Nevada Supreme Court Permits Challenge to Commerce Tax, But With Short Timeframe

May 11, 2016

The Nevada Supreme Court just handed down its ruling in Coalition for Nevada's Future v. RIP Commerce Tax, a case involving Nevada's new Commerce Tax on gross receipts that went into effect on July 1, 2015. Opponents of the tax had begun gathering signatures to force a referendum to repeal it on this November's ballot, and supporters of the tax challenged the petition. They claimed the referendum would violate Nevada's balanced budget requirement because the tax's repeal would unbalance the budget, that the petition can only challenge a statutory section and not a number of an enacted bill, that pasting the text of the bill is an improper form of petition, and that the petition's description didn't explain the budgetary consequences.

The Court concludes that the referendum is valid but the petition's description must be rewritten to specify that voter disapproval of the Commerce Tax will unbalance the state budget. Referenda can challenge an enacted bill. The Court doesn't clearly explain why it rejects the petitioner's argument about the whole thing being unconstitutional for unbalancing the budget, but my guess is that's because it's not true: some laws unbalance the budget and others bring it into balance, and if it passes Nevada's legislators will have to figure out a solution. If they don't, that's what will be unconstitutional. But the Court is firm in voters understanding this consequence, and remands to the lower court to (speedily) sort it out.

It's likely the 20,000 signatures gathered so far (out of 55,234 needed) are no longer valid. That matters because they're due on June 21. So the next step will be what the proponents do with that compressed timeframe.

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