Judge rules Nevada Commerce Tax repeal effort can advance

By Michelle Rindels, Associated Press

Wednesday, Dec. 2, 2015 | 1:40 p.m.

CARSON CITY — A Carson City judge ruled Wednesday that an effort to repeal the new Nevada Commerce Tax can move forward — a setback for a supermajority of lawmakers and the governor who backed it this spring as a way to increase funding for public education.

Judge James Wilson rejected arguments from the Coalition for Nevada's Future, a group of gambling, mining and business interests that sought to invalidate a petition from the PAC "RIP Commerce Tax" that seeks to repeal the measure. Wilson disagreed with the coalition's technical objections to the language of the petition, and said the group's view of the referendum process leaves little recourse for the average voter to challenge legislation they oppose.

"The hyper-technical interpretation of the requirements ... may impede the people from exercising their constitutional right to propose laws," Wilson said as he handed down the ruling.

Coalition attorneys including Matt Griffin and Kevin Benson argued against the petition on several grounds. They said it should only deal with policy but instead addresses "administrative details" such as accounting processes, argued it would unlawfully unbalance the budget with no way to backfill the money and asserted that it doesn't properly inform voters about the budgetary consequences the measure would create.

The judge's rejection of those arguments is a victory for Republican Controller Ron Knecht and others who are opposed to the tax, which applies to businesses with more than $4 million in annual Nevada revenue. Their attorney, Craig Mueller, said he couldn't think of any more appropriate use of the referendum process than repealing the tax that the Legislature passed "in ignorance or arrogance" shortly after voters rejected a tax measure on the 2014 ballot.

"This is nothing more than people trying to stop the political process, and the judge was obviously having no part of it," Mueller said of the coalition's arguments.

The coalition could appeal Wilson's ruling, but attorneys for the group said they want to talk with their clients first before committing to that. Tax opponents must gather more than 55,000 signatures statewide to place the measure on the ballot in 2016 and said they're ready to start that work.

"We're going to print the petitions without waiting to see if they appeal to the Supreme Court because the court was so definitive in our favor," Knecht said. "It isn't much of a risk."

The decision is a setback for Republican Gov. Brian Sandoval and more than two-thirds of lawmakers who backed the measure as part of a $1.1 billion tax package. The commerce tax is projected to bring in about $120 million every two years — a relatively small part of the overall, $7.4 billion general fund budget, but a step toward updating and diversifying the state's tax revenue stream.

Tax proponents say that if the referendum makes it to the ballot, it could have negative consequences regardless of where the majority of voters land. Voters could opt to repeal the tax and leave a hole in the budget, or affirm the tax and cement it in statute where the Legislature could not adjust the rates or clean up flaws.