Challenge to state court tax decision dismissed

The Ninth Circuit Court of Appeals on Wednesday declined to rule on whether the Nevada Supreme Court had the right to set aside the state's constitutional requirement that two-thirds of the Legislature support any tax increase.

When lawmakers deadlocked last July, one vote short of two-thirds needed to pass the tax plan, Gov. Kenny Guinn took the issue to the Nevada Supreme Court asking it mandate the Legislature approve both a tax plan and funding for public education.

The court instead ruled the two-thirds majority requirement must "give way" to the constitutional mandate the state fund schools.

The Assembly responded by passing a tax plan in Senate Bill 6 with less than a two-thirds majority, but the Senate didn't act on the legislation.

Outraged opponents including the "mean 15" Republicans in the Assembly who held out against the tax plan, businessmen who opposed new taxes and even some who supported the final tax plan sued saying that decision violated due process and equal protection rights of the U.S. Constitution.

They lost at the federal district court level and appealed to the Ninth Circuit which heard oral arguments last month.

The appellate court gave its answer Wednesday in an eight-page memo terming the legal challenge moot because lawmakers found the extra vote needed in the Assembly and voted out an $833 million, two-year tax package by exactly two-thirds.

According to the memo, the case might be different if the Nevada Supreme Court decision allowing a simple majority vote on taxes was actually used to pass a tax plan into law.

"Here, plaintiffs have alleged only an abstract injury," the memo said. "SB6 did not pass the state Senate and was not acted into law. No taxpayer paid a nickel into the coffers of Nevada under its rule."

Therefore, the memo states, there was no actual injury and, thus, no case. And it says the situation "may never be repeated" so there is no need for the appellate court to act.

It also refused to grant any damages or attorney's costs saying "appellants have failed to allege a sufficiently concrete injury to support federal jurisdiction over the suit."

Assemblyman Ron Knecht, R-Carson City, one of the tax-holdouts and a law school graduate, said the decision was, in fact, used to help pass the final tax plan.

He said the decision "gave them the leverage to peel off one of the 15 which they didn't have otherwise."

"We completely disagree with the Ninth Circuit panel on it being moot," he said adding that the group will ask the full Ninth Circuit court to reconsider the decision, which was made by a three-judge panel.

Assemblywoman Sharron Angle, R-Reno, one of the prime proponents of the federal lawsuit, said she believes there were damages suffered and that the issue is not moot.

Speaker Richard Perkins, D-Henderson, indicated he agreed with the appellate court ruling.

"We obviously waited for a two-thirds vote for a reason and that's because the people spoke for a two-thirds vote on taxes in 1996 and we will uphold their wishes," he said.

He was joined by Gov. Guinn, who said, "We're satisfied the court has reached a conclusion and will respect its decision."

Contact Geoff Dornan at gdornan@nevadaappeal.com or 687-8750.