Costly legal fight over taxes was unnecessary

It was a senseless and futile gesture, but our Democratic lawmakers and governor were just the ones to do it.

Despite the fact Nevada voters in 1994 and 1996 amended the state Constitution to declare “an affirmative vote of not fewer than two-thirds of the members elected to each House is necessary to pass a bill or joint resolution which creates, generates, or increases any public revenue in any form,” the 21-member state Senate approved the extension of taxes and fees that were supposed to be curbed with a 13-8 vote, one vote short of the constitutionally mandated two-thirds. Gov. Steve Sisolak signed the tax extensions into law.

The eight Republican senators who voted against the tax extensions and three companies that would have to pay the higher taxes have sued in district court in Carson City, asking the court for a temporary restraining order and a permanent injunction against enactment of the laws.

The Democrats charged ahead with tax and fee extensions after their compliant Legislative Counsel Bureau (LCB), the lawmakers’ lawyers, issued an opinion that a two-thirds vote was not necessary since the taxes were not being “raised” but merely allowed to continue at a rate that was scheduled to be reduced, paying no heed to the fact the bills in question “generate” public revenue. Asked nearly the same question in 2011, 2013 and 2015, the LCB said a two-thirds vote was necessary.

When Republicans first threatened to sue, Sisolak confidently stated, “We’ve got legal opinion from LCB that, you know, a simple majority is what’s needed. I’ve been in government for 20 some-odd years, and if you don’t trust your attorneys, you’ve got a problem. So I’m confident that the attorneys gave us a good opinion. We’ll move forward from there.”

After the suit was actually filed, a somewhat less assured Sisolak was quoted by the press as demurring, “I remain absolutely committed to taking action if necessary following the court’s decision to ensure our schools continue to receive the total amount of funding approved by the Legislature for the … biennium.”

According to the governor’s executive budget at the end of that biennium there is expected to be a rainy day fund balance of $415.2 million, more than enough to cover the $98 million that the extension of the modified business tax rate and the $7 million that the $1 Department of Motor Vehicles technology fee extension are expected to generate.

The modified business tax extension is scheduled to begin being collected on Oct. 1 and the technology fee was set to end on July 1, 2020.

So, what was the point in pushing the constitution-ignoring legislation?

Senate Republican Leader James Settelmeyer said in a statement released to the media after the suit was filed, “We have checks and balances for a reason and eroding the two-thirds requirement is an unprecedented disregard for the constitution and creates a dangerous precedent. While there was ample money to fund education and other vital programs, Sisolak and (Senate Democratic Leader Nicole) Cannizzaro acted recklessly and their behavior created an unnecessary constitutional crisis at the expense of over 23,000 small business in Nevada.”

The lawsuit itself makes abundantly clear the stakes involved here: “This action involves an issue of of significant public and statewide importance as it seeks to uphold and protect the constitutional amendment proposed by citizen ballot initiative adopted and overwhelmingly approved by Nevada voters in 1994 and 1996. As provided in Article 1, Section 2 of the Nevada Constitution, political power is inherent in the people. Government only has power from the consent of the governed, and the residents and citizens of the State of Nevada twice voted strongly in favor of amending the Nevada Constitution to add the two-thirds requirement, and the two-thirds requirement has, at least prior to 2019, been applied consistently to legislative bills extending sunsets by the Nevada Legislature.”

The Republican senators and three companies, of course, are asking for recovery of reasonable attorney fees and costs. So, the taxpayers are likely to get stuck with all the costs from both sides.

The suit further noted that lawmakers “had enough money to fund the State’s budget without the public revenues created, generated or increased as a result of the changes to the payroll tax …”

So the passage with less than two-thirds votes was senseless, and, once the courts correctly rule that a two-thirds vote was constitutionally necessary, it will have been futile.

A version of this column appeared this week in many of the Battle Born Media newspapers — The Ely Times, the Mesquite Local News, the Mineral County Independent-News, the Eureka Sentinel and the Lincoln County Record — and the Elko Daily Free Press.

Nevada Legislature

Editorial: File suit to uphold two-thirds vote requirement for taxes

So, the governor is confident that the extension of the modified business tax rate will withstand a legal challenge, according to the Las Vegas newspaper.

“We’ve got legal opinion from LCB (Legislative Counsel Bureau) that, you know, a simple majority is what’s needed,” Gov. Steve Sisolak was quoted as saying this past week. “I’ve been in government for 20 some-odd years, and if you don’t trust your attorneys, you’ve got a problem. So I’m confident that the attorneys gave us a good opinion. We’ll move forward from there.”

Be prepared to move back, governor, by nearly $100 million in your budget for the next two years — the budget that promises 5 percent raises for teachers.

Republicans have promised a legal challenge if the business tax were extended without a two-thirds majority of both houses as prescribed by the Constitution. The tax extension passed the Senate on a party line vote of 13-8, one vote shy of two-thirds.

Voters in 1994 and 1996 amended the Nevada Constitution to state “an affirmative vote of not fewer than two-thirds of the members elected to each House is necessary to pass a bill or joint resolution which creates, generates, or increases any public revenue in any form, including but not limited to taxes, fees, assessments and rates, or changes in the computation bases for taxes, fees, assessments and rates.”

The modified business tax passed in 2015 by a two-thirds vote of lawmakers contained specific language saying the rates would be reduced in 2019 if tax revenues exceeded a certain level, which they have.

