Nevada Supreme Court ruling cuts $ 100 million in respendable revenue
The Nevada State Supreme Court building in Carson City.
But this will not affect the budget for the coming biennium since the Economic Forum voted on May 4 to increase its December revenue forecast by $ 909.7 million for the remainder of this year. fiscal year and the next biennium.
Staff said the decision will not impact the 2022-2023 budget. But they said it would reduce the Legislature’s ability to reinstate further cuts. This includes restoring the $ 102 million in general funds cut from the Nevada higher education system budget and program cuts in K-12 budgets.
Senate Minority Leader James Settelmeyer R-Minden also said the move would not have a significant budgetary impact.
“It doesn’t really create a hole,†Settelmeyer told Nevada Newsmakers earlier this week. “It just shows that they stole money from people when they didn’t have the authority to do so.”
Some of the K-12 cuts have already been reinstated by the planned increase in funding for so-called local schools, particularly the local tutoring tax portion of the sales tax. Non-General Fund revenue sources that feed the education budget are expected to be $ 154 million higher than they were before the convening of the 2021 Legislative Assembly.
The High Court unanimously ruled Thursday that Senate Democrats voting to extend the sunset of the amended business tax for two years in 2019 was unconstitutional because it failed to secure a two-thirds majority . The payroll tax missed that mark by a vote, going 13-8 with all Republicans opposed. It is projected that extending the higher MBT rate would raise $ 98.2 million during the biennium.
The same happened to the bill to extend the $ 1 DMV technology fee on all DMV transactions. This measure is expected to bring in approximately $ 6.9 million per year.
The Democrats pointed to a legal opinion from the Office of the Legislative Counsel which claimed that neither was in fact a tax increase because they simply extended existing tax rates and, therefore , did not actually raise taxes in violation of the constitutional provision requiring two-thirds of every house to approve before raising. the taxes.
The High Court was not persuaded by this argument.
“Based on the plain language of the supermajority provision, we conclude that it applies to the bills in question because they create, generate or increase government revenue,” wrote Chief Justice Jim Hardesty . “Because bills have not passed a two-thirds majority in the Senate, parts of bills that would require a majority vote are unconstitutional.”
In saying this, the court upheld the decision of Carson District Judge Todd Russell, who came to the same conclusion.
A number of legislative observers and longtime members have been baffled by the legislative legal opinion since two-thirds had consistently been required to extend higher tax rates in previous sessions, just as there was a need to enact higher rates or new taxes.
Lawmakers have already used some of the additional revenue projected by the forum. Earlier this week, they used $ 300 million to reinstate the 6% cuts by lawmakers, Medicaid providers and the governor made during last summer’s special session.
The DMV technology fee bill, SB542, was a simple extension of an expected sunset.
Following the Supreme Court ruling, DMV announced Friday that it will stop charging the $ 1 per transaction fee as soon as programmers can remove it from the system.
They also announced that those who paid the fees between July 2020 and May 14 will receive refunds as soon as officials can figure out how to do it.
Lawmakers voted in 2015 to increase the MBT rate, but to halt that increase in 2019 if the Tax Department confirmed that actual revenues exceeded expectations by a certain amount. Taxation confirmed that MBT’s revenue met and exceeded this threshold in 2018, triggering the reduction. SB551 eliminated this sunset.
Since 1996, the Nevada Constitution requires two-thirds of lawmakers in both houses to approve any measure that “creates, generates or increases government revenue in any form.”
Nevada Gov. Steve Sisolak, a Democrat, issued a statement promising to “work with legislative leaders on the fiscal implications” of the decision. He said state officials “will analyze the decision to determine next steps.”