Lawyers: Gibbons out of bounds

By J. Patrick Coolican (contact)

Thursday, May 17, 2007 | 7:14 a.m.

CARSON CITY - Lawyers for the Legislature say Gov. Jim Gibbons did not have the authority to suspend a state law giving tax breaks to Nevada businesses for developing "green," or environmentally friendly, buildings.

The four-page opinion, issued Wednesday, comes as the state receives a flurry of applications - nine since May 1 - from businesses trying to capitalize on the state government's so-far unsuccessful attempt to freeze the program.

Unless the Legislature and governor can find a solution, the outcome could be an even greater loss of revenue.

At issue are massive tax breaks for companies that build in an environmentally friendly way. The Legislature passed the breaks in 2005, directing state agencies to carry out the law. The cost of the tax breaks has surpassed the Legislature's forecasts by as much as $900 million over the next 10 years.

In response, the Legislature passed a bill this month instructing state agencies not to take any action on applications for the tax breaks so it could craft new legislation this session to put the state on firmer fiscal ground.

The governor vetoed that freeze Monday, but he issued an executive order telling state agencies to suspend until June 4 issuing any new regulations or processing new requests for the tax cuts so the Legislature can craft a new law.

He said he took the executive order route so that four companies that already qualified for the breaks could be grandfathered in and wouldn't have cause to sue the state if their tax cuts were rescinded.

Legislators from both parties and constitutional scholars questioned whether he had the authority to freeze the law. Assembly Speaker Barbara Buckley, D-Las Vegas, and Senate Majority Leader Bill Raggio, R-Reno, asked their legal counsel for an opinion.

The opinion, written by Brenda Erdoes and Kevin Powers, cites case law and concludes that the executive order "is not valid and enforceable." "Under the fundamental doctrine of separation of powers, the governor may not exercise legislative power unless the governor's exercise of that power is expressly permitted by the constitution."

By attempting to set aside a statute with his executive order, which isn't expressly permitted by the constitution, the governor tried to claim powers he doesn't possess, the opinion states.

Gibbons responded Wednesday with a statement: "I also believe that the executive order was a lawful, reasonable, appropriate and necessary exercise of executive authority. As executive, I have the right to direct administrative agencies, as that order did, particularly when the legislation in question specified no time limit.

"I agree with the (Legislative Counsel Bureau) that I cannot, using an executive order, supersede legislation and disregard time limits in that legislation. However, the legislation is silent regarding the time periods within which the administrative agencies need to review pending applications. Therefore, my order to suspend such reviews does not supersede legislation. It simply directs agencies how to administratively process pending applications. That direction is within my constitutional authority."

This evening, legislative leaders and developers are expected to meet to begin hammering out a deal on the green tax breaks.

A joint Assembly-Senate committee has scheduled hearings for Friday on new legislation to replace the that vetoed Monday. The Associated Press contributed to this story.