Las Vegas Sun

March 3, 2024

Legislature 2013:

OK, voters, margins tax ball is now in your court

Deciding to raise taxes is now your choice, Nevadans.

A 2 percent margins tax on businesses will head to your ballot in 2014, and it’s slated to raise about $800 million for primary education in Nevada.

The Nevada Legislature took no action within the 40-day limit it had to pass or reject the measure, meaning Nevada voters now get to play policymaker and vote the margins tax up or down.

“I don’t believe the votes are there,” said Assembly Speaker Marilyn Kirkpatrick, D-North Las Vegas, about the initiative measure.

Legislators of both parties never warmed to the tax on businesses that make $1 million or more per year in revenue. The Legislature gave the tax a show hearing in which its sponsor, the state teachers’ union, trotted out supporters who cheered for the tax. Business groups booed, and at least one legislator verbally ripped into a Las Vegas Chamber of Commerce lobbyist who opposed the tax.

But the margins tax initiative petition never made it out of committee, and nobody brought any emergency measures to the Senate or Assembly floor to pass or reject it at the last minute because Democrats would not bring it to a vote.

“It’s going to the people either way,” said Sen. Debbie Smith, D-Sparks. “I’m focused on solving our problems so that we have education funding for the coming school year, not down the road.”

The teachers’ union, which usually aligns with Democrats, would have been “upset” if the tax was voted down, said Craig Stevens, lobbyist for the Nevada State Education Association.

But the real winners of the day may not have been the teachers union, who gathered the signatures necessary to get the tax on the ballot in the first place, but a few lawyers who racked up billable hours fielding legal questions about a possible alternative to the margins tax.

With the margins tax guillotine hanging over their heads, a group of six Republican senators who virulently dislike the margins tax proposed an alternative tax on the mining industry this past week.

The state constitution allows for the Governor and Legislature to put a competing measure on the ballot, meaning voters could have two tax choices, and whichever one wins more votes would become law.

But the constitution lacks clarity on the process for placing an alternative on the ballot, and a key question remains as to whether the Legislature must explicitly vote down an initiative petition like the margins tax before its members can introduce an alternative.

In 2011, legislators voted to reject an initiative petition that would have imposed a sales tax in a special district on the Strip for an arena.

Later, Gov. Brian Sandoval and the Legislature worked to introduced an alternative.

This time, though, Sandoval is not aligned with the mining tax alternative, which Senate Minority Leader Michael Roberson, R-Henderson, and five other Republican senators support.

It’s unclear whether lawmakers can now propose an alternative since they did not actually vote to reject the petition within the 40-day window.

“We don’t believe it’s an issue that has been decided before,” said Rick Combs, director of the Legislative Counsel Bureau, which runs the operation of the Legislature. “There are arguments for both sides.”

Republicans in support of the mining tax alternative say that no action within 40 days is a de facto rejection.

“Our legal opinion is that if we don’t act on it, it’s rejected,” said Sen. Ben Kieckhefer, R-Reno, a proponent of the mining tax alternative.

It’s like asking somebody out to a date and not hearing back for 40 days: that’s certainly rejection.

Not so says the lawyer for the teachers’ union.

“It’s pretty clear that if they don’t formally reject it within 40 days, they lose that option [to introduce an alternative],” said Frank Flaherty, lawyer for the Nevada State Education Association. “If they try to float something after that 40 days without rejecting it, that gives us a great legal argument.”

He called the lack of rejection a “kill shot.”

If the alternative gains traction, it could end up in the state Supreme Court due to the confusion, and some are already forecasting a legal fight ahead.

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