Las Vegas Sun

March 28, 2024

Nevada among few ‘supermajority’ states

By failing to break a deadlock over proposed new taxes for the next biennium the Nevada Legislature has earned a unique place in the annals of American legislative history.

Nevada is one of only seven states that require all taxes to be approved by at least two-thirds of both the Senate and Assembly. Earlier this month Nevada became the first of those states to convene a special session to resolve a tax dispute, according to national tax experts and legislative aides in the other states.

Nevada lawmakers will be convening their second special tax session when they meet again in Carson City on Wednesday to determine whether to implement new business and entertainment taxes and increased cigarette and liquor taxes.

They'll need at least 14 votes in the 21-member state Senate and 28 in the 42-member Assembly to break the stalemate over a proposed $869 million tax increase sought by Gov. Kenny Guinn that he says is necessary to keep up with the state's nation-leading population growth.

Other "supermajority" states have managed to avoid special sessions through compromises that usually have had the support of the governor. The compromises typically consist of a combination of tax hikes with spending cuts, an adjustment in a proposed tax rate, or a vow that opposition lawmakers' pet projects will be funded in order to secure their votes.

"Normally, the taxes that have been approved in this state are those that the governor wanted to have done," Jerry Guillot, chief of staff of the Louisiana State Senate, said. "Those individuals who have asked for taxes without administrative support have been almost 100 percent unsuccessful."

In addition to the seven states that require at least two-thirds legislative approval for all taxes, eight other states have less restrictive supermajority laws. All have generated plenty of debate among anti-tax advocates, think tanks and politicians.

Limiting growth

Proponents of supermajority laws say the tougher voting hurdles control unwieldy spending and limit the ability of a state government to grow. One such proponent is the National Taxpayers Union, an Alexandria, Va., organization that advocates lower taxes.

"It puts into place a limit that prevents the government from growing faster than the people's ability to pay for it," Pete Sepp, spokesman for the organization, said. "For people who believe that state and local tax burdens are high enough already it should take more than a simple majority to raise that burden.

"Raising taxes is one of the most critical decisions a legislative body can make so it should be placed on a higher plane than other decisions."

Opponents say that supermajorities are not democratic because they give too much power to a legislative minority and are unfair because they can protect tax loopholes that benefit certain individuals or special interests.

One such opponent is the Center on Budget and Policy Priorities, a Washington research group that has supported policies that benefit low- and moderate-income families.

Nicholas Johnson, director of the center's State Fiscal Project, said that supermajorities tie the hands of legislators and governors.

"A supermajority gives power to a legislative minority in a way that undercuts accountability," Johnson said. "It allows the minority to play games. It creates an unlevel playing field among different policy decisions.

"It makes it easier to cut spending than to get rid of tax breaks. Anytime you create an artificial constraint like that it has unanticipated side effects, such as a state pushing down costs to the local level. Or, they may not increase taxes but they'll increase fees."

Nevada's designation as a supermajority state was sealed in 1996 after voters approved -- for a second consecutive election -- a constitutional amendment that requires support from two-thirds of both the state Senate and Assembly in order to pass new taxes. The initiative was authored by Rep. Jim Gibbons, R-Nev., an assemblyman at the time who ran on an anti-tax platform during an unsuccessful gubernatorial bid in 1994 but who eventually gained election to Congress in 1996.

"The issue is one of accountability, reining in the tax-and-spend attitude of the liberal side of our Legislature," Gibbons told the Sun in 1994. "That is why I elected to go to the people with an initiative. Absolutely it's part and parcel of that deep-rooted public sentiment that government has lost touch with the people of Nevada.

"I guarantee you the Nevada State Education Association will oppose it. They hate the idea because most of their programs rely on tax increases. I think you'll see gaming come out against it simply because they would put taxation on everything except gaming. Gaming sees this as a threat to its ability to control the Legislature."

It so happens that the education association, which represents teachers, and the gaming lobby have been key players in Nevada's ongoing tax debate, the first that has occurred since the two-thirds law went into effect.

Educators favor increased taxes to support schools that are struggling financially while gaming interests have been pushing for a broader-based tax system, arguing that they pay more than their fair share.

A majority of both legislative houses passed a state budget bill for the next biennium during this year's regular session but couldn't meet the two-thirds requirement to approve the taxes necessary to fund that bill. The budget for kindergarten through 12th grade education also has not yet been approved.

The hang-up on taxes is particularly acute on the Assembly side, where minority Republicans have at least the 15 votes necessary to block new taxes no matter what the Senate does. The GOP assemblymen have said they would approve the education budget but want Guinn to cut other budgets, such as welfare, something he has refused to do.

