Friday, July 18, 2003 | 2:14 a.m.
The U.S. District Court today rejected efforts by anti-tax legislators and citizen groups to reverse a decision by the Nevada Supreme Court that opened the door to a resolution of the state's crippling tax-and-budget impasse.
The federal district judges, which met in a rare group session known as en banc, threw out the temporary restraining order it established July 14 at the request of the anti-tax protesters.
The seven-judge court said it lacked jurisdiction in the court. The protesters will have to go to the U.S. Supreme Court, a move they are already considering, or go back to the Nevada courts, the court ruled.
"The only federal court suitable to address those claims is the United State Supreme Court," Chief Judge Philip Pro wrote for the court.
With the removal of the restraining order, the Legislature can vote in a new tax with a simple majority vote, as the state Supreme Court ruled earlier this month.
John Eastman, the California law professor who represented the 24 Republican legislators, said a notice of appeal has been filed to take the case to the 9th U.S. Circuit Court of Appeal. He said he would probably seek a preliminary injunctions pending appeal to continue to stop the Legislature from passing anything by majority vote.
Eastman, who teaches at Chapman College's law school in Southern California, said he will probably ask the Nevada Supreme Court to reconsider its decision that permitted the Legislature to pass taxes to fund education with only a majority vote.
"I don't see us going to the U.S. Supreme Court yet," he said.
There were no federal issues raised by the parties to the suit in the Nevada Supreme Court, he said.
"We have got to have those before there is jurisdiction in the U.S. Supreme Court," Eastman said.
The federal court decision, released late this morning, is the latest in the ongoing turmoil over Nevada's still incomplete budget and funding formula, which the Nevada Constitution says must be balanced and in place by July 1. The second special session of the Nevada Legislature, which has the responsibility to pass the budget and fund it, is now in its 24th day.
Gov. Kenny Guinn sued after the fiscal year year started because the Legislature had been unable to pass a state k-12 schools budget and a tax increase that would cover the state's deficit. Tax increase plans have ranged between $700 million and nearly $1 billion.
The Legislature still has been unable to come to agreement on major portions of the plan.
A group of 15 Republican holdouts in the Assembly blocked passage of a complete revenue package, a defensive move that is possible because the state constitution requires a two-thirds majority in the Legislature for any new taxes.
The decision reached the Assembly in middle of its debate over bill to raise cigarette, liquor, gaming and bank taxes. Assembly Speaker Richard Perkins, D-Nev., then called for a recess to talk to Assembly Minority Leader Lynn Hettrick, R-Gardnerville.
It was doubtful the bill could have been passed with the tax on banks. But with only a majority of lawmakers needed under the state supreme court's ruling, the Democrats could push the bill through.
Both houses unanimously passed the Assembly Bill 4 today that will reduce the amount that retailers will be able to retain for collecting the cigarette, liquor and sales tax and for the duty on the cigarette stamp work. That will raise about $31 million over the biennium.
The combined with the increase in the Secretary of State fees, that gained final approval in the Senate today, will bring in $75 million over the next two years.
After the fiscal year started July 1, Guinn petitioned the Nevada Supreme Court to find some solution to the impasse.
The Nevada Supreme Court, in a move that surprised observers on both sides of the tax divide, opened the door for passage of the tax increase by declaring that the two-thirds majority requirement was "procedural," and that requirements for a balanced state budget and fully funded schools trumped the two-thirds issue.
The Nevada Supreme Court decision came July 10; the Assembly, the hotbed of the anti-tax resistance, passed a school budget and tax plan three days later.
On July 14, the anti-tax legislators and citizen groups filed in federal court to block the Nevada Supreme Court's decision.
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