Election 2014: Nevada state ballot questions

Nevada Question 1:

Shall the Nevada Constitution be amended to create a Court of Appeals that would decide appeals of District Court decisions in certain civil and criminal cases?

EXPLANATION: This ballot measure proposes to amend the Nevada Constitution to create a Court of Appeals consisting of three judges. The Nevada Supreme Court would establish the types of District Court decisions to be heard by the Court of Appeals and also determine when a Court of Appeals decision may be reviewed by the Nevada Supreme Court.

A “Yes” vote would create a Court of Appeals within the existing court system.

A “No” vote would retain the existing court system.

ARGUMENTS FOR PASSAGE: Nevada’s Supreme Court has been overburdened for decades as it struggles to provide the public with speedy access to justice in the face of an ever-growing population. The increasing backlog of appeals is delaying justice in Nevada. Nevada is one of only ten states that do not have a Court of Appeals. Our Supreme Court is one of the busiest in the nation because it must hear and decide all appeals from final judgments entered by Nevada’s 82 District Court judges. Although our Supreme Court has tried to manage and reduce its caseload through technological and procedural measures, more needs to be done to make our justice system work better for our citizens and businesses.

The American Bar Association (ABA) recommends that when the volume of appeals becomes so great that a state supreme court cannot decide cases in a timely fashion, a court of appeals should be created. Nevada has reached that point. The ABA’s recommended annual caseload for an appellate judge is 100 cases. The Nevada Supreme Court’s caseload for each justice was 333 cases in Fiscal Year (FY) 2013, more than three times the recommended caseload.

As a result of this heavy caseload, the Supreme Court must resolve most appeals through unpublished orders that bind only the parties in a single case, instead of published opinions that establish statewide precedent for all future cases. In recent years, because of the extensive time and effort involved in researching and writing published opinions, the Supreme Court has issued published opinions in only 3 to 4 percent of all cases. The lack of published opinions can lead to the same issues being litigated repeatedly. A Court of Appeals would decide the more routine cases, which would allow the Supreme Court to focus on precedent-setting published opinions.

A Court of Appeals would provide more timely access to justice for Nevadans and a more stable business climate for existing and new businesses. It would promote a quicker resolution of all cases, including such personal and time-sensitive matters as family law, foreclosure mediation, and business disputes. A “yes” vote will enable Nevada’s court system to meet the demands of the twenty-first century and provide our citizens and businesses with an improved level of appellate review already available in 40 other states.

ARGUMENTS AGAINST PASSAGE: Nevada’s court system has been functioning without a Court of Appeals for the past 150 years, and voters rejected the creation of a Court of Appeals in 1972, 1980, 1992, and 2010. The backlog of appeals has not sufficiently increased since 2010 to justify creating a Court of Appeals now.

There are other methods to manage caseloads without creating a new court for appellate review. When necessary in the past, the Legislature has added more DistrictCourt judges and Supreme Court justices to handle increased workloads. Even if it is necessary to spend additional State money on improving the judicial system, it would be better to spend the money on increasing judicial resources within the existing court structure instead of creating a Court of Appeals.

Although a Court of Appeals would initially consist of three judges, the Legislature could add more judges, staff, and facilities to operate a Court of Appeals in the future, with no guarantee of an improved judicial system. Adding a new court could further delay justice for some litigants.

A “no” vote will stop the creation of another layer in Nevada’s court system, prevent increased spending of our limited resources on the court system, and confirm, for the fifth time in four decades, that Nevada voters do not want a Court of Appeals.

FISCAL NOTE: The Administrative Office of the Courts has indicated that this ballot measure creating a Court of Appeals would require operating expenses of approximately $800,000 in FY 2015, relating to judicial selection, salaries, and other expenses for the administration of a Court of Appeals. However, the Legislature, in Assembly Bill No. 474 of the 2013 Legislative Session, approved funding to the Interim Finance Contingency Account for the initial implementation of a Court of Appeals in FY2015, contingent upon the passage of this ballot measure. Therefore, no additional funding beyond that which has already been approved would be necessary for the operation of a Court of Appeals in FY 2015.

The Administrative Office of the Courts has indicated that ongoing costs for administration of a Court of Appeals, if approved by the voters, would be approximately $1.5 million per year. It is not known at this time, however, whether the Legislature and the Governor would choose to provide this funding from the State General Fund or from other sources.

Representatives of the Nevada Supreme Court have indicated that a Court of Appeals initially would be housed in existing court facilities in northern and southern Nevada, which would avoid the need for capital expenditures to establish a Court of Appeals. Thus, no immediate financial impact upon State government for capital costs is anticipated.

