Nevada Legislature: Do as we say, not as we do!

Here’s what’s holding up everybody who wants to repeal the largest tax hike in Nevada history through a ballot referendum…

According to the Nevada Constitution…

“Each law enacted by the Legislature shall embrace but one subject, and matter, properly connected therewith, which subject shall be briefly expressed in the title.”

Now here’s how your Legislature twists what should be a simple concept into a mutated mess.

The title of the tax hike bill that provided for a wide variety of very different tax hikes in one omnibus bill was: “S.B. No. 483—Revises provisions relating to governmental financial administration.”

Brief in title, yes…but totally misleading.  No one in the general public would read that title and come to the conclusion that it provided for the largest tax hike in Nevada history.

Now get a load of the legislative digest of the amendment that legislators conspired together to combine two giga-tax hike bills into one massive tax hike bill (just scan it quickly; don’t try reading and understanding the whole thing unless you’re prepared for the mother of all headaches!)…

*   *   *   *   *

Legislative Counsel’s Digest:

1 [ Existing law imposes an excise tax on certain financial institutions at a rate of 2 percent

2 of the total wages paid by the financial institution each calendar quarter. (NRS 363A.130)

3 Sections 1 and 2 of this bill require businesses that are subject to the tax on the net proceeds of

4 mining to pay the tax on the wages paid by the business at the same rate as the rate paid by

5 financial institutions under existing law.]

6 Section 20 of this bill imposes an annual commerce tax on each business entity

7 engaged in business in this State whose Nevada gross revenue in a fiscal year exceed

8 $4,000,000 at a rate that is based on the industry in which the business entity is

9 primarily engaged. In accordance with section 9 of this bill, the Nevada gross revenue of

10 a business entity is determined by taking the amount of its gross revenue, as defined in

11 section 8 of this bill, making various adjustments to that amount under section 21 of this

12 bill, and then situsing that adjusted amount to this State pursuant to section 22 of this

13 bill. Sections 24-49 of this bill set forth the rate of the commerce tax for the industry in

14 which a business entity is primarily engaged. Sections 2-66 of this bill further provide for

15 the administration, collection and enforcement of the commerce tax by the Department

16 of Taxation in a manner similar to other state taxes. Sections 77, 79, 83, 85, 86, 89, 90,

17 93-95, 97 and 100 of this bill authorize the imposition of various types of disciplinary

18 action against certain business entities who fail to pay the tax by the agencies responsible

19 for their supervision and licensing. Sections 78, 80-82, 84, 87, 88, 91 and 92 of this bill

20 authorize the Department to obtain certain records and information from certain

21 agencies to assist the Department in its administration of the tax. Sections 96, 98, 99, 101

22 and 102 of this bill amend various provisions of existing law, including, without

23 limitation, various provisions of the Nevada Insurance Code to specifically provide that

24 entities regulated under that Code are required to comply with the provisions of the

25 commerce tax.

26 Existing law imposes an excise tax on certain businesses other than financial institutions

27 at the rate of 1.17 percent of the total wages paid by the business each calendar quarter that

28 exceed $85,000. (NRS 363B.110) On July 1, 2015, this rate is scheduled to change to 0.63

29 percent of the total wages paid by the business each calendar quarter. (Chapter 476, Statutes

30 of Nevada 2011, pp. 2891, 2898, as last amended by chapter 518, Statutes of Nevada 2013, p.

31 3427; chapter 518, Statutes of Nevada 2013, p. 3424) Existing law also imposes an excise

32 tax on financial institutions at the rate of 2 percent of the total wages paid by the

33 financial institution each calendar quarter. Sections [10 and 12-14] 62 and 67-70 of this

34 bill [remove this scheduled rate change and permanently provide for the imposition of the tax

35 at the rate of 1.17 percent of the total wages paid by the business each calendar quarter in

36 excess of $85,000.] : (1) require businesses that are subject to the tax on the net proceeds

37 of mining to pay the payroll tax at the same rate as the rate paid by financial institutions

38 under existing law; (2) impose the payroll tax businesses other than a financial

39 institution or a mining business at the rate of 1.475 of the total wages paid by the

40 business each calendar quarter that exceed $50,000; (3) authorize a business to subtract

41 50 percent of the commerce tax paid by the business as a credit when determining the

42 amount of the tax on the total wages paid the business which is due from the business;

43 and (4) require a reduction in the rate of the tax on the total wages paid by all businesses

44 if the combined revenue from the commerce tax and the tax on the total wages by a

45 business exceed a certain amount.

