Supreme Court Order - Commerce Tax Repeal

8/17/2019 Supreme Court Order - Commerce Tax Repeal

1/10

No. 69501

F I L E D

M A Y 1 1 2 1 6

E K

ND E M N

4 4 1 6 1 1 1 11

F EP

IN THE SUPREME COURT OF THE STATE OF NEVADA

COALITION FOR NEVADA'S FUTURE,

A NEVADA POLITICAL ACTION

COMMITTEE,

Appellant,

vs.

RIP COMMERCE TAX, INC., PAC, A

NEVADA POLITICAL ACTION

COMMITTEE; AND BARBARA

CEGAVSKE, IN HER OFFICIAL

CAPACITY AS NEVADA SECRETARY

OF STATE,

Respondents.

ORDER AFFIRMING IN PART REVERSING IN PART

AND REMANDING

his is an appeal from a district court order denying a

complaint for declaratory and injunctive relief that challenged a

referendum petition seeking voter approval or disapproval of the

commerce tax provisions of Senate Bill 483 from the 2015 Legislative

Session. First Judicial District Court, Carson City; James E. Wilson,

Judge.

In May 2015, the Nevada Legislature passed Senate Bill 483

as part of the state's overall budget. SB 483, among other things, raises

revenue by imposing a commerce tax on businesses earning more than

$4 million in a fiscal year. 2015 Nev. Stat., ch. 487, at 2876, and § 20, at

2884-85. According to the Economic Forum's May 1, 2015 Forecast, the

commerce tax is expected to add, to the state general fund, net revenues of

approximately $119.8 million in fiscal year 2015/16 and $59.9 million in


2/10

fi

sca

l ye

ar 2

01

6/17

.

Th

e t

ax

was

si

gne

d i

nto

law

b

y th

e g

ov

ern

or i

n J

une

2

01

5. 2

01

5 N

ev.

Sta

t.,

ch.

487

, a

t 28

76

.

A f

ew

mo

nth

s l

ater

, re

spo

nd

ent

RI

P C

om

me

rce

Ta

x, I

nc.

fil

ed

wi

th t

he

Sec

ret

ary

of

Sta

te

a p

etit

ion

se

eki

ng

to r

efe

r th

e c

om

me

rce

ta

x

por

tio

n o

f S

B

483

to

th

e v

ote

rs f

or

ap

pro

val

or

di

sap

pro

va

l. S

ho

rtly

th

ere

afte

r,

app

ell

ant

Co

ali

tion

fo

r N

ev

ada

's F

utu

re

file

d a

di

stri

ct c

ou

rt

c

om

pl

ain

t c

hal

len

gin

g

the

re

fer

end

um

p

eti

tio

n. I

n p

ar

ticu

la

r, t

he

C

oa

lit

ion

as

se

rte

d t

hat

th

e p

eti

tio

n f

ail

s to

st

ric

tly

co

mp

ly

w

ith

refe

ren

du

m r

equ

ire

me

nts

und

er

Ne

vad

a C

ons

titu

tio

n A

rtic

le

19,

Se

ctio

n 1

be

ca

use

it

ch

all

eng

es

a s

en

ate

bi

ll r

ath

er

tha

n

a s

tatu

te

, co

nt

ain

s

confusing and inaccurate language in its explanation and enacting clause,

an

d

imp

er

mi

ssib

ly

ad

dre

sse

s a

dm

in

istr

ati

ve

ma

tte

rs,

as

opp

os

ed

to

leg

isla

tiv

e m

att

ers

. T

he

Co

alit

ion

al

so c

om

pl

ain

ed

tha

t th

e c

om

me

rce

ta

x's

dis

app

ro

val

wo

uld

un

bal

anc

e th

e s

tat

e bu

dg

et i

n v

iola

tio

n o

f A

rtic

le

9,

Se

ctio

n

2(1

) s

ba

lan

ce

d b

ud

get

m

and

at

e a

nd

tha

t t

he

pet

itio

n

s

d

es

crip

tio

n o

f e

ffec

t fa

ils

to

inf

orm

si

gne

rs o

f t

he

bud

ge

tary

im

pa

ct t

hat

the tax's repeal w

ou

ld

hav

e.