After the initial two-year terms of the three judges appointed to a Court of Appeals, candidates for future judgeships will be required by existing law to pay filing fees to the Office of the Secretary of State in order to seek judicial office. This will result in an increase in revenue to the State General Fund beginning in FY 2016, but the amount of the increase cannot be determined with any reasonable degree of certainty because the number of candidates cannot be predicted.

Nevada Question 2:

Shall the Nevada Constitution be amended to remove the cap on the taxation of minerals and other requirements and restrictions relating to the taxation of mines, mining claims, and minerals and the distribution of money collected from such taxation?

EXPLANATION: This ballot measure would repeal existing provisions of the Nevada Constitution that impose requirements and restrictions relating to the taxation of mines, mining claims, and minerals and the distribution of money collected from such taxation. If this ballot measure is approved by the voters, the Legislature, or the people through the initiative process, would be able to propose and enact laws to change existing methods of taxing mines, mining claims, and mineral extraction that are currently set forth in the Nevada Constitution.

The Nevada Constitution exempts mines and mining claims from the real property tax except for certain patented mines and mining claims. The Nevada Constitution also requires a tax upon the net proceeds of all minerals extracted in this State, including ores, metals, oil, gas, hydrocarbons, geothermal resources, and all other mineral substances. The tax rate must not exceed 5 percent of the net proceeds. Net proceeds are determined by calculating the gross value of all minerals extracted by a mining operation and then subtracting various deductions for certain operating costs incurred by the mining operation. The Nevada Constitution also prohibits any other type of tax upon a mineral or its proceeds, such as any mining tax upon gross value or upon the privilege of extracting minerals in Nevada. This ballot measure would remove these existing constitutional provisions.

Additionally, the Nevada Constitution requires a certain amount of the net proceeds tax to be distributed to each county and the local governmental units and districts, including the school district, within the county where minerals are extracted. This distribution must be made to these entities in the same proportion as they share in the local property tax. This ballot measure would remove these existing constitutional provisions.

Finally, the Nevada Constitution establishes special rules for taxing land owned as a patented mine or mining claim. A person who has a patented mine or mining claim has an ownership interest in all the land, including its surface and any minerals beneath the land, regardless of whether the minerals are being mined. By contrast, a person who has an unpatented mine or mining claim has an ownership interest only in any minerals beneath the land. The Nevada Constitution states that a patented mine or mining claim is subject to real property tax, except that no value may be attributed to: (1) any minerals beneath the land; and (2) the surface of the land if $100 of labor has been performed on the mine or mining claim during the preceding year. This ballot measure would remove these existing constitutional provisions.

A “Yes” vote would remove provisions of the Nevada Constitution that impose a cap on the taxation of minerals and would remove other constitutional requirements and restrictions on the taxation of mines, mining claims, and minerals and the distribution of money collected from such taxation.

A “No” vote would keep provisions of the Nevada Constitution that impose a cap on the taxation of minerals and would keep other constitutional requirements and restrictions on the taxation of mines, mining claims, and minerals and the distribution of money collected from such taxation.

ARGUMENTS FOR PASSAGE: The time has come to remove provisions in the Nevada Constitution that grant the mining industry special tax treatment. Mining has enjoyed constitutional protection from various taxes since Nevada became a state in 1864. More recently, in the 1980s, the mining industry campaigned for the passage of a constitutional amendment preventing Nevada from taxing the industry in the same way as most other states and imposing a cap on the mining tax rate. While these protections may have made sense in the past, times have changed and the State must have the flexibility to adopt tax policies that better reflect current conditions and meet the needs of all Nevadans.

Minerals, such as gold, silver, and lithium, are nonrenewable resources. When mineral resources are taken out of the ground, they are gone forever and the State is left with a scarred landscape. Given the eventual depletion of these resources, Nevada must be able to adjust its mining tax policies like other states do, and not be restricted by inflexible constitutional limits. Other states are able to tax mining in ways that better account for the industry’s permanent removal of scarce and nonrenewable resources. Another factor to consider is that many of the major mines in the State are owned by companies headquartered outside of Nevada that are getting rich on our limited resources and taking the profits out of state.

As currently written, the Nevada Constitution limits taxes on mineral extraction to 5 percent of the net proceeds, which allows the mining companies to deduct numerous operating costs before paying the tax. Because of these deductions, the mining industry ends up paying taxes on mineral extraction that represent a mere 2 to 2.5 percent of its gross revenues. The mining industry’s constitutional protections are not fair to other businesses and industries in our State and should be removed.

Nevada is rich in mineral resources—hence our nickname, the Silver State. We are the leading producer of gold in the United States and, in 2011, were the eighth largest producer in the world. Despite any claims to the contrary, mining companies will stay here as long as there are resources to mine.

A “yes” vote will remove the special constitutional protections for mining and give our State the ability to update its tax policies to fund schools, roads, and essential services appropriately.

