Four business groups join Nevada Senate Republican tax lawsuit

Four Nevada business groups have joined in the Senate Republican lawsuit challenging the extension of the higher Modified Business Tax and DMV technology fee.

The Retail Association of Nevada, Nevada Trucking Association, National Federation of Independent Business and Nevada Franchised Auto Dealers Association on Tuesday joined Senate Republicans in the lawsuit seeking to overturn that decision as unconstitutional.

Those higher tax levies were scheduled to sunset this fiscal year, but Democratic majorities in both the Assembly and Senate eliminated the sunsets this spring, by way of 28-13 and 13-8 party line votes on both bills, which Gov. Steve Sisolak signed into law in June.

According to previous reports, the primary focus by Democrats was on keeping the MBT at its current level in order to generate roughly $100 million to help balance the K-12 education budget.

But they did so in the state Senate on a simple majority, citing an opinion issued this spring by the Legislative Counsel that an extension of an existing tax levy doesn’t require a two-thirds majority.

Minority Leader James Settelmeyer, R-Gardnerville, has argued that Democrats violated the clear constitutional provision mandating all tax increases receive a two-thirds vote.

With just 13 Democrats in the Senate, the passage of SB551 fell one vote short of the two-thirds mark.

Likewise, SB542 — which extends the DMV technology fee to sunset in 2021 and generates about $7 million — also fell short with its 13-8 vote.

Settelmeyer said the two-thirds requirement, since the language was added to the constitution, has been interpreted as applying to any legislation that increases tax revenues since.

Spokespeople for those four business groups added to the suit Tuesday issued a statement, saying they are “confident that this judicial ruling will reconfirm and uphold the long-held practice of requiring a two-thirds majority vote for any legislation regarding taxation.”

“Forcing through these extensions without a two-thirds majority in both houses sets a dangerous precedent and a disregard for the state constitution,” Paul Enos, president of the trucking association, said in the statement provided to the Nevada Appeal. “The constitution is not a document that should be open to the partisan interpretation by the party in the majority.”

Settelmeyer and Bryan Watcher, Senior Vice President of the Retail Association of Nevada, have both pointed out that Sisolak has already identified sufficient funds in the state’s Ending Fund Balance to cover the $100 million if the court rules in the GOP’s favor.

“Nevada needs to have an in-depth and thorough debate on financing education as we move further into the 21st century, instead we see our education community once again used as a pawn in a quest to rewrite our Constitution,” Wachter said in a provided statement. “... It raises further questions of whether the motivation behind these votes was increasing revenue or an attempt to erode the voter-mandated two-thirds requirement.”

Randi Thompson of the independent business federation said small businesses in Nevada take issue with Democratic Senate Majority Leader Cannizzaro’s reaction to the lawsuit, saying that her “claim that only large corporations pay the Modified Business Tax is inaccurate and misleading.”

“The vast majority of Nevada’s businesses have fewer than 20 employees and many are required to pay this tax,” Thompson said.

Andy Mackay of the auto dealers say they support the MBT as a reasonable and easy-to-understand levy, but that SB551 makes changes that make computing it more complex.

Settelmeyer has also said the burden for paying costs of the lawsuit is on him at this point. He said any groups or individuals who believe in the cause of protecting the two-thirds majority are welcome to contribute to his campaign account or the state Senate Republican Caucus.