46 Existing law imposes an excise tax on the purchase, possession or use of cigarettes at the

47 rate of 80 cents per pack of 20 cigarettes. (NRS 370.165, 370.350) Under existing law, the

48 Department of Taxation must remit 70 cents of the tax on each pack of 20 cigarettes, less the

49 costs of collecting the tax, to the State Treasurer for deposit in the Account for the Tax on

50 Cigarettes in the State General Fund, and the remaining amount of the tax must be deposited

51 in the Local Government Tax Distribution Account for distribution to local governments.

52 (NRS 370.260) Sections [3-5] 71-73 of this bill increase the excise tax on cigarettes to $1.80

53 per pack of 20 cigarettes and require the additional amount of tax to be deposited in the

54 Account in the State General Fund. Section [16] 113 of this bill requires a wholesale dealer

55 who purchases a revenue stamp evidencing payment of the tax before July 1, 2015, but who

56 has not affixed that stamp to a pack of cigarettes before that date to pay the additional tax on

57 the stamp.

Assembly Amendment No. 1039 to Senate Bill No. 483 First Reprint Page 4

58 Existing law imposes an annual fee of $200 for a state business license. (NRS 76.100,

59 76.130) On July 1, 2015, this fee is scheduled to change to $100. (Chapters 381 and 429,

60 Statutes of Nevada 2009, as last amended by chapter 518, Statutes of Nevada 2013, p.

61 3426) Sections 74 and 75 of this bill increased the annual state business license fee to

62 $500 for all corporations organized pursuant to the laws of this State and all foreign

63 corporations transacting business in this State. Sections 74 and 75 further maintain the

64 existing $200 state business license fee for all other businesses.

65 Existing law requires each business entity organizing under the laws of this State or

66 transacting business in this State to: (1) file with the Secretary of State an initial list and

67 an annual list of the directors and officers of the entity or the persons holding the

68 equivalent office; and (2) pay a fee for that filing. (NRS 78.150, 80.110, 82.193, 82.523,

69 84.110, 86.263, 86.5461, 87.510, 87.541, 87A.290, 87A.560, 88.395, 88.591, 88A.600,

70 88A.732, 89.250) Sections 75.5 and 76.1-76.8 of this bill increase by $25 the fee for filing

71 an initial or annual list.

72 Existing law requires, until June 30, 2015, the advance payment of the tax on the net

73 proceeds of minerals based upon the estimated net proceeds and royalties of a mining

74 operation for the current calendar year. (Chapter 4, Statutes of Nevada 2008, 25th Special

75 Session, p. 14, as last amended by chapter 518, Statutes of Nevada 2013, p. 3425) Section [6]

76 103 of this bill delays the expiration of this requirement for advance payment until June 30,

77 2016, and section [11] 107 of this bill makes conforming changes to related transitory

78 provisions governing the duties of the Department of Taxation in 2017 and the appropriation

79 and apportionment of money to counties and other local governments during that year.

80 Existing law provides that effective January 1, 2016, in computing the net proceeds from

81 certain mining operations conducted in this State, a person may deduct certain amounts

82 expended for health care for employees actually engaged in mining operations in this State.

83 (Chapter 449, Statutes of Nevada 2011, p. 2690, as amended by chapter 518, Statutes of

84 Nevada 2013, p. 3426) [Section 9] Section 106 of this bill extends to January 1, 2017, the

85 effective date of this deduction. Section [8] 105 of this bill makes conforming changes to

86 transitory provisions governing the computation of the proceeds from certain mining

87 operations for calendar years 2016 and 2017 and all subsequent calendar years.

