Judge rejects Nevada teachers union tax proposal

More than 60,000 Nevadans were misled into signing their support to a tax initiative that organizers claimed would generate $800 million for public schools, according to a state judge who struck down the initiative Tuesday.

But the Nevada State Education Association and local teachers unions aren't giving up on their tax initiative just yet, President Lynn Warne said. The association, which is backing the measure to impose a 2 percent margins tax on businesses making $1 million or more annually, will appeal to the Nevada Supreme Court.

And, while waiting, it will continue to collect signatures, Warne said.

It can do so because the judge ruled the initiative invalid but didn't grant the injunction - sought by pro-business group Committee to Protect Nevada Jobs - prohibiting the gathering of signatures, union attorney Francis Flaherty said.

That's a silver lining for the teachers unions. If they win the appeal, they will need to gather and submit 72,352 signatures to the secretary of state. And they can't wait for the appeal, which might conclude after the state's Nov. 13 deadline for signatures.

"This petition is the will of the people," said Warne, who noted that resistance to a tax initiative is "part of the legal process."

But the committee has argued that the teachers union and its 22,000-word petition misled people by claiming the tax would raise $800 million a year for K-12 education.

No guarantee can be made that the tax would increase public school funding, said Brian McAnallen, a committee director and vice president of government affairs for the Las Vegas Chamber of Commerce.

District Judge James Wilson agreed.

"The initiative does not require increased spending on education," Wilson wrote in his opinion. "Nothing in the initiative prevents the Legislature from using margin tax revenue to replace general funds that would otherwise be used to support education."

Basically, the Legislature could keep education funding constant by taking $800 million that currently goes to education and using it for something else - a wash. The chances of this are likely because the state has fallen on hard times during the deep recession, and the Legislature is looking for money. The budget to be considered by the 2013 Legislature is expected to be a tight one.

"This was a money grab without thinking through the process," McAnallen said of the tax initiative.

When asked about this potential outcome of unchanged education funding, Warne said it's just a "hypothetical."

But it's a hypothetical "those being asked to sign the petition should know," Wilson wrote.

That hypothetical is also why Nevada school districts have shied from voicing support of the tax initiative.

The Clark County School District probably would receive about
$560 million of the tax increase because it teaches 70 percent of Nevada's students, but senior School Board member Carolyn Edwards is against it. The cash-strapped district could use more money to improve teacher salaries, among other things, but the initiative doesn't guarantee more money, she said. The average compensation, including benefits, of a Clark County teacher is more than $70,000.

"While I think we have a problem, this isn't the way to solve it," concluded Edwards, who is also president of the Nevada Association of School Boards. "Any tax plan needs to be just that, a plan that's well thought out."

And a tax initiative cannot be well thought out because it's not looking at the state's entire budget, she said.

"That's why we have a Legislature, to plan this out," she said.

The tax initiative also would be to the detriment of businesses that must pay the tax "even if the business operates at a net loss," Wilson wrote. All businesses generating $1 million of revenue must pay. But some might be confronting more than $1 million in expenses, McAnallen said.

Failure to reveal this is "deceptive and misleading, and invalidates the petition," Wilson wrote.

Contact reporter Trevon Milliard at tmilliard@reviewjournal.com or 702-383-0279.