Proposed business tax for education will go to Legislature

A petition to create a business tax to fund education was upheld, the Nevada Supreme Court ruled Thursday, sending it to the 2013 Legislature for action.

The ruling unanimously overturns the decision by Carson District Judge James Wilson that barred the petition from moving forward. Wilson said the 200-word description of effect describing what the statutory initiative would do was fatally flawed because it was incomplete, deceptive and misleading.

The Supreme Court, with just one business day to go before the start of the Legislature, disagreed, concluding that the description of effect satisfies the statutory requirement that it be a "straightforward, succinct and nonargumentative summary" of what the initiative is intended to do.

"Given that limited purpose and the 200 word restriction, the description of effect cannot constitutionally be required to delineate every effect that an initiative will have," said the opinion by Justice James Hardesty. "To conclude otherwise could obstruct, rather than facilitate, the people's right to the initiative process."

The statutory initiative demands the Legislature create a 2 percent tax on all businesses making more than $1 million a year. The estimated $800 million a year that tax would generate would be deposited in the state's K-12 education budget.

Teachers collected 152,713 signatures, more than double the 80,361 needed to put the proposed business tax before the 2013 Legislature.

Under the statutory initiative petition law, lawmakers have the first 40 days of session to act on the proposed statute. If they approve it and the governor signs it, the tax goes into effect. If they fail to act, the plan goes on the next general election ballot for the voters to decide.

The union's proposal was opposed by the Committee To Save Nevada Jobs, a coalition of business groups. Josh Hicks, the committee's lawyer, argued that he description of effect simply didn't tell voters everything the initiative would do. He said that included not saying lawmakers could put the money in the education budget but back out other state funding - effectively meaning education would not get the full benefit of the money. He said it didn't explain that the tax would raise $800 million a year and several other potential impacts if the tax were enacted.

Wilson agreed and declared the description "incomplete, deceptive, misleading and, therefore, invalid."

The high court rejected that argument saying, an initiative's description of effect does not need to mention every possible effect of an initiative and, in just 200 words, couldn't possibly do that.

"To reach a different conclusion would significantly hinder the people's power to legislate by initiative and effectively bar all but the simplest of ballot measures," the opinion states.

The opinion also quotes a previous opinion in an initiative case, stating that, "it is not the function of this court to judge the wisdom of the proposed initiative."

"We conclude that the committee's arguments regarding the description of effect's insufficiency lack merit and, to the extent the district court relied on them to invalidate the Initiative, that conclusion was in error and must be reversed," the opinion concludes.

It effectively directs the Secretary of State's office to present the initiative petition to the 2013 Legislature, which opens for business Monday at 11 a.m.