ARGUMENTS AGAINST PASSAGE: Since 1864, the Nevada Constitution has required taxation of the mineral proceeds generated by Nevada’s important mining industry. In 1989, to ensure that the mining industry paid a greater share of taxes, voters approved a constitutional amendment that permitted an increase in the tax rate on the net proceeds of minerals. Today, the mining industry pays hundreds of millions of dollars in taxes, provides high-paying jobs, and supports our communities in countless other ways. Now is not the time to change the Constitution and threaten this vital Nevada industry and the communities it supports.

In addition to paying the net proceeds tax, mining companies pay fees and taxes just like other Nevada businesses, such as license and permit fees, taxes on employee wages, and personal property and sales taxes on expensive equipment required for mining operations. This ballot question is unnecessary. The Legislature already has the power to raise revenues by increasing existing fees and taxes or creating new ones that would apply equally to mining and other Nevada businesses.

Mining provides more than 12,000 jobs in Nevada, and it pays an annual average wage of over $87,000, one of the highest averages in the State. By spending money in our communities, mining companies and their employees and families support our local businesses and help our economy thrive. Thousands of other jobs are created every year because the mining industry consumes goods and services provided by our local businesses. Without the mining industry’s high-paying jobs, Nevada’s economy would suffer and many of these jobs would be lost.

Mining is an expensive and speculative business requiring significant capital investment for exploration, extraction, transportation, processing, and environmental restoration, with no guarantee of finding minerals or making a profit. Mineral prices are unpredictable and can change rapidly, which leads to even greater uncertainty for the industry. Keeping the net proceeds tax in the Nevada Constitution retains our predictable tax structure and promotes the industry’s vital investment in Nevada’s economy.

A “no” vote will retain the constitutional provisions that help make Nevada a global leader in mining and ensure a strong mining industry which will continue to invest and create valuable jobs in our communities for many more years.

FISCAL NOTE: No. This ballot measure would remove existing provisions of the Nevada Constitution that exempt mines and mining claims from the real property tax, thereby making mines and mining claims subject to real property taxation. However, Senate Bill No. 400 of the 2013 Legislative Session, which becomes effective if this ballot measure is approved by the voters, would provide similar exemptions from the real property tax. Thus, there are no anticipated financial effects on real property tax revenues received by State and local governments.

Nevada Question 3:

Shall the Nevada Revised Statutes be amended to create a 2% tax to be imposed on a margin of the gross revenue of entities doing business in Nevada whose total revenue for any taxable year exceeds $1 million, with the proceeds of the tax going to the State Distributive School Account to be apportioned among Nevada’s school districts and charter schools?

EXPLANATION: This ballot measure proposes to impose a two-percent (2%) margin tax on business entities in Nevada with total revenue in excess of $1,000,000, and it requires that the proceeds of the tax be used to fund the operation of the public schools in this State for kindergarten through grade 12. If this ballot measure is approved by the voters in the 2014 General Election, the applicable margins tax would take effect January 1, 2015.

The ballot measure includes an exemption from the tax for natural persons not engaged in business, passive entities, governmental entities, tax exempt organizations and credit unions authorized to do business in Nevada. Also, any business entities with total revenue of $1 million or less are not subject to margin tax. The tax would apply to all other businesses and organizations with total revenue in excess of $1 million in any taxable year.

The ballot measure would impose the 2% tax rate on the entity’s taxable margin. Under the ballot measure, a business entity’s taxable margin is determined by taking the lesser of:

(i) 70% of the entity’s total revenue; or

(ii) the entity’s total revenue minus either: (a) the cost of goods sold; or (b) the amount of compensation paid to its owners and employees.

The 2% tax would be imposed on the percentage of this margin that corresponds to the percentage of the entity’s total business that is done in Nevada. A business entity that pays the existing tax on payroll, commonly referred to as the modified business tax, would be credited for that amount against the amount it would owe under this measure.

If approved by the voters, proceeds from the tax would be deposited in the State’s Distributive School Account (DSA) in the State General Fund and will be apportioned among the county school districts and charter schools in the manner provided by state law to fund K-12 public education. The DSA provides the primary source of public education funding for Nevada’s 17 county school districts and its various charter schools. The DSA is funded by legislative appropriations from the State General Fund and other revenues. The ballot measure does not change how funds in the DSA can be spent or allocated.

A “Yes” vote would impose a 2% margins tax on Nevada businesses with revenue in excess of $1 million with the tax proceeds being deposited in the State Distributive School Account in the State General Fund and used to fund K-12 public education.

A “No” vote would retain the existing tax liability for businesses in Nevada and retain the existing sources of K-12 education funding.

