Federal court halts tax vote

Erin Neff

Tuesday, July 15, 2003 | 11:17 a.m.

CARSON CITY -- Legislative wrangling over taxes moved back to the courts Monday when a federal judge blocked lawmakers from any consideration of the tax bill that passed the Assembly on Sunday without a two-thirds majority.

Today legislative lawyers will file briefs in U.S. District Court trying to persuade all of the active federal judges in Nevada to rescind a temporary restraining order Judge Philip Pro issued Monday afternoon.

"It looks like theater of the absurd," Senate Minority Leader Dina Titus, D-Las Vegas, said, after the Senate was ordered to halt further consideration of the tax bill. "I was the person who said we should never decide taxes in special session because who knows what's going to happen.

"Once you go to court, you really never know."

Fifteen Republican assemblymen and nine senators filed suit in U.S. District Court in Reno early Monday seeking a restraining order and a return to the supermajority vote requirement the Nevada Supreme Court set aside last Thursday.

The lawsuit said that by not voting with a two-thirds majority, as required by the state constitution, the Legislature was taking property in the form of taxes without following due process.

"The reason that this was done was so that the people's voice can be heard," Sen. Ann O'Connell, R-Las Vegas, said. "The door was shut on the people and we're trying to reopen it."

Legislators on opposite sides of the tax debate -- and largely on opposite sides of the aisle -- reacted strongly to the court's intervention.

Shortly after being gaveled from any further talk about Senate Bill 6, Sen. Joe Neal, D-North Las Vegas, told those who brought the suit: "Enjoy your 15 minutes of fame because I don't think it's going to last that long."

Assembly Minority Leader Lynn Hettrick, R-Gardnerville, cheered the restraining order and suggested Neal was wrong because the Republicans who sued have already won a greater legal victory than they expected.

"Our lawyer told us that he didn't expect us to be granted a temporary restraining order," Hettrick said in his office shortly after the Senate adjourned for the day.

A moment later, his phone rang.

"Thanks, Jim," Hettrick said to U.S. Rep. Jim Gibbons, father of Nevada's two-thirds majority constitutional requirement. "This is obviously a pleasant surprise."

Monday was supposed to be the day when the Senate voted on SB6 -- a $788 million tax plan approved by the Assembly 26-16, and two votes short of the two-thirds requirement.

Although senators did convene -- and ultimately reject -- the Assembly's amendments to SB6, most of the day's actions were in judges' chambers, not legislative chambers.

The plan today was for the Senate to vote on a new tax plan -- outside of the restraint over SB6 -- and one that centers on a payroll tax.

Senate Republicans said they believed the tax plan could pass the Senate today by a two-thirds majority and pursuade one more Republican to join the initial four Assembly Republicans who had supported various iterations of tax proposals.

The problem then would be with Assembly Democrats, many of whom are against the payroll tax being used as the only tax on business. Assembly Speaker Richard Perkins has also consistently said a payroll tax is not broad-based and did not meet his requirement for a tax plan to pass his house.

Perkins, D-Henderson, was so angered by the court's ruling he offered just a terse comment and pledge to continue negotiating on a tax plan.

"At this point in time, I don't think anything surprises me," Perkins said.

Assembly Majority Leader Barbara Buckley, D-Las Vegas, said her caucus was disappointed because they assumed the Senate would fail to concur on SB6, thus triggering a conference committee at which a negotiated tax deal could emerge.

"There's a small group who want to play games until 2004," Buckley said. "When you have momentum, as we had with the tax vote and the Senate considering it, the pressure is at that stage. Now the pressure's completely off."

Buckley said she thought the court will pull the temporary restraining order and throw out the suit.

"People are upset that the Supreme Court decision was awful," Buckley said. "But that doesn't mean there's suddenly a federal question."

Republicans disagreed, saying their suit points to a critical 14th Amendment question about voters' due process.

"Whether it's 15 minutes of fame, that's not the point," O'Connell said. "The point is to honor the constitution."

The Republicans vowed to keep fighting the case, even if the seven federal judges on Wednesday throw it out.

"The cause of action, which is the 14th Amendment, is like catnip to the 9th Circuit Court and any other liberal court," Assemblyman Ron Knecht, R-Carson City, said.

