Supreme Court orders majority rule in tax-budget dispute

The Nevada Supreme Court surprised all sides Thursday by ordering the Legislature to pass both an education funding bill and a tax plan by a simple majority.

At least for this legislative session, the court's ruling eliminates a two-thirds majority requirement in the state constitution that has prevented passage of tax increases sought by Gov. Kenny Guinn, who asked the court to intervene.

The Legislature is expected to go back to work Monday, although there remained no clear picture of how it would resolve its differences.

The court's opinion, on a 6-1 vote, reads: "Due to the impasse that has resulted from the procedural and general constitutional requirement of passing revenue measures by a two-thirds majority, we conclude that this procedural requirement must give way to the substantive and specific constitutional mandate to fund public education."

It describes the impasse as irreconcilable and says when constitutional provisions are incompatible with one another, the court must attempt to resolve the problem.

"When a procedural requirement that is general in nature prevents funding for a basic substantive right, the procedure must yield," reads the opinion by Chief Justice Deborah Agosti.

"Therefore, we grant the petition as to the Legislature of the state of Nevada and direct this court's clerk to issue a writ of mandamus directing the Legislature to proceed expeditiously with the 20th Special Session under simple majority rule."

Justices Bob Rose, Miriam Shearing, Myron Leavitt, Nancy Becker and Mark Gibbons agreed with the ruling. Justice Bill Maupin, in a lone dissent, said education funding won't become critical until Aug. 1 and lawmakers should be allowed more time to act without court interference.

The ruling was applauded by supporters of Guinn's tax plans, and criticized by foes of the additional spending in his budget. But it caught everybody off guard.

Attorney General Brian Sandoval, Legislative Counsel Brenda Erdoes. lawyers representing the Nevada Taxpayers Association, Assembly Republicans who have been blocking the tax plan, public school officials and university administrators all said they didn't expected the court's ruling to disregard the two-thirds majority requirement.

Before the hearing, several lawyers said they expected the court to do what Maupin recommended, giving lawmakers more time.

In fact, Guinn's petition never asked the court to lift the two-thirds rule. It simply asked the court to order lawmakers to resolve the impasse by a certain deadline.

"For now, it's simple," said Legislative Counsel Bureau Director Lorne Malkiewich. "The court has said a simple majority to resolve this impasse."

"They just wiped out the constitution," said Assembly Minority Leader Lynn Hettrick, R-Gardnerville, who has led the block of 15 Republican Assembly members who have prevented passage of a tax plan.

The ruling prompted strong criticism from U.S. Rep. Jim Gibbons, R-Nev., who authored the two-thirds requirement voted into the Nevada Constitution in 1996. He said the decision disenfranchises Nevadans who voted for it by a 2-1 margin

"The people of Nevada have said that they want this requirement in our state's constitution," he said. "I would ask that the court give us guidance as to how we can include this requirement in a manner that this court would consider constitutional."

Assembly Republicans have demanded the general-fund budget, approved on the last day of the Legislature's regular session, be reopened and cut. There has also been wide disagreement over the type of taxes needed to support a $5 billion budget, about 35 percent higher than the last two-year budget.

The high court adopted the argument by the governor and Sandoval that lawmakers have passed a legal state budget but failed to pass a measure authorizing $1.5 billion for public schools and a tax package covering an $860 million shortfall.

Guinn said the ruling supports his argument the Legislature has a constitutional obligation to pass a balanced budget and fund education.

"How they do this is a legislative decision, but today's order leaves no doubt that legislators must finish their work without further delay," he said.

Senate Majority Leader Bill Raggio, R-Reno, said he too was surprised by the ruling but intends to call the Senate back to work by Monday.

"This isn't what the Legislature asked for, but we have to abide by the court's rule now," he said. "We now have to proceed under the writ by a simple majority vote."

Raggio, however, said the decision doesn't necessarily make it easy to pass a tax plan.

"There are big differences between the Senate version and what the Assembly has been proposing," he said.

The Senate version relies on a payroll tax on businesses for each worker, while the Assembly version relies on a tiered tax based on a business's gross receipts.

Assemblyman Ron Knecht, R-Carson City, said the GOP caucus would look to federal court, among other legal options.

"The court tore up the constitution," he said.

But Raggio said he has been advised there probably isn't a legal avenue to take the issue to federal court.

He, like Malkiewich, said the next issue is how sweeping the court's decision is in relation to future legislative sessions and tax votes.

"Did it toss out the two-thirds? I don't think so," Malkiewich said.

He said he believes the ruling may apply only in this circumstance, but that the counsel bureau will be analyzing the ruling in detail.

Lawyer Sam McMullen, representing business groups who oppose major new business taxes, said he too thinks the decision is limited to the conflict between the two-thirds requirement and the constitutional requirement mandating funding of public education.

Sandoval made a similar comment.

"We need to analyze the consequences of the opinion as to the two-thirds majority," he said. "But we do know education has been considered to be above the supermajority. It orders the Legislature to expeditiously balance the budget and fund education pursuant to a simple majority vote."

"There's a good chance we could finish this up soon," said Sen. Dennis Nolan, R-Las Vegas, after the ruling.

Raggio, however, said compromise will still be necessary to get a plan through both houses.

"I would like to reach a consensus of two-thirds we could agree on," he said. "I would still like to accommodate everybody's concerns."

He and other legislative leaders are to meet today to work out how to proceed.