Tax repeal effort to begin; proponents helped by legislative lawyers

A small band of would-be tax erasers are poised to launch their effort next week, aided by a lawmaker and legislative lawyers who helped them draft the petition to overturn Gov. Brian Sandoval’s largest increase in history.

Assemblyman Jim Wheeler confirmed this week that Legislative Counsel Bureau lawyers helped him draft possible vehicles to repeal the $1.4 billion tax increase, a use of legislative resources that surely infuriated the governor and key lawyers who pushed for and voted for the plan. That surely saves the organizers a lot of time and money, right? (I have asked LCB for comment and will update when I get one.)

"Some constituents asked me back in June if it were possible to have LCB write a referendum,” Wheeler told me via email, trying to create some distance between himself and the effort, although he clearly knows a lot. “I asked for a legal opinion from LCB and they told me it was possible and that they have done this for other Legislator’s (sic) in the past. So, on the request of these constituents, I asked LCB to do so. Sometime in early July, LCB presented me with three different drafts, which I turned over to the requestors. They have sent these on to outside council (sic) for advice on which one to file. As of yet, I haven’t heard when they will file or which of the three they will use. I am sure a press release will go out when they decide.”

I’m sure.

Wheeler also asked LCB for an opinion on repealing the Commerce Tax, the most controversial part of the increase. (That opinion, which Steve Sebelius wrote about last month, is at the bottom of this post.)

One of the interesting factors here, as LCB lawyer Brenda Erdoes pointed out to Wheeler, is that the referendum could result in changes being locked in that could not be changed by lawmakers. (This is similar to what pro-choice advocates achieved in 1990 by passing a referendum that locked the state’s abortion rights statute in forever.)

Although many insiders don’t give the repeal effort much chance, especially because those pushing it (Citizen Outhouse, for instance), one expert pointed out that because of 2014’s abysmal turnout, the threshold for approval is greatly reduced (to about 55,000 signatures to qualify).

“The minimal number of signatures due to 2014 turnout coupled with presidential year registration drives make 2016 the easiest cycle to qualify a petition in more than a decade,” this expert told me. “Having these proponents carry a tax repeal referenda is like asking Amtrak to carry nuclear waste. But they have a lot of time to file and refile and refile and refile, and eventually they'll get it right, and if they get to actually gathering signatures, look out. I'd bet there are quite a few nervous people out there.”

And they will have little time to prepare.

Carson City GOP Chairman Roger Haynes, whose group also wants to recall Senate Finance Chairman Ben Kieckhefer, sent out a missive this week alerting folks to the incipient effort:

“Have you signed up yet for the Recall & Repeal effort?  It starts the week of August 3rd....Contact the office to schedule your participation.”

I am sure the governor will be thrilled when he returns next week from his European sojourn.

Oh, one more thing: Could the repeal folks have asked for a friendlier secretary of state than barbara Cegavske, who dissed the governor during the session?

This is going to be "fun" to watch.


Assemblyman Wheeler,

You have asked 4 questions related to a proposed referendum that would bring the recently enacted Commerce Tax to a vote of the people:

                1.  The first question is whether a referendum regarding the Commerce Tax would need to include all of the provisions of the bill that added the Commerce Tax to the law or instead could the referendum only include the provisions related to the Commerce Tax.

                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.

                Nonetheless, I believe that you do have some options regarding the provisions that are included in the referendum.  In fact, the choice of the provision or provisions to be included may have an important impact both on the success of the referendum and on the ultimate effect of the law that results from the referendum. The specific language of section 1 of Article 19 of the Nevada Constitution, which authorizes referenda, states that “any statute or resolution or any part thereof enacted by the Legislature” may be submitted to a vote of the people.  That language could be read to suggest that only one provision of NRS, or a part thereof, could be included in a referendum. However, the Sales and Use Tax Act, which was submitted to the voters at the General Election of 1956, was submitted as a single referendum that included a large number of sections and is still in effect today. Though we were unable to find any record of a challenge to the Sales and Use Tax Act on this basis, we were able to verify that the applicable language of the constitution has been essentially the same since 1902.

                In determining which section, sections or part of a section relating to the Commerce Tax to include in the referendum, it may be instructive to note that at the time the Sales and Use Tax Act was originally approved in 1956, it included both the provisions imposing the taxes and the provisions for the administration of the taxes; however, the administrative provisions of the Sales and Use Tax Act were repealed by referendum at a special election on June 5, 1979. The bill that provided for the special election included a question on the ballot that would exempt food for human consumption, other than food sold in restaurants for immediate consumption, from the Sales and Use Taxes and also provided for the repeal of the administrative provisions of that Act. The explanation indicated that an affirmative vote would put the control of the administrative provisions back in the hands of the Legislature.

                There are a wide range of options as to what could be included in the proposed referendum – ranging from including all of the provisions of SB 483 (2015) that relate to the Commerce Tax - to somewhere in the middle that includes only the sections imposing the Commerce Tax and providing for the formula for computing the amount of the tax due, the sections designating the rates for the various types of businesses and the exemptions - to the most minimal which could include only the portion of section 20 which actually imposes the tax.

                2.  You have also asked what the legal effect of a majority of the voters voting “no” on the referred measure would be.  If a majority of the voters who voted on the referred measure vote negatively, the provisions included in the referred measure are disapproved, which has the same effect as if the provisions had been repealed by the Legislature. The specific language of the second sentence of subsection 3 of section 1 of Article 19 of the Nevada Constitution is that the provisions of the referred measure “shall be void and of no effect.” You specifically asked whether there is any prohibition against the Legislature coming back at a future session and re-enacting the disapproved provisions – the answer is that there is no such prohibition so the same language as in the disapproved statute or statutes could be re-enacted by a future Legislature or by the people by initiative petition.

                3.  Similarly, you have asked what the legal effect of a majority of the voters voting “yes” on the referred measure would be. If a majority of the voters who voted on the referred measure vote affirmatively, the provisions included in the referred measure cannot be changed by the Legislature unless the change is approved by the voters. The specific language of the first sentence of subsection 3 of section 1 of Article 19 of the Nevada Constitution is that the provisions of the referred measure “shall stand as the law of the state and shall not be amended, annulled, repealed, set aside, suspended or in any way made inoperative except by the direct vote of the people.”

                4.  You have also inquired as to whether we are able to draft the proposed referendum and put it into the correct legal format for filing. The answer to this question is that we are able to draft and format the referendum at the request of a currently serving Legislator -  but, just like with the bills and resolutions we draft,  you must be responsible for determining whether you believe we have accurately captured your intent in both the provisions of the referendum and the description of the effect of the referendum.