Nevada's Neros fiddle while the margins tax burns, cause potential legal nightmare


On Friday morning, instead of taking a stand on the most important issue confronting the Legislature and one that could forever change the state, lawmakers listened to music and watched dancing.

All that was missing: Legislators playing fiddles as the building burned. Yes, there are no heroes, only Neros in Carson City these days.

With so much promise – new leaders, big talk – I’d hoped that the biennial courage vacuum would be filled with concrete action. But by punting the margins tax to the ballot and not even taking a vote to do so, the Gang of 63 has shown just how fearful lawmakers are of standing up for anything or angering the teachers union, or both.

And in so doing, legislators have contributed to a legal maelstrom that could very well prevent them from proposing a tax alternative for the ballot. The Gang of 63 also may hasten a constitutional crisis because a taxing part of that document is so poorly constructed, exacerbate an ongoing separation of powers debate and place the state Supreme Court in the position of sorting all of this out. Again.

Friday marks the 40th day of the 77th session, the day on which the Legislature is mandated by the Constitution to either approve or reject (remember that word) the teachers’ union qualified initiative that would impose a margins tax. In what may be an emblem of the S.O.P for how the capital operates every other year for four months, the Legislature did….neither.

No vote to approve. No vote to reject. And therein lies the rub, mostly because of the complexities and vagueness of Article 19, Section 2 of the state Constitution.

Frankly, and sadly, I expected nothing less on the politics. Many Republicans would happily have cast a vote today against the margins tax, which many conservatives abhor and GOP business constituencies would have applauded. But the Democrats, who not coincidentally control both houses, refused to allow a vote in either the Assembly or the Senate.


“This was brought forward by the people and it will be decided by them in 2014,” the Senate Democratic Caucus said in a statement. “In the meantime we will continue working towards funding our schools immediately.”

Oh? Although I know Assistant Leader Debbie Smith believes, Pollyanna that she is, that a funding solution can be found before June 3, it has almost no chance to pass. And I know too many of her colleagues in the upper and lower houses simply don’t want to take a stand on the margins tax because of how the teachers union or others in their base constituency might feel.

It is cowardice, plain and simple.

But craven behavior is a dog bites man story in Carson City and elsewhere in politics. It’s the potential consequences of their spinelessness that is much more worrisome.


Lawmakers, even those whispering a good game, have all but short-circuited the serious tax discussion for the next 80 days unless they propose some new package themselves and get two-thirds to back it (that would include a handful of Republicans, who would have to vote for it twice over a certain gubernatorial veto). That’s because a plain reading of Article 19, Section 2 indicates that unless the Legislature formally rejects a petition – not simply pretends it does not exist – it loses the ability to propose an alternative.

The language says “the statute or amendment to a statute proposed thereby shall be enacted or rejected by the Legislature without change or amendment within 40 days.” Pretty simple, right?

Put aside the argument that tax policy should not be made at the ballot, which of course it shouldn’t be. But the teachers were frustrated by the Legislature’s serial inaction, so they circumvented lawmakers and went to the ballot process, qualified the margins tax and forced lawmakers to take action within 40 days, as the article mandates. And now, because of lawmakers’ inert behavior once again, tax policy will be decided at the ballot next year, with no alternative to tax mining or business or anything else likely to survive a legal challenge if it were to happen.

Lawmakers themselves believed as much last session when they passed Senate Concurrent Resolution 4 at the end of the 40 days to ensure they could place an alternative on the ballot during the arena wars. Notice the last line: "That the members of the 76th Session of the Nevada Legislature hereby reject Initiative Petition No. 1."

They surely did that on the advice of their legislative counsel, who would not comment for this piece but appears to have given different advice to would-be mining taxman Michael Roberson and the Democrats. Roberson says he has been told no formal vote was needed while the Democratic sources say they were told the opposite by legislative lawyers.

But as one lawmaker put it, “Why in God’s name would you have a legal issue like this out there if you don’t have to?” Yes, why, besides a lack of vertebrae in the capital?


The ultimate cynic might say Roberson knows what happened with SC4 last session, so maybe his whole mining gambit is simply to think outside his base while knowing nothing to tax the industry on the ballot can survive legal muster. Wink, wink.

As for the Democrats, if they have been told a rejection resolution is needed, they either never intended on proposing a ballot alterative and hope this ratchets up the pressure to pass something during the session or they are political chickens – or both.

I hope neither of those postulations are true. I fear one or both are.

No matter what LCB says, the high court surely will decide the question if – and it is a huge “if” – a taxing ballot alternative were to miraculously be passed. Smart lawyers I know in both parties think legislators almost surely would lose the case.

Said one: “I agree that the plain reading requires rejection.  And I don't see how one could interpret what the Legislature has done in connection with IP1 as a rejection.  The plain meaning of 'reject' as a verb implies affirmative action, and the Legislature as an institution has taken no affirmative action here.  It has merely considered IP1 in the context of hearings in both chambers.  No action was taken on the petition one way or the other.  Therefore, I would conclude that the institution has not rejected anything.  To the contrary, it has been unresponsive to the petition.  As a consequence, I don't see how the Legislature can place a competing measure on the ballot. “


But there are other legal obstacles, too, including what it means in the article about gubernatorial “approval,” which I already have explored and goes to the heart of the ongoing executive vs. legislative branch conflict in a state where governors have always had most of the power. And there are other thorny legal and constitutional issues that will converge, probably in the hands of a high court that has seemed eager to weigh in on issues of legislative privilege and overreaching. Remember the Clean Water Coalition decision that resolved the funding debate last session?

You now have others already before the court, including the issue of how lawmakers handled the Steven Brooks case, essentially creating a kangaroo court and banishing him from legislative service before any expulsion vote.

The court also has signaled that it wants to protect the initiative process – allowing the teacher petition to come before the Legislature despite the usual objections was significant and likely precedent setting.

“I think this makes sense from a policy perspective as well," said one lawyer. "The whole point of the initiative process is to give the people an option to make policy in the face of an unresponsive Legislature.  It seems logical to me that the Legislature should have to at least address the people's choice, as reflected in the petition, before it can place a competing measure on the ballot. Otherwise, the Legislature can do exactly as it some would propose it do here: refuse to address the matter, and take an affirmative step to undermine the people's choice.  Such action undermines the whole point of the process--i.e. to force the Legislature to address the matter on the people's terms. “

Another legal expert told me he believes the high court will not look kindly on lawmakers playing a game with procedure to circumvent having to reject the teachers’ petition if indeed they try to put something on the ballot, as unlikely as that seems.

A nice synthesis of all of these legal issues and the ramifications can be found on attorney Sean McDonald's blog. It’s quite the mess.

So lawmakers took a powder on the most important question of the day and created a legal morass that is likely to take more power out of their hands.

All in a day’s work for Nevada’s Neros.

(Graphic courtesy of The Progressive Pulse.)