88 Existing law requires, until June 30, 2015, an increase in the rate of the Local School

89 Support Tax of 0.35 percent. (Chapter 395, Statutes of Nevada 2009, pp. 2191-93, as last

90 amended by chapter 518, Statutes of Nevada 2013, p. 3426) Section [7] 104 of this bill

91 removes the expiration date of this rate thereby requiring the payment of this rate indefinitely.

92 The State of Nevada imposes a governmental services tax for the privilege of operating

93 any vehicle upon the public highways of this State. (NRS 371.030) The annual amount of the

94 basic governmental services tax is 4 cents on each $1 of valuation of the vehicle, as

95 determined by the Department of Motor Vehicles. (NRS 371.040) Existing law sets forth

96 depreciation schedules for determining the amount of the basic governmental services tax due

97 each year for used vehicles and establishes a minimum tax. (NRS 371.060) In 2009, the

98 amount of the basic governmental services tax due annually was increased for used vehicles

99 by reducing the amount of depreciation allowed and increasing the minimum tax. The revenue

100 from these increases in the basic governmental services tax were allocated to the State General

101 Fund until June 30, 2015, and then were required to be deposited in the State Highway Fund

102 thereafter. (Chapter 395, Statutes of Nevada 2009, p. 2188, as last amended by chapter 518,

103 Statutes of Nevada 2013, p. 3426) [Section 7] Sections 78.1-78.9 of this bill [extends for an

104 additional 2 years the period during which] provide that: (1) the increases in the basic

105 governmental services tax are allocated to the State General Fund [. Therefore,] in fiscal year

106 2015-2016; (2) in fiscal year 2016-2017, fifty percent of those increases will be deposited

107 in the State General Fund and 50 percent of those increases will be deposited in the State

108 Highway Fund ; and (3) the entire amount of those increases will be deposited in the State

109 Highway Fund commencing on July 1, 2017.

110 [ Section 14.5 of this bill requires a person who, on or after October 1, 2015, and before

111 October 1, 2016, applies for the issuance or renewal of a state business license to include in

112 the application certain information concerning the revenue earned by that person from the sale

113 of services used in this State.]

114 Existing law requires a court to impose a fee of $100, in addition to any other

115 administrative assessment, penalty or fine imposed, if a person pleads guilty, guilty but

116 mentally ill or nolo contendere to, or is found guilty of, a charge of driving under the

Assembly Amendment No. 1039 to Senate Bill No. 483 First Reprint Page 5

117 influence of intoxicating liquor or a controlled substance that is punishable as a

118 misdemeanor. The money collected for this fee is deposited with the State Controller for

119 credit to a special account in the State General Fund administered by the Office of Court

120 Administrator and money apportioned to a court from this fee must be used by the court

121 for certain purposes related to specialty court programs. (NRS 484C.515) Under existing

122 law, this fee expires by limitation on June 30, 2015. (Chapter 373, Statutes of Nevada

123 2013, p. 1992) Section 109 of this bill extends the expiration date of this fee until June 30,

124 2017.

*   *   *   *   *

Again, that’s just the DIGEST of the AMENDMENT.

The final bill as passed by the Republican-controlled Nevada Legislature and signed by “Republican” Gov. Brian Sandoval is actually 108 pages long!

If that monstrosity constitutes a “single subject” then east is west and night is day.

But hold on, it gets worse…

In an effort to make it exceedingly more difficult for Nevada citizens to place issues on the ballot for “the people” to vote on, the Legislature – at the behest of the gaming industry – added a new “single subject” law to the Nevada Revised Statutes in 2005 which reads, in part…

“Each petition for initiative or referendum must: (a) Embrace but one subject and matters necessarily connected therewith and pertaining thereto…

The same language as the supposed constitutional limitation on legislation.

The problem is, the courts have interpreted the “single subject” definition very liberally for the Legislature while giving it a strict interpretation when it comes to initiatives and referenda proposed by citizens – exactly as the gaming industry intended.

