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Nevada Republicans sue to void 2 tax bills

Updated July 19, 2019 - 6:56 pm

CARSON CITY — Senate Republicans filed a widely expected lawsuit Friday to challenge the constitutionality of a pair of Democrat-backed tax extensions that they argue should have required a two-thirds vote.

The lawsuit, filed in Carson City around 3 p.m. Friday, challenges both Senate Bill 551, which nixed a scheduled decrease in the state’s modified business tax, and Senate Bill 542, which kept in place a $1 technology fee on all DMV transactions.

Senate Minority Leader James Settelmeyer, R-Minden, said the bills “clearly violate the tax-restraint initiative,” referring to the voter initiative approved in 1994 and 1996 that requires a two-thirds majority vote for any bill that “creates, generates, or increases any public revenue in any form.”

Settelmeyer said: “If the governor and other parties want to change that, then they need to go ask the voters to change the constitution and not just do it at their own will.”

Democrats, who were one seat short in the Senate of being able to pass a tax without any Republican votes, argued that extending an existing tax at the same rate does not count as a tax increase and that the tax extensions under SB551 and SB542 did not require a two-thirds threshold. Both bills passed the Senate on party-line 13-8 votes.

The Legislative Counsel Bureau, the nonpartisan lawyers who advise elected officials on legal issues, sided with the Democrats in a lengthy memo written this year, though the bureau appeared to take the opposite position in prior sessions.

The day after the Legislature ended, Gov. Steve Sisolak told reporters he believed the state was on firm ground with the tax extension because of the counsel bureau’s opinion.

“We’ve got legal opinion from LCB that, you know, a simple majority is what’s needed,” Sisolak said last month. “I’ve been in government for 20 some-odd years, and if you don’t trust your attorneys, you’ve got a problem. So I’m confident that the attorneys gave us a good opinion. We’ll move forward from there.”

The extension of the modified business tax at its current rate in SB551 was one of several education-related initiatives the governor signed without ceremony. The bill directs $98 million in revenue gained from keeping the tax at the current rate over the next two years primarily to fund school safety and teacher raises.

The lawsuit, which lists all eight Senate Republicans and three businesses that operate in Nevada as plaintiffs, targets the state, Senate Majority Leader Nicole Cannizzaro, Lt. Gov. Kate Marshall, who serves as president of the Senate, the Senate secretary, Sisolak, the Taxation Department and the DMV.

Cannizzaro could not be reached for comment on the lawsuit Friday evening. The governor’s office declined to comment.

The Carson City-based law firm of Allison MacKenzie Ltd. is representing the Senate Republicans in the case.

Contact Capital Bureau Chief Colton Lochhead at clochhead@reviewjournal.com or 775-461-3820. Follow @ColtonLochhead on Twitter.

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