Debate and finger-pointing continued Wednesday as Nevada lawmakers worked on a new "green" building tax break plan and traded arguments with Gov. Jim Gibbons over his order suspending their 2005 tax abatement law.
The new plan, to replace one vetoed Monday by the governor, was expected to be introduced today and discussed Friday in a joint Senate-Assembly committee hearing.
As work on the new bill continued, the lawmakers' legal counsel issued an opinion that Gibbons' executive order temporarily suspending tax breaks for all but four energy-efficient building projects was "not valid and enforceable" because the governor went beyond his constitutional authority.
Gibbons countered that his order was "lawful, reasonable, appropriate and necessary," and didn't amount to an executive-branch end run around the 2005 law.
With lawmakers moving rapidly on the replacement measure, the opinion challenging his executive order "should have no effect" because the new proposal will fix the "unintended consequences" caused by the 2005 law, Gibbons added.
If the 2005 law remains in place, the tax breaks will amount to hundreds of millions of dollars. The revenue loss has a direct impact on local governments and schools - and if Nevada schools fall short of a certain amount of taxes, the state must make up the difference.
That requirement worsens a revenue shortfall in the state's operating budget, complicating the legislators' efforts to adequately fund agency operations and complete a nearly $7 billion spending plan for the state for the coming two fiscal years.
Senate Commerce and Labor Chairman Randolph Townsend, R-Reno, one of the legislators working on the new tax break plan, said Wednesday he wanted to make the record "extremely clear" that lawmakers shouldn't be blamed for confusion over the 2005 law.
Townsend also said the controversy over the tax breaks can have "devastating" consequences because businesses look for consistency in government policies in deciding whether to start new projects.
"One thing you can do to undermine economic development and growth in this state is to be inconsistent in your regulatory policies," he said.
Senate Minority Leader Dina Titus, D-Las Vegas, also working on the replacement plan, criticized the state Tax Commission for not properly adopting rules to implement the 2005 law. "It is a mess. It is a disaster," she added.
Thomas Sheets, chairman of the Tax Commission, has said the panel carried out the intent of the 2005 law. Dino DiCianno, executive director of the state Taxation Department, has said there was nothing in the law clearly stating how the commission was to act.
Titus also urged lawmakers to strongly challenge Gibbons' executive order, which she said "goes far beyond" a governor's constitutional powers.
Gibbons, in vetoing SB567, a tax-break suspension measure approved May 3 by lawmakers, said Monday that efforts to modify the 2005 tax breaks should include public hearings "where taxpayer concerns can be discussed and debate and the long-term fiscal impact of any tax exemptions or abatements can be carefully analyzed."
"To date, those hearings have not occurred," Gibbons said, referring to the rushed move by lawmakers to give final approval to S B567.
The governor said legislative hearings are needed to establish a record "before we yank the rug out and just assume that we have no liability here." He added that his action was "a very prudent course."
Gibbons said he based his decision in part on his own research, on discussions with outside lawyers and on a letter from Attorney General Catherine Cortez Masto, which he got in response to a request for a legal opinion.