Las Vegas Sun

December 9, 2016

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Opponents of Nevada tax increase forging ahead in repeal effort

A contingent of Nevada conservatives remains undeterred in its efforts to repeal a portion of Gov. Brian Sandoval’s $1.5 billion omnibus tax plan passed during the last legislative session, even as those repeal efforts remain tied up in the courts.

Lawyers from a coalition supporting the tax plan filed an appeal with the Nevada Supreme Court Tuesday, asking the court to reconsider a ruling made by a lower court judge last month in favor of repeal supporters. But that isn’t stopping Republican State Controller Ron Knecht and others involved with the RIP Commerce Tax PAC from continuing to push ahead in gathering signatures to get the measure on the ballot.

“There’s no reason to dither waiting for the results of the appeal,” Knecht said. “We’re going out and getting signatures aggressively.”

The so-called commerce tax that the group opposes is one portion of a tax plan the Legislature passed in June, largely to increase funding for education. The tax applies to businesses with more than $4 million in annual revenue in Nevada.

Those who want to repeal the tax must gather 55,000 signatures across Nevada before mid-June to qualify for the ballot, including about 14,000 from each of the state’s four congressional districts. Those signature-gathering efforts have, so far, been on a volunteer basis, emailing supporters a PDF and having them print out copies themselves, Knecht said.

But because voters can only sign petitions that are circulated in their county and district, Knecht said signature gathering in the north, which falls under one congressional district, is easier than it is in the south, which is divided into three districts.

The campaign believes it can rely mostly on volunteer efforts to gather the required number of signatures in the north but plans to hire a professional team to reach the required number of signatures in the south.

Professional signature gatherers are costly, about $1 to $3 per signature, which means the group could be facing a bill of more than a $100,000. RIP Commerce Tax has only raised $12,700, according to campaign filings, $5,000 of which was a loan that has since been repaid and $7,500, which went toward paying lawyers to defend the repeal in court.

By contrast, the group opposing a repeal, Coalition for Nevada’s Future, has brought in more than $240,000 — almost all of it coming from the gaming industry — of which only $15,000 has been spent so far on a consulting group. (Casinos back the tax plan because it applies to all business, not just the gaming industry.)

Knecht said those numbers didn’t make him nervous and that he expected to be “vastly outspent.” He added that he believed that more money for the campaign was still to come.

“When all the court cases are resolved, you’ll see the money people coming forward, the professional signature gatherers being hired,” Knecht said. “Even the volunteers are a bit iffy about things as long as there’s a court case, even though I’ve told everybody to look at the numbers.”

The numbers Knecht is referring to are the results of the 2014 election, in which 80 percent of Nevadans voted down a tax increase, known as the margin tax ballot initiative, which was a flat 2 percent rate on businesses earning more than $1 million. The commerce tax has 26 different rates, depending on the type of business and revenues, ranging between .051 and .331 percent.

State legislators supportive of the tax plan repeatedly deflected comparisons between the two taxes during the session, but Knecht and other supporters believe the two are comparable. They plan to make the argument to voters that the tax could one day be expanded to include all businesses, not just those making more than $4 million a year.

Ultimately, only 10 Assembly Republicans voted against the entire tax plan, five short of what was needed to prevent a two-thirds majority from passing a tax increase. Knecht, who is personally traveling around to Lincoln Day dinners to gather signatures, believes things will turn out differently at the November ballot box.

“I think the voters are on our side big time,” Knecht said.

But supporters of the tax have appealed a December ruling by a lower court judge to the Nevada Supreme Court in the hopes that a repeal is defeated in the courts.

In a 53-page filing, lawyers for the Coalition for Nevada’s Future ask the court to bar a repeal on a number of grounds, including that the petition to place the law on the ballot is misleading, includes administrative details and violates the Nevada constitution.

Because of the way Nevada law works, the language of the tax would appear on the ballot for voters to either approve as it stands or repeal entirely. If voters choose to approve the tax, the Legislature would be barred from amending or repealing any portion of the tax. Any changes would have to again come before Nevadans for a popular vote.

“In our opinion, we think it’s best that this does not qualify for the ballot,” said one of the coalition’s attorneys, Matt Griffin. “There’s obviously discussions and strategies around if and when scenarios, but right now our focus is predominantly upon preventing it from going to the voters.”

Both sides hope the court grants a request for expedition in the case, but a decision could still take several months, either before or after the June filing deadline.

Until then, Knecht and others opposed to the tax to keep working to get it on the ballot.

When asked if he was confident that they could get the measure on the ballot, Knecht said they “will find out in the next five months.”

“I’m confident enough that I’m working my tail off,” Knecht said.

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