Gibbons said in a telephone interview last week that his two-thirds initiative is working as designed because it has prevented "poor tax policies" from being adopted and has made it difficult for special interests to get their way.

"This is exactly what it was designed to do," Gibbons said. "The worst of the tax policies was the gross receipts tax, especially when you have mom and pop businesses operating at 1 percent to 2 percent profit. That would have done an enormous disservice to the small businesses in this state."

At the same time, he defended his initiative against critics who have said that it gives a legislative minority too much power on issues of taxation.

"You can't say that simply by having two-thirds required in law, it is an obstacle to getting a tax into law," Gibbons said. "Every tax increase in the state of Nevada received a minimum 75-percent support."

He also said polls have shown that the vast majority of Nevadans continue to support the two-thirds law.

"It seems to me the general public feels the initiative is doing the work it was designed to do," Gibbons said. "It may be an inconvenience for lawmakers, but it protects the taxpayers."

Oklahoma has the nation's strictest supermajority hurdle, requiring approval from at least three-fourths of both houses of its legislature for all new state taxes. Nevada's two-thirds requirement places it in the next toughest tier, along with Arizona, California, Louisiana, South Dakota and Washington state.

Eight other states -- Arkansas, Colorado, Delaware, Florida, Michigan, Mississippi, Missouri and Oregon -- require either 60 percent approval in both houses or supermajority votes for some taxes but not others.

For instance, the law in Arkansas that requires approval of three-fourths of both of its legislative houses pertains primarily to sales and liquor taxes but does not apply to state taxes that existed before 1934. Colorado's two-thirds law applies only to temporary emergency taxes and Michigan's three-fourths law covers only property taxes.

Falling short

Efforts have also been made to require new federal taxes to receive two-thirds support in both houses of Congress. But the latest attempt in the House failed last year by falling short of the two-thirds vote required to send the bill to the Senate.

Legislative aides from other states interviewed by the Sun said that supermajority laws often have dissuaded legislators in their states from proposing new taxes. Oklahoma, South Dakota and Arizona are examples of states that have had no significant tax increases since their laws have been in effect.

But none of the other supermajority states have faced Nevada's combination of rapid population growth and debate over whether the state needs a revamped tax system to ensure more stable revenues.

Guy Hobbs, chairman of last year's task force that recommended new and increased taxes to solidify Nevada's revenue stream, said there is no question the case has been made for that to happen if the state wants to maintain its current levels of service.

"The strongest argument made by the task force is, are we able to afford what we have today?" Hobbs said. "The answer from all the quantitative methods we used was 'no.' "

California, Missouri and Delaware, three other supermajority states, are also in the midst of fierce legislative debates over budgets and taxes. California is facing a potential $38 billion budget deficit and is exploring a temporary sales tax increase, an increase in cigarette taxes, and an adjustment in its upper income tax bracket, Diane Cummins, chief fiscal policy adviser for Senate President Pro Tem John Burton, D-San Francisco, said.

Cummins said California's two-thirds rule has come into play because the Democrats, who hold the legislative majority in that state, need two Republicans in the state Senate and six in the Assembly to change their minds in order to enact the tax increases. The Republicans aren't budging.

"The Republicans are saying they will vote for no increased taxes," Cummins said. "We're getting down to the time when our fiscal year ends so there's pressure to fund the budget. We have borrowing issues and payment issues in terms of who gets paid when there's no budget."

It was California's property tax revolt of the 1970s that sparked anti-tax fervor elsewhere in the nation. California now may be taking the lead in another direction by attempting to weaken its supermajority law.

"There is an initiative in circulation right now that would lower that to a 55-percent vote," Cummins said.

Missouri, like Nevada, has convened a special legislative session this month to resolve budget and tax issues. Unlike Nevada, Missouri's two-thirds supermajority law applies only to emergency taxes. Still, Democratic Gov. Bob Holden has been unable to convince the GOP-controlled Missouri Legislature to increase gaming and cigarette taxes. The legislators would rather solve that state's budget gap with anticipated federal funds, according to news accounts.

Delaware, which requires 60-percent legislative approval of all taxes, is considering higher business, gaming and cigarette taxes to cure its budget deficit. Delaware Controller General Russell Larson said it was too early to tell whether that supermajority would be achieved but he said his state has managed to avoid special sessions to approve tax increases.

"Every tax is a compromise," Larson said. "There has been a lot of compromise here at the top levels of government."

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