ARGUMENTS FOR PASSAGE: A “Yes” vote for Question 3 – the Education Initiative – will give our schools a predictable funding source needed to provide a better education for Nevada’s children. Experts report that a better funded education system results in better jobs and higher wages. A quality education for our children will ensure their success and the success of Nevada’s economy.

The money from this tax will go directly to K-12 education. The initiative “requires that the proceeds of the tax be used to fund the operation of the public schools in this state.” This tax will provide money to pay for smaller class sizes, textbooks, technology, classroom materials, and programs resulting in increased student success and higher graduation rates.

Nevada is one of only three states that do not require big corporations to pay a corporate income or gross receipts tax. Big out-of-state corporations that operate in Nevada do not pay taxes on their income in Nevada! These big corporations pay corporate taxes in other states. Approval of Question 3 will require these big corporations -fewer than 14% of Nevada’s businesses- to pay a 2% tax on a certain portion of their total revenue which will go directly toward funding public and charter schools.

Approval of Question 3 will not hurt small businesses! A business with a total revenue less than or equal to $1 Million would not pay this tax. Businesses that pay the tax can take generous deductions. Any tax paid under the Education Initiative can be deducted from federal taxes.

Voting “Yes” on Question 3 is a vote to require the biggest corporations in Nevada to pay a 2% tax, after deductions, to fund Nevada’s K-12 public and charter schools. Students and Nevada’s economy will benefit greatly from payment of this modest 2% tax by the biggest corporations operating in Nevada, which have long avoided paying their fair share.

Business leaders like MGM Resorts Chairman Jim Murren, Republicans like Governor Brian Sandoval, and Democrats like U.S. Senator Harry Reid have stated that Nevada needs more money for K-12 education. The Education Initiative is the way to solve this problem. A better funded K-12 system will create opportunities for every Nevada student and prepare them for the better high-wage jobs of the future.

Please vote yes on Question 3 – the Education Initiative – to give our kids and our state a brighter future.

The above argument was submitted by the Ballot Question Committee composed of citizens in favor of this question as provided for in NRS 293.252.

ARGUMENTS AGAINST PASSAGE: Question 3 is a deeply flawed tax measure that would damage Nevada’s economy, cause the loss of thousands of jobs, and force consumers to pay more for food, housing, utilities and healthcare – without guaranteeing more funds for education.

No Accountability, No Guarantee of More Funds for Schools

Promoters claim the tax is for education. But Nevada law lets the legislature divert education funds to other uses. Moreover, Question 3 contains no guidelines on how its “education” funds might be spent. Question 3 gives politicians and bureaucrats a blank check to spend money with no plan, no oversight, no accountability and no guarantee for more money in the classroom.

It’s Worse Than It Seems: “This 2% ‘Margin Tax’ would be on gross revenues, not profits, so it’s the equivalent of a nearly 15% business tax. That would make Nevada one of the five highest taxed states in the country for businesses.” Carole Vilardo, President Nevada Taxpayers Association

Flawed, Unfair: Employers would have to pay the tax even if they have no profits and are losing money. And, the tax would be imposed on the businesses that provide most of the jobs in Nevada: major employers and thousands of small businesses with gross revenues above the threshold, including farms, restaurants, grocery stores and local retailers. The “businesses” exempted by the measure are mostly one-person operations with no employees.

Lost Jobs: Question 3 would increase the tax burden on Nevada employers by hundreds of millions of dollars annually. Economic studies show that it would cause the loss of thousands of existing jobs and make it extremely hard to attract new businesses and jobs to Nevada.

Higher Consumer Costs: Increased costs imposed on businesses providing goods and services in Nevada would ultimately be passed on to consumers. This would force Nevadans to pay higher prices for everything from food, clothing, gas, water and electricity to housing, insurance and healthcare – hurting those who can least afford it.

Everyone cares about education. But this costly, deeply flawed measure doesn’t ensure a better education for our kids. What it would do is hurt Nevada employers and our economy, put thousands of Nevadans out of work, discourage businesses from growing, and increase consumer prices for food, shelter, utilities, healthcare, and other vital goods and services.

That’s why a coalition representing tens of thousands of small and large employers, community leaders, educators, parents and consumers urges no on 3.

The above argument was submitted by the Ballot Question Committee composed of citizens opposed to this question as provided for in NRS 293.252.

FISCAL NOTE: Financial impact can’t be determined.

OVERVIEW: Question 3 proposes to amend Title 32 of the Nevada Revised Statutes to impose a new margin tax on the taxable margin of specified business entities in the state. The proceeds of the tax, less administrative costs incurred by the Department of Taxation, would be deposited in the State Distributive School Account. Question 3 requires that appropriations be made from the State General Fund to the Department of Taxation for the initial costs of administering the margin tax. Question 3 also proposes a temporary increase in the rate of the Modified Business Tax on Financial Institutions to generate revenue to support the appropriations made to the Department.