CARSON CITY — Debate and finger-pointing continued Wednesday as Nevada lawmakers worked on a new “green” building tax break plan and traded arguments with Gov. Jim Gibbons over his order suspending their 2005 tax abatement law.
The new plan, to replace one vetoed Monday by the governor, was expected to be introduced today and discussed Friday in a joint Senate-Assembly committee hearing.
As lawmakers worked on the new bill, their legal counsel issued an opinion stating the governor’s order suspending tax breaks for energy efficient building projects doesn’t pass legal muster. The four-page opinion authored by Senate Legal Counsel Kevin Powers concludes that Gibbons’ executive order is “not valid and enforceable.”
The governor doesn’t have the constitutional authority to suspend the impact of the law passed in 2005 as Assembly Bill 3 during the 22nd special session, according to the opinion. Gibbons cannot order state agencies to act contrary to statute, Powers said.
In response to the Legislative Counsel Bureau’ legal opinion, Gibbons said in a prepared statement that he believes he has the legal authority to suspend the costly tax breaks.
The governor defended his actions, saying if he had allowed the vetoed bill to go into effect, “the unintended consequences for Nevada’s taxpayers could have been significant.”
The Senate had not yet taken up the vetoed bill on Wednesday. Majority Leader Bill Raggio, R-Reno, said the Senate is in no hurry and will wait to consider a veto override until after a Friday hearing on the new legislation that may alter the tax incentive program.
Senate Minority Leader Dina Titus, D-Las Vegas, said the Legislature should take some action in response to Gibbons’ unconstitutional executive order.
“I would like to see this Legislature not just say, ‘Oh well, here’s the governor doing something else,’ but to take some kind of proactive step,” Titus said. “We should be standing up for protecting what powers we were granted in the constitution.”
Gibbons on Monday vetoed Senate Bill 567 passed this session. The bill sought to suspend the tax breaks while the 2005 law enacting the benefits was reviewed and reconsidered.
Lawmakers are concerned about the tax breaks’ impact on the budgets of local governments and the public schools. The tax exemptions total tens of millions of dollars in property tax and sales tax breaks.
Gibbons also issued an executive order suspending the tax breaks for all but four projects until June 4, the date the Legislature is scheduled to adjourn.
Gibbons exempted the CityCenter project on the Strip, the Fontainebleau project, Las Vegas Sands Corp.’s The Palazzo, and a Patagonia outdoor apparel company project in Reno out of concern the companies could sue if the tax breaks were suspended.
The sales tax savings for the three Las Vegas projects exempted by Gibbons’ executive order will total $162 million over the upcoming three fiscal years alone.
In his prepared statement, Gibbons said: “The executive order was a lawful, reasonable, appropriate and necessary exercise of executive authority. As executive, I have the right to direct administrative agencies, as that order did, particularly when the legislation in question specified no time limit.
“I agree with the LCB (Legislative Counsel Bureau) that I cannot, using an executive order, supersede legislation and disregard time limits in that legislation. However, the legislation is silent regarding the time periods within which the administrative agencies need to review pending applications. Therefore, my order to suspend such reviews does not supersede legislation, it simply directs agencies how to administratively process pending applications. That direction is within my constitutional authority.”
More than a dozen companies have sought the exemptions for construction projects using what are called Leadership in Energy and Environmental Design, or LEED, standards.
There was no good estimate of the cost of the tax breaks when the bill was passed two years ago.
Titus defended the actions of the Legislature in approving the tax breaks in 2005, saying problems arose when state agencies expanded the program beyond legislative intent.
“The Legislature has gotten a bad rap on this,” she said. “The legislation that was passed was greatly expanded by the Tax Commission and the governor’s own Energy Office.”
Titus said the paper trail of the applications from companies seeking the tax breaks shows they all pursued the program in different ways, from making phone calls to sending letters to hiring attorneys.
“It is a mess. It is a disaster,” she said. “There were no regulations put in place by the Tax Commission.”
Thomas Sheets, chairman of the Tax Commission, has said the panel carried out the intent of the 2005 law.
Dino DiCianno, executive director of the state Taxation Department, has said nothing in the law clearly stated how the commission was to act.
The Associated Press contributed to this report.2007 Nevada Legislature