Gaming tax rate petition argued

CARSON CITY -- Retired Nevada Supreme Court Justice Miriam Shearing said Monday that she will try to decide quickly whether to throw out or keep intact a teachers union petition to increase the state gaming tax.

After a nearly three-hour hearing, Shearing said she realizes time is of the essence, but she did not give a date on when she will announce whether the Nevada State Education Association can continue to collect signatures on its petition to increase the gaming tax rate by 3 percentage points.

The teachers union, which started collecting signatures about a month ago, must collect 58,628 valid signatures by May 20 to qualify the proposal for the November ballot.

If voters pass the proposal then and again in 2010, the state constitution would be amended and the higher tax rate would begin in 2011.

But if the judge changes even one word of the petition, then the NSEA would have to throw out any signatures it already has gathered on the petition and begin anew, according to a past high court ruling.

As a retired justice, Shearing has been named a senior justice by the Supreme Court. She can serve as a judge when needed in Supreme Court and district court cases. On Monday she was acting as a Carson City District Court judge.

The gaming tax is 6.75 percent.

The teachers petition would raise an additional $250 million to $400 million a year to increase teacher pay, offer teachers incentive pay, add school days, reduce overcrowding and compensate teachers for out-of-pocket expenses.

None of the money could be used for pay for administrators.

On Monday, lawyers for the Nevada Resort Association and Las Vegas Sands argued the petition violates a state law that restricts the subject of petitions to one issue.

Attorney Todd Bice also argued that the 200-word description that the union wrote to explain the petition is nothing more than an "advertisement, a sales pitch that doesn't inform voters at all what happens if it becomes law."

Bice contended the petition contains language that was designed to specify current spending on education cannot be reduced if the petition receives voter approval.

As the petition is written, Bice said, only legislative-appropriated funds to education could not be shifted to other budgets. Local education spending and money raised from bond issues would not be protected, he said.

If the NSEA cannot explain what the petition does, then potential petition signers who petition circulators briefly meet in shopping malls could understand its intent.

"They are saying 'Let's just punt. Let the court figure out whether it is $5.1 billion, $2.6 billion or heck maybe $6.4 billion that is protected.' "

Sands lawyer Scott Scherer said the teachers union wants not only to increase gaming taxes, but also to set up requirements on how the money would be spent and create a minimum standard for education funding by the Legislature.

"That is an entirely different subject," Scherer said.

He said the proposal also would require state gaming regulators to begin audits of slot machine earnings at convenience stores.

But in response to their arguments, NSEA lawyer Michael Dyer said the purpose of the petition "is not to impose a tax on gaming," but to increase funding for education.

He said it is absurd to conclude NSEA must circulate one petition to increase the gaming tax and another to specify how funds would be spent on education.

"If you are going to require anything to be done, you have to raise money for that expenditure," he said.

Dyer said the 200-word petition description does not have to "mention everything," but must be a "fair" explanation of what its proponents believe the petition will accomplish.

If a judge disagrees, then that judge can rewrite the description or order lawyers to do that, he said.

The Resort Association is also battling two other proposals that would increase the gaming tax, to 20.2 percent. It has filed legal challenges against petitions being circulated by Southern Nevada lawyer Kermitt Waters that would allow voters to decide whether to triple the state's current 6.75 percent gaming tax.

Contact reporter Ed Vogel at evogel@reviewjournal.com or (775) 687-3901.