Nevada Supreme Court upholds tax initiative

The Nevada Supreme Court thrust the discussion about taxes onto state lawmakers Thursday, upholding a business tax proposal backed by the teachers union and other labor groups and sending it to the 2013 Legislature.

In a unanimous ruling, justices overturned a lower court judge and rejected arguments by Committee to Protect Nevada Jobs, a pro-business organization, that the initiative to impose a business margin tax was flawed.

Critics argued that a required 200-word description of what the measure would do was misleading because it doesn't explain that the measure itself would not guarantee more money for education.

During oral arguments in December, Josh Hicks, attorney for Committee to Protect Nevada Jobs, argued that even if enacted, state lawmakers could decide to reduce general fund support for the school account and spend that money elsewhere. Voters should be told about the possibility that money for schools might not increase at all, he said.

But Francis Flaherty, representing the Nevada State Education Association, called that argument "raw speculation," and countered that initiative backers aren't required to disclose every conceivable scenario of what future legislators might do. He added that those types of detailed arguments for and against the measure would be included on the ballot if it gets to voters in November 2014.

Justices agreed, saying the description - the explanation voters see when asked to sign the petition - is not required to be all inclusive.

"Given the 200-word limit imposed on these descriptions, they cannot constitutionally be required to explain every detail or effect that an initiative may have," the opinion said. "This is especially true where, as here, the actual text of the initiative is 25 pages in length.

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

The measure was pushed by the Nevada State Education Association and other labor groups.

The margins tax proposal seeks to impose a 2 percent margins tax on businesses grossing more than $1 million. Backers have said it would raise $800 million a year and the petition says those taxes would be earmarked for the Distributive School Account, used for per-pupil funding.

Supporters gathered more than 150,000 signatures - more than twice the number needed - to keep the measure alive and send it to the Legislature that convenes Monday. Lawmakers have 40 days to act. If they reject it or take no action, it automatically goes to voters in November 2014.

Legislators could also come up with their own alternative proposal to appear on next year's ballot.

Democrats control both the Senate and Assembly but lack a two-thirds margin needed to pass tax increases. Incoming Assembly Speaker Marilyn Kirkpatrick, D-North Las Vegas, has said a discussion on Nevada's tax structure will begin early in the session, though Democrats have stopped short of advocating for new taxes.

Republican Gov. Brian Sandoval, midway through his first term, has said he will oppose any new taxes.