Aft

er a

he

ari

ng,

the

di

stri

ct c

ou

rt e

nte

red

an

'W

e ta

ke

jud

ici

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ot

ice

of

the

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on

om

ic

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um

's

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y 1

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eca

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ep

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/.

NR

S

47

.13

0(2

)(b)

; N

RS

47.

150

(1)

;

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ac

k v.

Es

tate

of

Ma

ck

12

5 N

ev

. 80

, 9

1, 2

06

P.3d 98, 106 (2009). Beginning in fiscal

ye

ar 2

01

6/1

7, b

usi

nes

ses

can

ta

ke

a c

red

it a

gai

nst

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ir m

od

ifi

ed b

us

ine

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ax l

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ilit

y o

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-pe

rce

nt o

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xe

s th

ey

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d fo

r th

e p

rev

iou

s f

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l y

ear

.

Se

e

2

01

5 N

ev.

S

tat.

, ch

. 4

87,

§ 6

7(

4),

at 2

90

0,

and

§

70(

4),

at 2

90

2.

Ac

cor

din

gly

, th

at

ye

ar'

s n

et c

om

m

erc

e ta

x-

rela

ted

re

ve

nue

in

clu

de

s

119

.8

mi

llio

n

in

p

roj

ecte

d r

eve

nue

, le

ss

a 5

9.9

m

illio

n m

od

ifie

d b

usi

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s ta

x c

red

it.

ME OU

RT

O

N

EV D

47A


3/10

o

rde

r de

ny

ing

all

requ

est

ed

dec

lara

tory

an

d in

jun

ctiv

e r

elie

f, an

d t

he

C

oali

tion

app

eal

ed.

The

pet

ition

is

not

inva

lid

H

avin

g c

ons

ide

red

the

par

ties

' br

iefs

an

d a

ppe

ndi

ces

and

h

avi

ng h

ear

d or

al a

rgu

men

t, w

e c

onc

lude

tha

t th

e C

oali

tion

ha

s no

t m

et

i

ts b

urd

en

to d

em

ons

tra

te t

hat

the

ref

ere

ndu

m

pet

itio

n is

inv

ali

d.

Nev

ada

ns f

or N

ev.

v. B

eer

s,

12

2 N

ev.

930

, 94

2, 1

42 P

.3d

339

, 34

7 (

200

6)

(e

xpl

ain

ing

that

, w

hen

no

fact

s ar

e di

spu

ted

in b

allo

t m

atte

rs, t

his

cou

rt

rev

iew

s o

rder

s de

nyi

ng d

ecl

arat

ory

and

inj

unc

tive

rel

ief

de n

ovo

). F

irst

,

alt

hou

gh A

rti

cle

19,

Sec

tion

1d

esc

ribe

s a

[r]e

fer

end

um

for

app

rova

l or

disapproval of statute or resolution enacted by legislature, the petition is

no

t in

firm

fo

r re

ferr

ing

ase

nat

e bi

ll, a

s th

e se

nat

e bi

ll b

eca

me

a st

atut

e

wh

en

sign

ed

into

law

by

the

go

vern

or

on J

une

9,

201

5.