Buckley was stunned when told the Republicans would appeal to the 9th Circuit.

"When are people going to recognize that the Legislature has a job to do," Buckley said. "The 9th Circuit, now that's who we want deciding tax policy in this state. This is the court who said 'under God' was unconstitutional."

The 9th U.S. Circuit Court of Appeals in San Francisco is dubbed with two monikers -- the most liberal court and the most overturned. If the Circuit Court gets the case there is a greater likelihood that Nevada's education funding could actually be decided by the U.S. Supreme Court.

Lawyers in the Legislative Building on Monday to lobby the Legislature spent most of the morning reading the Republicans' brief. When word emerged that Pro had agreed to issue the temporary restraining order, most were stunned, and many re-read the suit trying to find which part proved successful.

One lawyer who has been involved in legislative issues for 20 years said because Judge Howard McKibben referred the Republicans' case to Pro, who already had jurisdiction over a case filed Monday by activist Bob Hall in Las Vegas, he was not sure which case resulted in the temporary restraining order.

The plaintiffs had to successfully argue one of two things: That there is probable success on the merits of the suit or irreperable injury if relief is denied.

The irreperable injury cited on behalf of the Republicans and taxpapers and interested parties is "dilution of their constitutionally protected rights."

The lawmakers' suit, filed by Reno attorney Jeffrey Dickerson and John Eastman of Chapman University School of Law in California, states the defendants will suffer no irreparable damage if the restraining order is issued because the Legislature can still pass a tax package with a two-thirds majority if it chooses.

That supermajority, however, appears more elusive than ever.

Shortly before word of the restraining order reached the Senate, that body voted 19-1, with O'Connell abstaining, not to concur with the Assembly's amendments to SB6.

O'Connell abstained because the measure contained a bank franchise tax, and her husband serves on the board of a bank.

Sen. Maggie Carlton, D-Las Vegas, voted no, saying that she finally saw a plan that favored Democrats. "It wasn't a bad deal. It was a broad-based business tax."

Hettrick said Monday he would support negotiations and believed the two-thirds was possible if Democrats backed off their desire for either a gross receipts or net profits tax.

SB6 contains a franchise tax based on business gross receipts. But those pushing for a broad-based business tax vowed to keep up the pressure.

"We all assume this will be a very short delay," Culinary Union Political Director Glen Arnodo said. "We're still confronted with no tax plan because a small number of legislators, mostly Republicans, continue to want to protect the Wal-Marts and Bank of Americas of the world."

The Nevada State Education Association lambasted the ruling and the 24 legislators who signed on to the suit.

"This is a frivolous and dilatory act to keep the Legislature from passing a funding bill that will provide monies for the education of Nevada's children," NSEA executive director Ken Lange said. "They lost their initial battle to use our kids as pawns in this political game and now they're trying to do it again."

Word of the restraining order began spreading through the Legislative Building as copies began coming over fax machines in lawmakers' offices.

But the Senate was unaware until electronic briefings from media began to show up in their e-mail.

Senate Majority Leader Bill Raggio, R-Reno, inititally discounted the briefings, and ordered his house to continue work, "pending official information."

He then called for a motion on SB6, with Sens. Mark Amodei, R-Carson City, and Bob Coffin, D-Las Vegas, moving not to concur with the Assembly's amendments to SB6.

"I'm wondering if we can vote on an illegal bill," Sen. Sandra Tiffany, R-Henderson, asked.

Legislative Counsel Brenda Erdoes said they could until they got notice.

Just minutes after the vote, Erdoes -- who is named as a defendant -- was handed a fax.

She advised Raggio that the motion to not concur was valid because it was taken prior to getting the order. But she said the Senate was restrained from any further action on SB6.

"That doesn't mean we can't suggest other plans," Raggio said, adjourning the Senate until noon today.

Raggio and Sens. Randolph Townsend, R-Reno, and Ray Rawson, R-Las Vegas, worked well into the evening Monday trying to crunch numbers and find a tax plan that will generate the elusive two-thirds majority in both houses.

None of the three had joined the lawsuit.

"I kind of thought I was hired by the public to do this process," Townsend said on his way back into Raggio's office for negotiations.

archive