Tax battle takes another historic turn

Will Oremus and Jace Radke

Tuesday, July 15, 2003 | 11:07 a.m.

In a case filled with historic decisions, the state Legislature's budget and tax battle took another unprecedented turn Monday as a federal judge issued a temporary restraining order against the Legislature.

U.S. District Judge Philip Pro in Las Vegas stopped the Legislature from moving ahead on a tax plan without a two-thirds vote of all lawmakers until the full panel of active federal judges in Nevada could hear the case Wednesday morning.

The ruling stunned lawmakers and observers alike.

"We've been in some uncharted waters here for a while," said Guy Rocha, state archivist. "When the governor essentially sued the Legislature in the (state) Supreme Court, that was a first for Nevada."

The federal court will hear a case challenging the Legislature's action to pass a tax plan with a simple majority. The Legislature followed a Nevada Supreme Court decision, which said in this case the state constitutional requirement to fund public schools outweighed a constitutional amendment, voted in by the public, to require new taxes to garner a two-thirds vote.

The seven active judges of the federal district court will meet Wednesday morning to hear the case "en banc" -- as a full court.

That's rare, said Senior U.S. District Court Judge Lloyd George, who will not be part of the panel.

"I can only think of maybe three times in the last 20 years that this has happened," said George, who has been a federal judge for nearly 30 years.

The entire court sitting on the case addresses the importance of reviewing a state Supreme Court decision, George said. Typically, federal courts stay out of state supreme courts' rulings on state constitutions.

Typically, the courts don't get involved in legislative action as it's happening, either.

But this case has been anything but typical.

"Never before has the state Supreme Court stepped in to make the Legislature take action, which brings in separation of powers issues," said Michael Green, a history professor at the Community College of Southern Nevada. "The problem for the federal court is, when a federal court sticks its nose into state business, it runs the risk of having to stick its nose into every state's business.

"They may very well overturn this decision. If they do, then they are potentially opening the floodgates for all kinds of cases."

Green noted a 1965 case in which a federal court ordered the Legislature to reapportion, following the "one man, one vote" requirement coming out of a U.S. Supreme Court ruling.

"Eventually, the federal court had to order them to act, and they went ahead and redistricted," Green said.

Monday's federal court order is the latest in a unique case and tops a tumultuous legislative battle over the state budget and raising taxes to fund the budget.

Gov. Kenny Guinn sued the Legislature in the state Supreme Court after lawmakers failed to pass the schools budget and the taxes to fund it by July 1, the beginning of the fiscal year.

The court took up the issue of a voter-approved constitutional amendment requiring the Legislature pass new taxes by a two-thirds majority. Lawmakers have been a few votes short of that in the 120-day regular session and two subsequent special sessions, and the court threw out that requirement in this case because of what the court saw as a drastic need to fund schools.

The state Assembly has since passed a tax plan by a majority of votes, two shy of the two-thirds typically needed.

The federal lawsuit argues that the Legislature violated the 14th Amendment of the U.S. Constitution by taking property -- taxes -- without due process and by "eviscerating" two popular votes. The two-thirds amendment passed on two initiative votes.

Michael Gerhardt, a professor at the College of William and Mary law school in Virginia, said the basic question is whether there is adequate and independent grounds for the Nevada Supreme Court decision to throw out the two-thirds requirement, and whether there is a federal issue at hand.

If the state court's decision is not grounded adequately and independently in state law then the case can stay in federal hands, he said.

Diana Sclar associate professor of law at Rutgers law school said, the federal court would have jurisdiction if the 14th Amendment due process claim is credible.

Sclar, who teaches a course on federal courts, said the only action the federal court could take is " to enjoin the proper state official to prevent them from doing something that violates the United States Constitution."

The court could issue an order that would halt the Legislature from acting without a two-thirds vote while the district court's decision is appealed.

Rocha noted that there have been state cases that have been overturned by the federal courts, but this one is atypical because of the action that has led up to it and the separations of power it raises.

"As it relates to a budget matter like this, I know of no precedent because the action taken by the governor has no precedent," he said. "This is all brand new.

"Each time something else happens, it's something new on top of something else that was new. We're going places no man has ever gone before."

Sun reporter

Malia Spencer contributed to this story.