Tuesday, July 01, 2003
Copyright © Las Vegas Review-Journal

BUDGET STALEMATE UNRESOLVED: Constitution breached

Guinn lawsuit to involve state's high court in legislative dispute

Paramedics take Assemblyman Tom Collins, D-North Las Vegas, from the Legislative Building on Monday after he collapsed on the Assembly floor with chest pains. Collins was taken to the Carson-Tahoe Hospital for evaluation and spent the night there."He is all right," said Assemblyman Joe Hardy, R-Boulder City, a physician who aided Collins after he collapsed. Photo by K.M. Cannon. Assembly Minority Leader Lynn Hettrick, R-Gardnerville, leads a group of Republican legislators during a Monday news conference in the Legislative Building to address the stalemate on record tax increases being sought to fund the state budget. Photo by K.M. Cannon. Seven hours before the Legislature's midnight Monday deadline to pass a balanced budget, Assembly Majority Leader Barbara Buckley, D-Las Vegas, leads a group of Democratic lawmakers. Buckley rejected an Assembly Republican proposal to raise taxes by a record $704 million over the next two years. "We have no time for demagoguery," she said. Photo by K.M. Cannon. Attorney Brian Sandavol delivers an 11-page lawsuit to the Nevada Supreme Court early today. The lawsuit, filed in response to the Legislature's budget and tax impasse, asks the Supreme Court to raise the revenues needed to fund public schools the next two years. Photo by K.M. Cannon.

CARSON CITY -- Gov. Kenny Guinn filed a lawsuit at 12:01 a.m. today that asks the Nevada Supreme Court to intervene in the Legislature's state budget and tax stalemate.

Guinn filed the lawsuit after Assembly Democrats and Republicans failed to pass the public schools budget and reach an agreement on the tax increases needed to fund it by a midnight Monday constitutional deadline.

Formal announcement of that failure came about 8:15 p.m., when Assembly Speaker Richard Perkins, D-Henderson, acknowledged during a brief floor session that the gridlock would not be settled Monday. At that point, Assembly members still had three hours and 45 minutes left in this month's second special legislative session.

"In consultation with the Senate majority leader, it appears that we are at a spot where we cannot ... complete our constitutional duties," he said. "We will continue to work on some way to find resolution in both houses of this Legislature so we can complete our constitutional duty."

The lawsuit asks the Supreme Court to raise the revenues needed to fund public schools for the next two years.

"Despite the 120 days of the 72nd regular session of the Nevada Legislature, the 10 days of the 19th special session, and the ongoing 20th special session, the Legislature has failed to comply with the mandatory, nondiscretionary provisions of the Nevada Constitution requiring it to fund education and balance the budget," the lawsuit reads.

"Unless the Legislature approves the Distributive School Account, there will be no general fund monies available for K-12 education in Nevada for FY04 and 05.

"The issues presented in this petition to the court are unique and unprecedented in the history of Nevada," the lawsuit reads. "Although some state courts are reluctant to interfere with the legislative process, they have not failed to act in this vital area when such action is justified and where a legislative body has failed to meet its constitutional obligations."

In a statement, Guinn said: "I am saddened to have to embark on this course of action. As governor, I have an obligation to uphold Nevada's Constitution.

"I have taken this action in hopes of compelling the Legislature to meet its constitutional responsibility to fund education for the children of this state."

In an effort to clarify to the Supreme Court what level of spending is appropriate for public schools, the Assembly on a voice vote approved a resolution indicating support for the two-year, $1.65 billion schools budget. The Senate was expected to adopt the resolution today. The last piece of the state's 2003-05 budget was agreed to but not passed by the Legislature.

"We thought it important the Supreme Court had some intent," said Assembly Majority Leader Barbara Buckley, D-Las Vegas. "We wanted this intent very clear should this matter be considered by the Supreme Court and ultimately acted upon."

The Assembly was then recessed to the call of the speaker, and Perkins pledged to keep working toward a compromise, even with the Supreme Court's possible intervention.

"This job cannot be half-done," he said. "We cannot go home and say with a shrug, `We tried.' We must leave here secure in the knowledge we lived up to the oath of our office, so help us God."

