Nevada Controller Ron Knecht and supporters calling themselves RIP Commerce Tax asked Carson City District Court to dismiss the suit seeking to prevent putting the so-called Commerce Tax before Nevada voters next November.
The commerce tax was included in Senate Bill 483, the omnibus tax and revenue package adopted by the 2015 Legislature and signed by Gov. Brian Sandoval.
“The petition presents a textbook case of a referendum for approval or disapproval of a statute enacted by the Legislature,” the motion, which was filed Wednesday, states. “The petition deals solely with legislation enacted by the Legislature on the single subject of the Commerce Tax.”
A similar petition seeking to invalidate the entire text of SB483 was dismissed by Carson District Judge Todd Russell who ruled it violated the mandate that initiative and referendum petitions deal with a single subject. He also ruled it’s Description of Effect, a 200 word summary of what the ballot question would do, was inadequate.
In the case of the Commerce Tax challenge, the group argues: “The petition and its Description of Effect are clear, truthful and non-argumentative.”
“The Petition simply refers the legislatively enacted Commerce Tax to the voters for their approval or disapproval….”
They also argue the claim isn’t ripe for judicial review at this time because it’s “a substantive constitutional challenge that is not subject to judicial pre-election review.”
“Our petition truly seeks a referendum on part of a statute,” Knecht said.
The motion to dismiss was filed in Carson District Court at 2:43 p.m. Wednesday.
Knecht said he was hand delivering the copies to the opposition lawyers in the case so they were properly served before the Dec. 2 hearing on the case in District Court.
The group who filed to block the ballot question from even gathering signatures, the Coalition for Nevada’s Future, argued the proposed ballot question would unconstitutionally unbalance the state budget by removing the Commerce Tax portion of the law that’s projected to generate more than $120 million over the two-year budget cycle. Lawyers Matt Griffin and Kevin Benson argued neither the people by a vote nor the Legislature have “the authority to repeal a law that provides the state with revenue if such a repeal would result in state expenditures that exceed state revenue.”
“The people cannot propose, by referenda, a measure that would create a budget deficit,” the coalition argued.
Finally, the coalition brief argues the petition violates Nevada’s constitution by dictating “administrative details,” citing several Supreme Court cases that say petitions and referenda are limited to legislation, not administrative matters.
Knecht said the tax was passed by lawmakers as a piece of legislation and signed by the governor: “If the people can pass those measures, they, the people, can repeal them.”
Knecht said the requirement to balance the budget applies to the Legislature and, if the Commerce Tax is repealed, it would be up to that body to fix it in 2017.
“If the Legislature cuts taxes, it either has to find new revenues or cut spending,” he said.
He added the impact wouldn’t happen until the next legislative session because the Commerce tax revenues “will already have been collected before the referendum vote” in November of next year.
Knecht said the 2017 Legislature would then have to adjust its budgets to meet the requirements for a balanced budget without the Commerce Tax.
He said eliminating the Commerce Tax cuts the budget by just 1.6 percent and lawmakers would just have to “take that into account when they make the next budget.”