Group files lawsuit to block petition to repeal business tax

The group trying to block a ballot vote to repeal the business tax imposed by the 2015 Legislature filed suit Thursday in Carson District Court charging the proposed referendum violates Nevada’s constitution.

The Coalition for Nevada’s Future charged the proposed ballot question would unconstitutionally unbalance the state budget, improperly dictate even the smallest administrative procedures of state government and that it fails to explain the impact the ballot question would have on the state and its budget.

The lawsuit was filed shortly before the 5 p.m. deadline for challenging the petition that was filed by a group headed by state Controller Ron Knecht seeking to repeal the “commerce tax” portion of SB483, the legislation that imposed that as well as nearly two dozen other taxes.

Another group headed by conservative blogger Chuck Muth has challenged the entire piece of legislation. But one of its two lawsuits has already been rejected by Carson District Judge Todd Russell.

The challenge filed Thursday by coalition lawyers Matt Griffin and Kevin Benson says the proposed referendum violates the state constitutional requirement that the state have a balanced budget because it would illegally unbalance the existing budget by repealing a business tax intended to generate more than $121 million over the biennium. It says 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 petition, it argues, “does not require that the Legislature reduce the annual expenditures.”

It argues the people, by a vote, don’t have the power to enact special legislation, impose a personal income tax, restrict judicial interpretation of the state constitution or “unbalance the budget through the referenda process in violation of (Nevada’s constitution).”

“The people cannot propose, by referenda, a measure that would create a budget deficit,” the brief argues.

It also charges the Description of Effect — a 200 word explanation of what a ballot question would do —is inadequate because it doesn’t tell people if the tax is repealed, lawmakers must replace it with other revenue or the state budget must be reduced. “It is irrefutable that one of these two things must happen, yet proponents do not inform voters of this consequence,” the brief states.

Finally, the brief states the petition violates the constitution by dictating “administrative details,” citing several Supreme Court cases that say petitions and referenda are limited to legislation, not administrative matters. “Put more directly, the smallest administrative duties used by an executive agency will be forever enshrined in the law unless and until those specific provisions are repealed by the people,” the brief says.

If approved, Griffin and Benson argue, “the legislature can never change the length of time taxpayers keep records or the manner of refunding overpayments or the process of legal challenges by the attorney general or how and when and why the Department ot Taxation can request records from other state agencies in order to perform the department’s duties.”

One of the key issues the judge used in rejecting Muth’s attempt to repeal the entire 2015 tax package was it violated the requirement that a petition deal with a single subject. SB483 contains nearly two-dozen different subjects.

Knecht and his supporters focused on just the commerce tax in an attempt to get around that legal issue.

While the commerce tax was estimated to generate about $121 million over the biennium, the entire SB483 package was projected to bring $1.3 billion to the state budget, much of it dedicated to K-12 education programs.

No hearing has been set at this point on the commerce tax petition and suit.