Perkins said he and Senate Majority Leader Bill Raggio, R-Reno, agreed to give lawmakers a break while they wait for possible action by the high court. But negotiations would continue on an informal basis to save money, he said. The two failed special sessions cost taxpayers about $50,000 per day.

Guinn did not wait until the normal start of business today to seek the court's intervention, instead filing the action as the fiscal year officially began.

Attorney General Brian Sandoval filed the 11-page petition.

"The Supreme Court is now in Las Vegas, six of the members, and we're hopeful they will review this petition (Tuesday) afternoon," he said after filing the lawsuit.

Sandoval could not say when the court might act.

Earlier, Guinn had expressed optimism that Assembly leaders could pass the public schools budget and finalize a tax plan.

But those discussions did not produce a compromise.

Sandoval said the Nevada Constitution prohibits Guinn from funding K-12 education in the absence of a specific appropriation by the Legislature. Approval of the schools budget has been held up by the tax stalemate.

Lawmakers had been warned by Sandoval that they would fail their constitutional duty if they did not fund the public schools budget and adopt a tax plan by midnight Monday. The new fiscal year began at 12:01 a.m. today.

Several lawmakers said the likely result of court intervention would be to order the Legislature back to work in a third special session.

Earlier in the day, Assembly Minority Leader Lynn Hettrick, R-Gardnerville, said he was prepared to vote for $704 million in tax increases over the next two years if the plan did not contain any form of a gross receipts tax sought by Democrats. Republicans prefer a Senate proposal that would enact a payroll tax.

A tax increase of $704 million would require about $156 million in reductions to the portions of the two-year spending plan that already have been approved. Much of it already has been signed into law and took effect this morning.

Hettrick, flanked by many of his GOP colleagues, said his caucus would defer to Guinn to make the necessary cuts where appropriate and report to the Legislature's Interim Finance Committee, which meets to make budget changes when lawmakers are not in regular session.

"They accuse us of holding up this process," Hettrick said. "We aren't stonewalling. We aren't delaying. We have an offer on the table."

But Buckley rejected the offer, saying Democrats want a broad-based business tax that funds more of the proposed budget.

"We have no time for demagoguery," she said. "We need to roll up our sleeves and get the session resolved."

Buckley said the Assembly Democratic tax plan, supported by four Republicans, is reasonable, raising taxes on banks, big business and gaming.

"The average Nevadan has already paid his fair share," she said. "It's time for big businesses, banks and gaming to pay."

Perkins said the two sides moved toward $783 million in tax increases after late negotiations Sunday. The figure was between the $704 million sought by Republicans and the $860 million supported by most lawmakers, but a final agreement could not be reached.

A tax plan to raise $873 million to fund the proposed budget, about $13 million more than necessary, passed the Senate on Thursday.

But the 42-member Assembly has not been able to muster the votes to pass its own tax plan. It takes two-thirds support in each house to pass a tax increase.

Fifteen Republican Assembly members have voted against the Assembly version of a tax plan twice. They want lower tax increases.

As Buckley rejected the Republican proposal, Perkins was talking with members of the GOP caucus who might be persuaded to join with the 23 Democrats and four Republicans and vote for the Democratic-proposed tax and budget plan. The plan includes a franchise fee, a form of a gross receipts tax.

Those lawmakers were Chad Christensen of Las Vegas, Rod Sherer of Pahrump and David Brown of Henderson. If one man changed his mind, the impasse could have ended.

But no breakthrough occurred.

The Senate convened briefly Monday, but adjourned to wait for possible action by the Assembly.

Raggio told his colleagues that relying on the Nevada Supreme Court to solve the tax and budget impasse could be "ugly and protracted" and undesirable.

"As a lawyer, I can tell you litigation takes strange turns, and usually nobody wins," he said.

The Supreme Court would likely say the budget as approved by lawmakers needs to be funded, Raggio said.

"And the court isn't going to say a different amount. Very likely, it's going to say fund the budget that has been passed," he said. "It could find the Legislature in contempt if (lawmakers) failed to do that after a certain time."

Not all of the budget has been funded, however. Most of it has been signed into law, but the biggest component, the schools budget, remains in limbo.

Senate Minority Leader Dina Titus, D-Las Vegas, agreed with Raggio, saying court intervention would set a terrible precedent.

Buckley said the Supreme Court most likely would order the Legislature back to work to find a compromise, a comment Hettrick agreed with.