The state constitution won’t defend itself. That’s why Senate Republicans must go to court to challenge efforts by legislative Democrats to brazenly ignore the voter-imposed supermajority requirement for tax hikes.
On Monday, Democrats approved Senate Bill 551, an extension of the current Modified Business Tax rate. It was scheduled to decrease as a result of higher-than-anticipated revenues from the Commerce Tax. But despite a record tax take, Gov. Steve Sisolak’s budget proposal sought to kill the sunset.
The Nevada Constitution requires that any bill which “creates, generates or increases any public revenue in any form,” receive a two-thirds vote in both legislative houses. A bill that nixes the proposed tax reduction clearly “generates” revenue. That’s the whole point, after all.
Democrats have a supermajority in the Assembly, but are one vote shy in the Senate. So the majority leadership sought cover from the pliable attorneys at the Legislative Counsel Bureau, which provides legal advice to lawmakers. The LCB obliged with a nonbinding opinion declaring that extending a levy’s existing rate doesn’t trigger the two-thirds requirement. Democrats took that as a green light to approve the tax increase in the Senate by a simple majority.
It’s worth noting that the LCB reached the opposite conclusion in 2011, 2013 and 2015 regarding similar bills.
The LCB’s flip-flop was the result of political pressure rather than lucid legal reasoning. Democrats have long chafed at the two-thirds restraint, which Nevada voters twice approved overwhelmingly during the 1990s. The state’s political elite has sought to avoid or erode the mandate for decades.
But the tax restraint provision is clear and unambiguous. Without SB551, the state will have less money to spend. Thus the bill “generates” or “creates” revenue for the government. “Any public revenue in any form” doesn’t mean “some” revenue in “certain” forms.
A lawsuit by legislative Republicans or affected businesses is now the necessary course of action. This would provide the Nevada Supreme Court an opportunity to make amends for its embarrassing Guinn v. Legislature decision in 2003 — a ruling the justices later repudiated — which allowed lawmakers to ignore the supermajority requirement during a budget impasse.
Republicans should be prepared to move promptly once the governor signs SB551. There could also be a lawsuit on behalf of employers who’d pay the higher rate.
“We are definitely looking at that option,” Randi Thompson, a lobbyist for the National Federation of Independent Business, said.
Good. The alternative is to allow the LCB and legislative Democrats to flout the constitution and the will of voters by declaring for sheer political convenience that the plain English of the two-thirds requirement doesn’t mean what it says.