Se

e

Nev

. Co

nst.

ar

t. 4,

§ 2

3 (

[N]o

law

sh

all b

e e

nact

ed e

xce

pt b

y bi

ll. )

; Ne

vad

a Le

gis

lativ

e

M

anu

al, A

pp

end

ix F

, N

evad

a L

egi

slati

ve C

ou

nsel

Bu

reau

(M

ay

201

5), a

t

2

73,

http

://w

ww

leg

. sta

te. fl

y. u

s/Di

visi

on/R

ese

arch

/Pu

blica

tion

s/L

egM

anu

al

/201

5/in

dex

.htm

l (d

efi

ning

S

tatu

te a

s a

M

ill p

asse

d b

y bo

th h

ous

es a

nd

ap

pro

ve

dby

th

e G

ove

rno

r o

r i

f ve

toe

d b

y th

e G

ov

ern

or

the

vet

o

ov

erri

dde

n b

y a

two

-thi

rds

vot

e of

eac

h h

ous

e )

;

Sta

tute

, B

lack

s L

aw

D

ict

iona

ry (10t

h e

d. 2

014

) (d

efi

ning

s

tatu

te

as

[a]

law

pa

sse

d by

a

le

gisl

ativ

e bo

dy;

spe

cif.

, leg

isla

tion

en

acte

d by

an

y la

wm

akin

g b

ody

, suc

h

as

a le

gisl

atur

e ).

N

or i

s th

e p

etit

ion

inv

ali

d b

ase

d on

its

ex

pla

nat

ion

and

fo

rma

t. W

he

n re

ad a

s a

wh

ole, it is sufficiently clear that the petition is

ref

errin

g S

B 4

83

to th

e v

oter

s fo

r ap

pro

val

or r

ejec

tion

of

the

com

me

rce

tax

an

d th

e N

ev

ada

Co

nst

itut

ion

req

uir

es n

o p

art

icul

ar f

orm

fo

r a

re

fer

end

um

pet

itio

n, e

xce

pt th

at i

t in

clud

e t

he f

ull

text

of

the

pro

pos

ed

m

easu

re,

as t

his

peti

tion

do

es.

See

gen

era

lly

Schu

ma

che

r v.

Byr

ne,

237

E OUR

T

O

NE V

D

47A


4/10

N

.W.

741,

745

(N.D

. 19

31) (

conc

ludi

ng th

at a

petit

ion r

eferr

ing a

tax

bill t

o

th

e vo

ters

for a

ppr

oval

ord

isap

pro

val

was

not

actu

ally

ani

nitia

tive

pe

tition

or

othe

rwise

inv

alid

for c

onta

inin

g an

enac

ting

clau

se, w

hen

the

st

ate c

ons

tituti

on f

ailed

to p

resc

ribe

any

parti

cula

r for

m an

d th

e pu

rpos

e

w

as s

uffic

ientl

y cle

ar fro

m th

e pe

titio

n).

F

inall

y, SB

48

3 inv

okes

the

basi

c leg

islat

ive p

owe

r to

impo

se

taxe

s. B

y see

kin

g ap

prov

al or

rep

eal o

f th

at st

atute

, the

ref

eren

dum

is

l

ikew

ise l

egisl

ative

and

doe

s no

t vio

late

any p

roh

ibitio

n ag

ains

t the

dire

ct

l

egis

latio

n of

adm

ini

strat

ive

matt

ers.

Nev

. Co

nst

. art.

10,

§1

( Th

e

egi

slatu

re s

hal

l pro

vid

e by

law

fo

r au

nifo

rm

and

equ

al r

ate o

f

as

sess

men

t an

d tax

atio

n, a

nd shall prescribe such regulations as shall

se

cure

aju

st va

luati

on fo

r tax

atio

n of

all p

rope

rty .

. . . )

;

N

evad

ans f

or th

e

Prot

. of P

rop.

Righ

ts, I

nc. v

. Hel

ler,

122 N

ev.

894,

914,

141

P.3d

123

5, 12

48

(2

006

) (re

cog

nizin

g th

at th

e pe

ople

's le

gisla

tive

pow

er i

s co

equa

l an

d

coex

tens

ive t

o tha

t of

the L

egi

slatu

re an

d th

at, u

nlike

a lo

cal g

ove

rnme

nt,

th

e Le

gisla

ture

. . .

perfo

rms

stric

tly l

egisl

ative

fun

ction

s );

G

allow

ay v

.

