Never tell the boss no.
This past week the Legislative Counsel Bureau, the Legislature’s attorneys, told Democratic Gov. Steve Sisolak and the Democratic majorities in both the state Senate and Assembly what they wanted to hear: Extending taxes scheduled by law to be reduced does not require a two-thirds vote of all lawmakers, just a simple majority.
In the 21-member Senate, Democrats are one shy of the 14 votes required to meet the two-thirds threshold established by a constitutional amendment approved by voters in 1994 and 1996, which states “an affirmative vote of not fewer than two-thirds of the members elected to each House is necessary to pass a bill or joint resolution which creates, generates, or increases any public revenue in any form, including but not limited to taxes, fees, assessments and rates, or changes in the computation bases for taxes, fees, assessments and rates.”
The governor pledged in his State of the State speech at the start of the legislative session that his $8.9 billion general fund budget contained no new taxes, but it does include a proposal to keep at the current rates two taxes that are scheduled to be reduced in June.
The modified business tax passed in 2015 by a two-thirds vote of lawmakers contained specific language saying the rates would be reduced in 2019 if tax revenues exceeded a certain level, which they have. A tax on vehicle registration was also approved with the caveat that it would go down in June, the start of the fiscal year.
The scheduled reduction in the modified business tax would reduce annual revenues by $48 million a year, while the vehicle tax revenue would drop by $21 million a year — a total of $138 million for the two-year budget.
Continuing that burden on taxpayers sure sounds like it “creates, generates, or increases” public revenue. It certainly generates.
But the LCB is telling lawmakers, “It is the opinion of this office that Nevada’s two-thirds majority requirement does not apply to a bill which extends until a later date or revises or eliminates a future decrease in or future expiration of existing state taxes when that future decrease or expiration is not legally operative and binding yet, because such a bill does not change but maintains the existing computation bases currently in effect for the existing state taxes.”
Not binding? How can something approved by a two-thirds majority be undone by a simple majority?
Asked nearly the same question in 2011, 2013 and 2015, the LCB said a two-thirds vote was necessary.
Gov. Sisolak said he appreciated the decision.
“Regardless, I am continuing conversations with legislative leaders of both parties about supporting my budget that would keep funding at our current levels in order to help fund our schools and educators, provide health coverage under Medicaid expansion for our families, and feed our seniors through Meals on Wheels,” his statement said. “As this legislative session comes to a close, I look forward to working with the Legislature to pass a budget that reflects our core values – making sure that Nevada’s economic recovery reaches every family, that our schools prepare every child to reach their potential, and that our health care system is there for every Nevadan who needs it.”
But several media outlets quoted Senate Minority Leader James Settelmeyer as calling the opinion “a work of legal fiction.”
He also said he does not believe any member of the Senate Republican caucus would break ranks and give the Democrats the one vote they would need to reach the two-thirds majority threshold. He also said that passage of the tax extensions by a simple majority would doubtlessly end in litigation.
“Unfortunately, it means that the majority party has decided to not try to reach compromise or discussions on issues, and unfortunately going down this road just guarantees legal challenge,” Settelmeyer was quoted as saying.
The Nevada Supreme Court did rule in 2003 that taxes could be raised by a simple majority vote if the lawmakers failed to adequately fund education as required by the Constitution, but that opinion was reversed in 2006 when the court ruled, “The Nevada Constitution should be read as a whole, so as to give effect to and harmonize each provision.”
If lawmakers try to continue to assess those two taxes without a two-thirds majority, it certainly should end up in court.