Don't Let Them Turn Nevada into East California

The Nevada Supreme Court Thursday, in a grossly political decision, tore up the state constitution and stole your right to vote.

Five Democrat and one Republican politicians, betraying their duty as judges, joined other tax-and-spend zealots -- Democrats in the Legislature and some Republicans, plus Big Gaming and the state teachers union -- in trying to turn Nevada into East California.

How did we get here?

Tax hikes of $400 million would 1) cover increases in student enrollments, caseloads and population, plus the effects of inflation, and 2) provide increased service levels by slightly more than the real growth rate of our economy. Instead, the governor asked for nearly $1 billion in new taxes to vastly expand the reach of state government at a time when the economy is struggling to recover.

Since every dollar taken in taxes is an act of destruction of human and societal well-being -- just as every dollar from public coffers spent prudently promotes human and societal well-being -- it is important to keep taxation damage and public spending benefits in balance. We must keep the public-sector fraction of our economy at reasonable levels, as Nevada's has been, and not let the natural tendencies of political processes drive it up to destructive levels. For this reason, I supported tax increases between $400 million and $511 million in this year's sessions.

However, Democrats, who fully control Assembly legislative process as the majority party, sought via mismanagement of that process to pass the irresponsible $1 billion tax hike requested. Their strategy was to put spending first and ignore the need for revenues to cover the bills. They put cart before horse because voters amended the constitution with two votes of 70 percent support in 1994 and 1996 to require two-thirds agreement in each house of the Legislature to raise taxes.

Voters intended that legislators should decide first how much revenue the state will have, taking into account the two-thirds requirement for new taxes, and then decide how to spend it, just as families, businesses and other government agencies normally do. Democrats had only 23 votes in the Assembly, and thus needed five of the 19 Republicans to join them to pass new taxes -- but only four Republicans were willing to support the $5 billion spending spree. Assembly Democratic leaders Richard Perkins and Barbara Buckley gambled -- unsuccessfully -- that they could, in effect, write bogus checks for $1 billion and then at the last minute bully one of 15 Republicans into caving in on their principles and milking taxpayers to make those checks good.

Meanwhile, the Senate made a number of embarrassing mis-starts, but finally voted enough taxes to cover the spending orgy -- an outcome contrary to the public interest, but not the train wreck caused by Democrats in the Assembly.

All along, Democrats peddled a Big Lie: that $1 billion tax increases are needed for public schools, and that the tax and budget battle is thus about funding education. In fact, the only time the school funding bill was brought up for a vote by itself in the Assembly -- in a special session committee -- all Republicans voted for it and all Democrats voted against it! Assembly Democrats always linked the education funding bill to the tax increase package -- except for the one time Republicans were able to get a separate vote.

Securing their spending plums was most important to all members of the tax-and-spend coalition except gaming, which naturally wanted to keep down its own tax burden, but which also sought to punish all other businesses in the state. Gaming sought not merely to shift tax increases to other businesses, which could be done in numerous reasonable ways Assembly Republicans would support, but to do so in the most onerous way: by creating a Nevada IRS to administer a gross-receipts tax or the many variants of it that were proposed.

Legislature Democrats, including senators lead by Dina Titus, insisted on the gross-receipts tax and rejected broad-based business taxes that Republicans would support. In sum, all Democrats, the teachers union, gaming and a few Republicans made a deal to support each other's special-interest political and economic agendas, all contrary to the public interest.

On the other side stood myself, 14 (sometimes 16) other Assembly Republicans, and a few Senate Republicans. The issue was never education funding, but instead: 1) the amount of total spending and tax increases and 2) the gross-receipts tax. For a couple of weeks now, it has been clear in the negotiations that the tax and spending number gaps could be compromised. Ironically, in recent days there were indications the Assembly Democrats also would finally consent to a reasonable broad-based business tax, and drop the gross-receipts tax. In short, there was no impasse, no constitutional crisis, and no need for the governor or Supreme Court to do anything.

That's how things stood as parties submitted final briefs last week in the governor's court action. There was reasonable hope the court would do the right thing. Moreover, it was clear there is no constitutional tension between the two-thirds requirement for taxes and the simple majority vote for spending -- for, as explained above, they require only that spending be pared back to the tax revenues that can be raised.

People were rightly shocked when the court invented the notion that the two-thirds provision put in the constitution by the voters is only "procedural," not "substantive," and thus could be set aside any time the tax-and-spend zealots could deal and maneuver as they have this term. This is not what the voters intended.

What should we do now?

During the regular session, I worked with legislative staff to draft a constitutional amendment for a reasonable spending cap that could be exceeded only with a two-thirds vote of each house. This measure would prevent the games played by Assembly Democrats and help keep spending in check. When the Assembly Democrats denied even a hearing on that measure, I decided to take it to the voters, just as Jim Gibbons did with his now overturned two-thirds requirement for increased taxes.

To correct the court's political adventure, before circulating my initiative petition, I will add language to my two-thirds spending-vote provision and to the Gibbons two-thirds tax-vote provision stating explicitly that they are substantive, not procedural items, and that any conflict between them and other constitutional provisions must be resolved in favor of them. Over the next two election cycles, the voters can pass this amendment and thus restore our constitution and make tax and spending increases appropriately difficult, as they previously sought to do.

The rest of the problem can be solved in future elections by the voters turning out the tax-and-spenders in all three branches of our state government, maybe even via impeachment. Voters should also repeal any law passed under the court's order that levies excessive taxes. We may also be able to appeal the ruling to a federal court, in part because the justices may have been improperly motivated by the 29 percent increase for Nevada courts in the budget. In any event, we cannot let them turn Nevada into East California.

Ron Knecht is an economist, engineer and law-school graduate who represents District 40, Carson City and Washoe City, in the Nevada Assembly.