Legal opinion might derail Nevada mining tax proposal

CARSON CITY — A plan by state Senate Republicans to spend $600 million to $800 million more a year on education starting in 2015 might be derailed by a secretary of state’s legal opinion released Tuesday.

The opinion by Scott Giles, deputy secretary of state for elections, found that because legislators last month did not reject a Nevada State Education Association petition to impose a 2 percent business margin tax, the Legislature now cannot draw up an alternative tax plan for voters to consider in the election next year.

Giles ruled that Article 19 of the Nevada Constitution required the Legislature to “reject” the teachers’ tax plan before lawmakers could place an alternative tax proposal before voters.

Instead of acting on the petition, the Assembly Taxation Committee took no vote by a March 15 deadline. The Legislature had to act by that date, the 40th day of the 2013 session, or the teachers tax plan automatically would go on the November 2014 ballot.

Six Senate Republicans, led by Minority Leader Michael Roberson, R-Las Vegas, had wanted to put an alternative tax plan before voters to raise the state mining tax. If this legal opinion is allowed to stand, they would be blocked from putting that plan on the ballot.

Gov. Brian Sandoval opposed the Senate Republican plan and asked the secretary of state, who administers elections, whether it is constitutional. He released the Giles’ opinion late Tuesday.

The ruling would not prohibit legislators from still putting before voters next year a constitutional amendment to change how mining is taxed in Nevada. This proposal, approved 17-4 in the state Senate on Monday, now goes to the Assembly for its approval or rejection, and with approval then would go on the ballot in 2014.

But the amendment does not specify how much the mining industry would be taxed if it passes. Instead it leaves it up to the Legislature to set mining tax rates in 2015. Democrats back this proposal, as do many other Republicans.

Lynn Warne, president of the teachers association, was pleased by the opinion and the governor’s opposition to the Senate Republican plan.

“It is consistent with the legal opinions of our attorneys,” she said.

She noted that polls by the Retail Association of Nevada and other groups show the teachers ballot question will pass.

“It is time corporations in our state pay their fair share toward education,” she said. “We are looking forward to a dedicated source of funding for education.”

Proponents expect the tax will produce about $800 million a year.

During a hearing, a line of business owners criticized the tax, with some contendings it would put them out of business. Texas is the only state with a similar tax.

Because only limited deductions could be made before calculating the tax, some unprofitable businesses could still have to pay the tax.

Roberson did not respond immediately for comments on Giles’ opinion.

Democrats want to spend at least $310 million more on education this session than what Sandoval has proposed in his state budget. The governor also has vowed to veto any new tax increase. But Democrats still could try to approve tax increases more acceptable to business this year that also would raise $800 million a year for education.

If those increases somehow were approved, then voters might reject the teachers business tax because education already would have received an acceptable amount of additional funding.

The teachers union, according to past statement by Warne, then could ask voters to reject its tax plan.

Contact Capital Bureau Chief Ed Vogel at evogel@reviewjournal.com or 775-687-3901.