Truesdell,

83 Nev. 13, 20, 422 P.2d 237,

242

(196

7) (

expl

ainin

g th

at th

e

Le

gisla

ture

's po

wer

is t

o fra

me a

nd e

nac

t law

s, an

d to

ame

nd o

r re

peal

the

m ).

The

refor

e, w

e con

clud

e th

at th

e ref

erend

um

is va

lid.

Th

e pet

ition

s de

scrip

tion

of ef

fect i

s ina

dequ

ate

Al

thou

gh t

he re

fere

ndum

is v

alid

as w

ritte

n, it

s des

crip

tion

of

eff

ect i

s no

t. Un

der

NRS

295

.009

(1)(

b),

[e]ac

h pe

titio

n fo

r init

iativ

e or

refe

rend

um

mu

st: .

. . [

set

forth

in

not

mo

re t

han

200

wo

rds

a

d

escr

iptio

n of

the e

ffec

t of

the i

nitia

tive

or re

feren

dum

if t

he in

itiat

ive or

ref

eren

dum

is a

ppro

ved

by t

he v

oters

. Th

e de

scrip

tion

mu

st ap

pea

r on

each

sign

atur

e pag

e of

the p

etiti

on.

A

de

scrip

tion

of e

ffec

t is i

nten

ded

to f

acili

tate

the p

eop

le's

ri

ght

to m

eani

ngfu

lly e

ngag

e in

the

initi

ative

pro

cess

by

pre

vent

[ing

]


5/10

voter confusion and promot[ing] informed decisions.

Beers,

122 Nev. at

939-40, 142 P.3d at 345 (internal quotations omitted). The importance of

the description of effect cannot be minimized, as it is what the voters see

when deciding whether to even sign a petition.

See Educ. Initiative PAC v.

Comm. to Protect Nev. Jobs,

129 Nev., Adv. Op. 5, 293 P.3d 874, 879

(2013);

Las Vegas Taxpayer Accountability Comm. v. City Council,

125

Nev. 165, 177, 208 P.3d 429, 437 (2009). We have emphasized that

petition signers must be informed at the time of signing of the nature and

effect of that which is proposed. Failure to so inform the signatories and

voters is deceptive and misleading . . . .

Stumpf v. Lau,

108 Nev. 826,

833, 839 P.2d 120, 124 (1992) (quotation and emphasis omitted) (reviewing

an initiative petition that failed to describe the nature and purpose of the

proposed measure),

overruled in part on other grounds by Herbst Gaming,

Inc. v. Heller,

122 Nev. 877, 888, 141 P.3d 1224, 1231 (2006);

see also Nev.

Judges Ass n v. Lau,

112 Nev. 51, 59, 910 P.2d 898, 903 (1996) (noting in

the ballot context that, while it is impossible to explain all the conceivable

implications of every initiative placed on a ballot[,} the failure to explain

material ramifications of the ballot initiative is potentially misleading).

Although [t]he utility of the description of effect is confined to the

preliminary phase of the initiative [or referendum] process, when the

proponent seeks to garner enough initial support so that the initiative [or

referendum] will be considered by the Legislature and the voters,

Educ.

Init.,

129 Nev., Adv. Op. 5, 293 P.3d at 880, as the Coalition points out, the

description of effect m y hold even more imp ct with respect to

referendum, since merely gathering sufficient signatures to place a

referendum on the ballot guarantees a change to the law regardless of the

election's outcome. Nev. Const. art. 19 § 1(3) (providing that, if the voters


6/10

appr

ove

the r

efer

endu

m, t

he s

tatut

e s

hall

stan

d as

the l

aw o

f th

e sta

te

and

shal

l not

be a

men

ded

, ann

ulle

d, re

peal

ed, s

et as

ide,

susp

ende

d or

in

an

y wa

y ma

de i

nope

rativ

e ex

cept

by t

he d

irect

vote

of t

he p

eopl

e, a

nd if

the

vot

ers d

isap

prov

e th

e sta

tute

or r

esol

ution

, it

is re

nder

ed v

oid)

;

cf

Educ

. Ini

t.

