Nevada Supreme Court takes up tax initiative

Nevada Supreme Court hears arguments on business tax initiative

Associated Press

CARSON CITY, Nev. (AP) -- The Nevada Supreme Court peppered attorneys on both sides of a business tax initiative Wednesday with questions about how detailed summaries describing petitions need to be to pass legal muster and not confuse voters.

The Education Initiative proposal would impose a 2 percent margin tax on businesses making $1 million or more, and supporters say it would provide as much as $800 million a year for schools. It was challenged by Committee to Protect Nevada Jobs, a pro-business group that argues the petition is deceptive because it doesn't guarantee more funding for education.

A lower court judge in October ruled the petition was invalid because its "description of effect" — the synopsis voters read before signing the petition and limited by law to 200 words— was flawed.

District Judge James Wilson said the petition backed by the Nevada State Teachers Association and other labor groups failed to tell voters how much revenue the tax would raise or that even businesses losing money would have to pay if they met the thresholds.

Justice Ron Parraguirre questioned why the issue of failing businesses being subjected to the tax wasn't mentioned.

"Isn't that a material effect that ought to be disclosed?" he asked.

Committee attorney Josh Hicks said if the measure is enacted, state lawmakers could decide to reduce general fund support for the school account and spend that money elsewhere. He said voters should be told about the possibility that money for schools might not increase at all if lawmakers decided to spend those general fund dollars elsewhere.

But Francis Flaherty, representing the teachers union, called that argument "raw speculation" and countered that initiative backers aren't required to disclose every possible scenario of what future legislators might do. He added those types of detailed arguments for and against the measure would be included on the ballot.

Justice James Hardesty pressed attorneys on how many hypothetical scenarios a description need to address.

"When do the hypotheticals ever end?" he asked.

Wednesday's arguments in Las Vegas came after backers of the Education Initiative turned in about 150,000 signatures — more than twice the number necessary — to send the proposal to state lawmakers in February or voters in 2014.

But the process is on hold until the Supreme Court rules. If justices overturn the court's order, the Legislature would have 40 days from the start of the Feb. 4 session to pass it. If they reject it or fail to act, it would automatically be put to voters on the 2014 general election ballot.

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