Depending on how it's interpreted, the teachers' proposed tax plan could force the state to increase education funding by nearly double the $250 million business tax they proposed.
If so, the extra money would come out of the existing budget that funds all state programs.
The Nevada State Education Association is circulating a petition that would create a 4 percent tax on net business profits and dedicate the money to public schools. With 23,000 members, the teachers' union is expected to have little trouble getting the 44,009 signatures needed to force the issue.
Teachers Association President Elaine Lancaster said when she announced the petition that it is designed to create a new source of revenue for schools without dipping into the pot that pays for the rest of government.
To prevent the Legislature from using the new tax revenue to free up money for other uses, the initiative petition contains language that requires the state to put at least 50 percent of its revenue into education.
That's where the questions start.
Education Association fiscal analyst Al Bellister says that formula was intended to guarantee the state's current contribution to education will stay about the same percentage of the total budget. He said the teachers' union isn't trying to grab money that now supports other governmental programs.
"We're trying to freeze the existing state commitment and add on the $250 million," he said.
According to Bellister, the state this fiscal year budgeted $676.1 million for kindergarten through 12th grade. If the $250 million from a business tax were added, it would come to about $925 million. He said the petition's language gets to that total by taking the $250 million business tax, adding it to this year's general fund for a total of just over $1.8 billion, then guaranteeing public schools half of that - just over $900 million.
Bellister said the formula guarantees lawmakers can't take the business tax money "out the back door" by using it to replace, instead of add, to existing school funding.
But fiscal experts in both the state Budget Office and Legislative Counsel Bureau fiscal division say they're not sure the language in the petition mirrors that intent.
The problem is in Section 53 of the petition, which says: "The basic support guarantees must be established in such amounts so that collectively, after deducting local money available for public schools, they represent not less than 50 percent of the projected revenue for the state for that year."
The state's "basic support" for fiscal 1999-2000 is $515.9 million. The $676.1 million cited by Bellister is "total support." The $183.8 million difference is supplemental funding for programs such as class-size reduction, special education and the adult diploma program.
If the initiative is interpreted to mean the $183.8 million is outside "basic support," it would force the state to provide that money over and above the $900 million in "basic support" - a total of $1.1 billion, or $237 million more than the business tax.
Another way to interpret the initiative is to say the $250 million is not part of the general fund.
In that case, education would get half the existing $1.55 billion general fund, plus the $250 million from business taxes. That scenario too would guarantee public schools more than $1 billion.
Bellister said that's not what the teachers' union intended. He said the intention is to add the $250 million business tax to the general fund and then cut the pile in half for a total of $925 million, and he believes that is what the legal interpretation of the bill would be if taken to court.
NSEA lawyers who drafted the initiative proposal declined to be interviewed to explain how the language in the initiative gets that job done.
Deputy Budget Director Don Hataway, who has handled education budgets for more than a decade, said he isn't certain how to interpret the initiative petition.
"I understand their intentions, but intent only goes so far in court," he said. "We have to get a legal opinion on how to apply it."
He said since the state's current contribution to public schools is 34 percent of the general fund, plus the supplemental money, 50 percent would mandate a bigger share of all state money in any case.
"It's sure not revenue neutral," he said.
"It certainly is not crystal clear," said his boss, Budget Director Perry Comeaux. "It appears to be subject to interpretation and we're going to have to get an interpretation."
They were joined by legislative fiscal analysts Mark Stevens and Dan Miles, who said they are trying to"work out the ramifications."
"There are all kinds of legal questions and mechanical questions that need to be answered," said Miles.
They said it will take both legal and fiscal analysts to sort out how the initiative would work if passed.
"We have to be able to answer questions for our bosses so they can make a decision," said Stevens, referring to the 63 state Senators and Assembly members.
The situation is a problem because the Legislature must approve the statute exactly as written in the initiative petition. Legislative Counsel Brenda Erdoes said if they reject it, the proposed legislation goes to the voters. If they amend it, both the legislative version and the petition's version go to the voters and the one that gets the most votes becomes law.
As a further twist, even if lawmakers approve the legislation, the governor could veto it. In that case, Erdoes said, the issue would again go to a vote of the people at the next general election.