12

9 N

ev., A

dv.

Op.

5, 2

93 P

.3d a

t 88

1 (no

ting

that

the

vote

rs

ha

ve t

he S

ecr

etary

of

Stat

e s o

ffic

ial e

xpla

nat

ion

and

the

requ

ired

arg

um

ents

for

and

aga

inst

its e

nac

tme

nt to

rev

iew

in d

ete

rmin

ing

whe

ther

to v

ote in

fav

or of

or a

gain

st an

initi

ative

).

We r

evie

w d

escr

iptio

ns o

f eff

ect t

o de

term

ine

whe

ther

the

d

escri

ptio

n ide

ntifi

es th

e pe

tition

's p

urpo

se an

d ho

w th

at p

urpo

se is

to b

e

achieved in a manner that is straightforward, succinct, and

no

narg

ume

ntat

ive,

and

not

dec

eptiv

e or

mis

lead

ing.

E

duc

. In

it. 1

29

N

ev.,

Ad

v. O

p. 5

, 29

3 P.

3d a

t 87

9 (q

uot

ing

Las

Vega

s Ta

xpa

yer

Acco

unta

bilit

y Co

mm.

125

Ne

v. at

183

, 20

8 P

.3d

at 4

41 (

inte

rnal

quo

tatio

ns o

mitte

d)).

Wh

ile th

e de

scri

ptio

n do

es n

ot n

eed

to m

enti

on

ever

y

po

ssib

le eff

ect,

id

(e

mph

asis

adde

d), i

t mu

st ac

cura

tely

iden

tify

the

consequence

s of

the

refe

rend

um'

s pa

ssag

e.

L

as

Vega

s Ta

xpa

yer

Ac

coun

tabil

ity C

omm

.

1

25 N

ev.

at 18

4, 20

8 P.

3d a

t 441

.

H

ere,

the

desc

riptio

n of

effe

ct de

scrib

es th

e co

mm

erce

tax a

nd

ex

plai

ns th

e leg

al ef

fect

of ap

prov

al an

d di

sapp

roval

, as

follo

ws:

Thi

s re

fere

ndu

m as

ks t

he v

ote

rs w

heth

er t

o

a

ppro

ve o

r dis

app

rove

tho

se po

rtio

ns o

f Se

nate

While we may consider a preelection challe

nge

toth

e de

scrip

tion

of

effe

ct un

der

NRS

295

.009

(1)(b

), we

ma

y not

revi

ew a

pree

lecti

on c

halle

nge

to a

refe

rend

um's

sub

stan

tive

con

stitu

tion

ality

, inc

ludi

ng w

heth

er t

he

ref

eren

dum

viol

ates

Artic

le 9

, Sec

tion

2(1)

of th

e N

evad

a Co

nstit

utio

n by

unba

lanc

ing t

he s

tate b

udg

et, b

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Bill No. 483 from the 2015 Legislative Session

which relate to the commerce tax. Pursuant to

S.B. 483, the commerce tax is imposed on each

business entity engaged in business in this State

whose Nevada gross revenue in a fiscal year

exceeds 4,000,000. The commerce tax is

calculated by multiplying the amount of a

business entity's annual Nevada gross revenue (as

adjusted by certain authorized deductions) which

exceeds $4,000,000 by the tax rate applicable to

the industry in which the business entity is

primarily engaged.

If this referendum is approved by a majority of

voters, the provisions of S.B. 483 related to the

commerce tax may not be amended, annulled,

repealed, set aside, suspended or in any way made

inoperative except by a vote of the people. If a

majority of voters disapproves of this referendum,

the provisions of S.B. 483 related to the commerce

tax are void which will have the effect of

eliminating the commerce tax. Disapproval of the

provisions of S.B. 483 related to the commerce tax

does not prohibit the Legislature from enacting

future legislation that imposes a commerce tax.