But the compliant LCB told the majority Democratic lawmakers and the Democratic governor, “It is the opinion of this office that Nevada’s two-thirds majority requirement does not apply to a bill which extends until a later date or revises or eliminates a future decrease in or future expiration of existing state taxes when that future decrease or expiration is not legally operative and binding yet, because such a bill does not change but maintains the existing computation bases currently in effect for the existing state taxes.”

The bill clearly “generates” revenue that two-thirds of the lawmakers in 2015 said would decrease as of July 1, 2019.

The state Constitution is not something to tamper with. Republicans should take it to court and make the Democrats abide by the rules, even if it means a special session would have to called. In fact, the GOP lawmakers should go directly to the state Supreme Court for an opinion that would be binding, unlike the LCB opinion “that future decrease or expiration is not legally operative and binding yet …”

Asked nearly the same question in 2011, 2013 and 2015, the LCB said a two-thirds vote was necessary. So, governor, when do you trust your attorneys? Now or then?

Republican lawmakers should join forces with those who will be paying the tax — Nevada businesses — and sue at the earliest possible convenience to defend the state Constitution. Randi Thompson, a lobbyist for the National Federation of Independent Business, has told the Las Vegas newspaper the organization is looking at the option of filing suit. Perhaps, the conservative Nevada Policy Research Institute can join the fray. The more the merrier.

A version of this editorial appeared this week in some of the Battle Born Media newspapers — The Ely Times, the Mesquite Local News, the Mineral County Independent-News, the Eureka Sentinel,  Sparks Tribune and the Lincoln County Record.

Gov. State Sisolak, right, talks to reporters. (R-J pix)

Newspaper column: Opinion says two-thirds vote not needed to extend taxes

Never tell the boss no.

This past week the Legislative Counsel Bureau, the Legislature’s attorneys, told Democratic Gov. Steve Sisolak and the Democratic majorities in both the state Senate and Assembly what they wanted to hear: Extending taxes scheduled by law to be reduced does not require a two-thirds vote of all lawmakers, just a simple majority.

In the 21-member Senate, Democrats are one shy of the 14 votes required to meet the two-thirds threshold established by a constitutional amendment approved by voters in 1994 and 1996, which states “an affirmative vote of not fewer than two-thirds of the members elected to each House is necessary to pass a bill or joint resolution which creates, generates, or increases any public revenue in any form, including but not limited to taxes, fees, assessments and rates, or changes in the computation bases for taxes, fees, assessments and rates.”

The governor pledged in his State of the State speech at the start of the legislative session that his $8.9 billion general fund budget contained no new taxes, but it does include a proposal to keep at the current rates two taxes that are scheduled to be reduced in June.Gov. Steve Sisolak gives State of the State speech. (R-J pix)

The modified business tax passed in 2015 by a two-thirds vote of lawmakers contained specific language saying the rates would be reduced in 2019 if tax revenues exceeded a certain level, which they have. A tax on vehicle registration was also approved with the caveat that it would go down in June, the start of the fiscal year.

The scheduled reduction in the modified business tax would reduce annual revenues by $48 million a year, while the vehicle tax revenue would drop by $21 million a year — a total of $138 million for the two-year budget. 

Continuing that burden on taxpayers sure sounds like it “creates, generates, or increases” public revenue. It certainly generates.

But the LCB is telling lawmakers, “It is the opinion of this office that Nevada’s two-thirds majority requirement does not apply to a bill which extends until a later date or revises or eliminates a future decrease in or future expiration of existing state taxes when that future decrease or expiration is not legally operative and binding yet, because such a bill does not change but maintains the existing computation bases currently in effect for the existing state taxes.”

Not binding? How can something approved by a two-thirds majority be undone by a simple majority? 

Asked nearly the same question in 2011, 2013 and 2015, the LCB said a two-thirds vote was necessary.

Gov. Sisolak said he appreciated the decision. 

“Regardless, I am continuing conversations with legislative leaders of both parties about supporting my budget that would keep funding at our current levels in order to help fund our schools and educators, provide health coverage under Medicaid expansion for our families, and feed our seniors through Meals on Wheels,” his statement said. “As this legislative session comes to a close, I look forward to working with the Legislature to pass a budget that reflects our core values – making sure that Nevada’s economic recovery reaches every family, that our schools prepare every child to reach their potential, and that our health care system is there for every Nevadan who needs it.”

But several media outlets quoted Senate Minority Leader James Settelmeyer as calling the opinion “a work of legal fiction.”

He also said he does not believe any member of the Senate Republican caucus would break ranks and give the Democrats the one vote they would need to reach the two-thirds majority threshold. He also said that passage of the tax extensions by a simple majority would doubtlessly end in litigation.

“Unfortunately, it means that the majority party has decided to not try to reach compromise or discussions on issues, and unfortunately going down this road just guarantees legal challenge,” Settelmeyer was quoted as saying.

The Nevada Supreme Court did rule in 2003 that taxes could be raised by a simple majority vote if the lawmakers failed to adequately fund education as required by the Constitution, but that opinion was reversed in 2006 when the court ruled, “The Nevada Constitution should be read as a whole, so as to give effect to and harmonize each provision.”

If lawmakers try to continue to assess those two taxes without a two-thirds majority, it certainly should end up in court.

A version of this column appeared this week in many of the Battle Born Media newspapers — The Ely Times, the Mesquite Local News, the Mineral County Independent-News, the Eureka Sentinel and the Lincoln County Record — and the Elko Daily Free Press.