Business groups laud judge’s ruling on taxes

The Retail Association of Nevada, Nevada Trucking Association, Nevada Franchised Auto Dealers Association, and the National Federation of Independent Businesses issued statements Monday in response to Carson City District Court Judge James Russell’s ruling on the lawsuit challenging the constitutionality of SB551 and SB542 passed during the 2019 legislative session.

“We applaud the ruling by Judge Russell, confirming the intent of the voters to require a two-thirds majority to raise taxes in Nevada,” said Bryan Watcher, senior vice president of the Retail Association of Nevada. “Legislative leaders irresponsibly gambled with education dollars and put our students’ education at risk.”

“Judge Russell confirmed that the Constitution is not a document that should be open to the partisan interpretation by the party in the majority,” said Paul Enos, CEO of the Nevada Trucking Association. “This ruling clearly sends the message we have been saying all along, that lawmakers should not have clearly disregarded the voters’ intent when it comes to the Constitution.”

State Senate Majority Leader Nicole Cannizzaro, D-Las Vegas, sponsored the measure in 2019 to extend the state’s modified business tax, saying Nevada schools needed a consistent, long-term funding source. While the Assembly passed the measure 28-13, clearing the two-thirds requirement, the vote in the Senate was 13-8, one vote short of the 14-7 majority needed under the state Constitution.

The issue was raised after Legislative Counsel Bureau was asked during the 2019 Legislature whether the two-thirds requirement applied 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.”

“LCB concluded that such a bill did not need the required constitutional two-thirds majority,” according to court documents in the case.

Republicans warned at the time that, if the majority used that opinion, the issue would wind up in court.

Senate Democrats say overturning those pieces of legislation would strip more than $100 million from the K-12 budget.

The taxes at issue were part of the Nevada Revenue Plan championed by former Republican Gov. Brian Sandoval during his campaign to put more money into public schools. The package was approved by the Legislature on May 31, 2015. The original measure, which added more than $600 million to education funding over two years, passed overwhelmingly, 18-3 in the Senate and 30-10 in the Assembly.

But the extension of those measures did not quite reach the same levels of support, and Russell handed an early victory to opponents of the tax.

“This ruling is a significant victory for Nevada’s smallest businesses,” according to Randi Thompson of the National Federation of Independent Business. “The burden of these unconstitutional taxes during the COVID-19 pandemic have added an additional hurdle to Nevada businesses that are struggling to keep their doors open, and this ruling will provide even the smallest relief.”

Andy MacKay, executive director of the Nevada Franchised Auto Dealers Association said, “Nevada’s auto dealers, as well as our partners, have consistently supported the modified business tax as a reasonable and easy to understand method of taxation; however, we do not support taxation that defies the long-held practice of requiring a two-thirds majority vote for any legislation regarding taxation.”

The state likely will appeal Russell’s ruling to the Nevada Supreme Court.