The divergent interpretations of almost identical rules as applied to the governing vs. the governed sparked a lawsuit back in 2012 filed by Kermitt Waters on behalf of Citizen Outreach and two other organizations.

In District Court, we argued that either the liberal definition as applied to legislation should also apply to initiatives and referenda, or the strict definition applied to initiatives and referenda should be applied to legislation.

We could live with it either way, but the rules should apply equally to both.

No way, said Big Gaming.

“Measures of popular passion or self-interest, the two dangers which were meant to be controlled by the deliberative process of representative government, must be rigorously restrained in the process of direct democracy,” Matt Griffin, attorney for the Nevada Resort Association, argued in court.

Yes, yes.  The great unwashed must be restrained while politicians in the pockets of special interests are allowed to wander around free range.

Or as former Las Vegas Review-Journal editorial writer Vin Suprynowicz so eloquently put it…

“There are two ‘classes,’ you see, the peasants and the elected elite. Arrayed against [Waters] will be the expensive and fancy lawyers of the Nevada state Legislature, the Nevada Attorney General’s office (defending Nevada’s Secretary of State), the casino industry, the mining industry, and a plethora of other special interests anxious to see that the common citizenry is left with no ability to go to the polls and do end-runs around the state lawmakers who these potentates have bought and paid to do their bidding.”

Not surprisingly, we lost at the District Court level and filed an appeal with the Nevada Supreme Court.  Arguments were presented by Mr. Waters over a year ago, but the Court has yet to rule.  But the circumstances surrounding SB483 should be considered by the Justices in this matter even if not legally “ripe.”  Here’s why…

A section of the “single subject” law enacted by the Legislature in 2005 reads…

“2. For the purposes of paragraph (a) of subsection 1, a petition for initiative or referendum embraces but one subject and matters necessarily connected therewith and pertaining thereto, if the parts of the proposed initiative or referendum are functionally related and germane to each other in a way that provides sufficient notice of the general subject of, and of the interests likely to be affected by, the proposed initiative or referendum.” (my emphasis)

Now, it’s one thing to argue that an initiative that has nothing whatsoever to do with proposed legislation violates the strict interpretation of the single subject rule, or is vulnerable to the “popular passion or self-interest” that the gaming industry believes must be controlled and “rigorously restrained,” however…

How do you make that “single subject” argument when the measure on the ballot is the EXACT SAME LANGUAGE enacted by the Legislature itself?

I mean, come on.  What’s identically good for the goose must be what’s identically good for the gander, right?

So if the Legislature can pass a 108-page bill raising a wide variety of taxes by some $1.4 billion, the citizens should be able to vote to repeal the entire exact same bill, word-for-word, in a ballot referendum, right?

Not necessarily so.

In a legal opinion forwarded to me separately this afternoon by State Controller Ron Knecht and Assemblywoman Michele Fiore, Brenda Erdoes of the Legislative Counsel Bureau wrote…

“Although it seems counterintuitive, I do not believe that you would be able to bring a referendum to a vote of the people that included all of the provisions of SB 483 (2015), which is the bill that added the Commerce Tax to the law. Based upon the current case law, the Supreme Court would likely find such a referendum to be in violation of NRS 295.009. That section sets forth the single subject rule for initiatives and referenda and has been much more narrowly construed by the Courts than the constitutional single subject rule (section 17 or Article 4 of the Nevada Constitution) that applies to statutes enacted by the Legislature.”

If that’s true, then each and every separate tax hike passed by the Nevada Legislature in that one giga-normous bill would have to qualify separately as a ballot issue.

Meaning each and every one of the separate tax hikes we just got shoved up our collective wazoos would have to get 55,000+ signatures to make it on the ballot.

Fortunately, Erdoes’ opinion is just that – one legal opinion, although an important one.

But with the single subject controversy already sitting in the Nevada Supreme Court’s lap, maybe we, the people, will finally catch a break.

In any event, now you know why it’s taking so long for the various groups interested in possibly pursuing a tax hike referendum of some kind to get the ball rolling.  No one really knows what the rules are yet.