on large businesses. Only when it became abundantly clear that neither side would budge, and only after the new fiscal year had begun without a balanced budget, and only after the state's school districts were deep into a crisis, did Guinn turn to the Supreme Court.
In its decision Thursday, the court ruled that the constitution's fundamental requirements of the Legislature for balancing the budget and for financing public education take precedence over its procedural requirement for a two-thirds majority vote on tax increases. It's the court's responsibility to resolve constitutional questions, particularly when they are bringing critical state functions -- school funding, in this case -- to a halt. The court ruled that for the rest of the current special session of the Legislature, tax bills may be passed by a simple majority. For the good of the state, the court was asked to make a difficult decision and in doing so it has given the Legislature a chance to finally set this state on a path toward fair and sufficient taxation.
In our view, Gov. Kenny Guinn was not far wrong when, after reviewing the year-long work of a tax commission that he appointed, he proposed a gross receipts tax. There are honest differences with that particular tax but a majority of legislators in both the Senate and Assembly agree on the approximate amount that needs to be raised. A majority also agree that large businesses have not been paying their fair share. Now that it is no longer hobbled by an obstinate minority holding extreme views, the Legislature should work cooperatively on passing a tax plan that brings large, nongaming businesses into the mix while balancing the budget for education.
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