Supreme Court knocks $62 million hole in budget: State can't take water coalition money

In a unanimous decision Thursday, the Nevada Supreme Court ruled the state can't take the $62 million in cash from the Southern Nevada Clean Water Coalition.

That money was used to balance the current biennial budget by the 26th special session of the Legislature. Making up the loss puts a $62 million hole in Gov. Brian Sandoval's proposed budget.

The court ruled the taking violates the state constitutional "mandate that all laws be general and operate uniformly throughout the state."

The decision sent lawmakers to Legislative Counsel Brenda Erdoes' office asking whether that decision has broader applications. Ways and Means Chairwoman Debbie Smith, D-Sparks, said lawmakers need to know specifically whether the ruling also applies to the governor's proposal to use Clark and Washoe counties school bond reserves and to take a portion of the property tax revenues from those two counties, which together would add $265 million more to the gap between the proposed budget and the revenue available.

The Clean Water Coalition was created by four local government entities in Southern Nevada to develop a regional waste water collection and treatment facility. The money came from sewer connection and use fees throughout urban Clark County over the past eight years. But the project has been on hold for a variety of reasons and, according to the court opinion it isn't clear whether or not the project has been terminated. Lawmakers and the governor reasoned they could take the money because the project was dead and it was just sitting in a fund.

The high court ruled that taking the Clean Water Coalition funds for the state General Fund would be unconstitutional because it imposes a tax burden on just one part of the state rather than a general law applied equally across Nevada. The opinion said taking the user fee money transformed it into a local and special tax prohibited by the constitution, the opinion states.

"This is true because they would no longer bear any relationship to the purpose for which they were assessed once mixed into the General Fund," the opinion states.

The high court agreed the state's budget crisis "presents exigent circumstances that must be addressed," but stated those circumstances cannot be addressed in legislation that violates the constitution.

"Political differences that might make it difficult to agree on a generally applicable law to address the state's budget crisis do not create 'special circumstances' that would permit a local or special law to address a concern that affects the entire state," the opinion states.

The question before the governor and lawmakers now is whether the ruling applies to the school bond reserves and property tax grab contained in the governor's recommended budget.