The oil and gas boom of the past 5 years or so is widely seen as the brightest spot of an otherwise moribund U.S. economy. In fact, a group of economists from Purdue University recently found that without this boom the U...
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Nevada Supreme Court Reverses Course on Tax Supermajority Requirement
The Nevada Supreme Court recently overruled one of the most notorious public finance court decisions in recent years. In its 2003 decision in Governor v. State Legislature, the state’s highest court ruled that the legislature’s constitutional duty to fund education trumped the constitution’s requirement that any tax increase pass by a 2/3 vote in each legislature.
The court was asked to decide the case when the legislature adjourned without funding education because there were not enough votes to raise taxes to do so. A tax increase was necessary because a simple majority of the legislature had appropriated virtually all forecasted revenue for purposes other than education.
The Nevada Supreme Court’s original decision ordered the legislature to proceed under majority rule, even though Governor Guinn had not asked the court for such a remedy. The only party that suggested such a remedy was the Nevada State Education Association, which did so through the filing of an amicus brief.
The fallout from the case was swift, and the criticism of the opinion was widespread, though of course it also had its defenders. An attorney for the court also later resigned, apparently in protest against the court’s decision.
In a decision where they ordered that a state spending limit could not appear on the ballot this fall, the court unanimously reversed its ruling in Governor v. Legislature. This is a good development for public finance law. The Governor v. Legislature decision drove an unnecessary wedge between procedural and substantive constitutional provisions and could have served as a model for similar misbehavior in other states.
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