But nowhere does this description reveal the significant practical

ramifications of the measure's disapproval.

Under Article 9, Section 2(1), [t]he legislature shall provide

by law for an annual tax sufficient to defray the estimated expenses of the

state for each fiscal year; and whenever the expenses of any year exceed

the income, the legislature shall provide for levying a tax sufficient, with

other sources of income, to pay the deficiency, as well as the estimated

expenses of such ensuing year or two years. In compliance with this duty

to balance the state budget, the Legislature enacted SB 483's commerce

tax to provide a source of revenue for funding state expenditures.

Eliminating the commerce tax thus will unsettle the balanced budget for

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this biennium, fiscal years 2015/16 and 2016/17, causing financial

uncertainty for the government, and thus the people, of this state. Indeed,

based on the Economic Forum s estimates, the Legislative Counsel

Bureau s Fiscal Analysis Division has indicated that the people s

disapproval of the commerce tax in November 2016 would result in a net

loss to the state general fund of approximately $74.9 million in fiscal year

2016/17 and approximately $59.9 million in the fiscal years thereafter.

Yet, even though the tax s disapproval will necessarily

unbalance the budget approved by the Legislature in 2015 pursuant to its

Article 9, Section 2(1) duty, the description of effect makes no mention

whatsoever of this critical consequence. Accordingly, we conclude that the

referendum's description is deceptive for failing to accurately identify the

practical ramification of the commerce tax s disapproval, and any

signatures obtained on petitions with this misleading description are

invalid. NRS 295.015(2). While we recognize that the description of effect

is constrained to only 200 words, it is imperative that signers understand

the effects and ramifications of their signature and later vote. Therefore,

to facilitate the people's right of direct legislation, the district court on

remand must clarify the description of effect by taking into account the

material consequences of the referendum, including that the disapproval

of the tax will unbalance the state budget prepared pursuant to Article 9,

Section 2(1).

ee

NRS 295.061(3) ( If a description of the effect of an

We take judicial notice of the Fiscal Analysis Division's statement

entitled Financial Impact of the Referendum on Provisions Related to the

Commerce Tax From Senate Bill No. 483 of the 2015 Legislative Session

Petition, available at: http ://nvsos.gov/index.aspx?page=1541

NRS

47.130(2)(b); NRS 47.150(1);

Mack

125 Nev. at 91, 206 P.3d at 106.

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initiative or referendum . . . is challenged successfully . . . and such

description is amended in compliance with the order of the court, the

amended description may not be challenged. ). Accordingly, we

ORDER the judgment of the district court AFFIRMED IN

PART AND REVERSED IN PART AND REMAND this matter to the

district court for4

ings consistent with this order.

c,t .ert.41

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SAITTA, J., concurring:

The majority has concluded that the commerce tax

referendum's description of effect is unacceptably flawed. I agree. The

description of effect is intended to do just what it says—inform petition

signers of the material effects of what is proposed. I write separately to

point out that by ignoring the significant effect the referendum would

have on the balanced budget mandate, the description of effect suggests

that no such effect exists and is thus materially misleading. As a result,

4

In light of the nature and urgency of this matter, we suspend NRAP

41(a) and direct the clerk of this court to issue the remittitur forthwith.

See Rogers v. Heller

117 Nev. 169, 178 n.24, 18 P.3d 1034, 1040 n.24

(2001).

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Saitta

J.

the petition's signers have been both deceived and misled.

Educ. Initiative

PAC v. Comm. to Protect Nev. Jobs

129 Nev., Adv. Op. 5, 293 P.3d 874,

879 (2013). Such drafting threatens the sanctity of the petition process

and consequently is untenable, and thus, I concur with the majority's

conclusion that the description is invalid.

cc: Hon. James E. Wilson, District Judge

White Hart Law

The Griffin Company

Mueller Hinds Associates

Attorney General/Carson City

Carson City Clerk

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Documents

Supreme Court Order - Commerce Tax Repeal