Carson City judge tells Democrats to get new counsel in tax lawsuit

Carson District Judge Todd Russell essentially split the baby Tuesday in the battle over whether the Legislative Counsel Bureau could represent Democrats in the battle over the constitutionality of two tax bills.

He disqualified LCB legal from representing Democrats but allowed them to stay in the case to represent the interests of the Legislature as a whole.

The lawsuit filed by Senate Republicans charges that Senate passage of measures extending the sunsets in place for the Modified Business Tax and a DMV technology fee were unconstitutional because they didn’t receive a two-thirds majority vote. Both bills fell one vote short on party lines.

That issue is still out there. Tuesday’s hearing was over LCB’s decision to effectively represent the Democratic majority.

Republicans headed by Senate Minority Leader James Settelmeyer moved to disqualify LCB legal saying they can’t represent one group of lawmakers against another group of lawmakers because they represent the entire Legislature.

Russell told both sides after an hour-long hearing that he was very concerned LCB was doing just that.

“It appears to this court there is a need for LCB to maintain neutrality with respect to all members of the Legislature,” Russell said. “LCB in my opinion has always been very neutral to everybody. I just don’t think you can pick sides by representing individual senators against other senators,” he told LCB counsel Kevin Powers.

He disqualified LCB from representing the Democratic legislator named in the suit, Majority Leader Nicole Cannizzaro.

But saying there were far broader implications if he were to kick LCB out of the lawsuit, he ruled the legislative legal staff could stay in the case by filing to intervene on behalf of the Legislature as a whole.

Cannizzaro and Senate Secretary Clair Clift, who were named in the suit, will have to get their own counsel but, under the law, the Legislative Commission can pay for their lawyers.

The eight Republican senators who opposed the bills and filed the suit must pay their own legal bills because, as Powers put it, they are challenging the Legislature as an organization while Cannizzaro is aligned with the interests of the legislative branch.

“The individual legislators named should either be dismissed or they need to get separate counsel,” Russell said. “I think you should be involved. I just think that, somehow, you shouldn’t be in the middle of this thing representing one state senator against another state senator. That jeopardizes the entire nature of the LCB.”

The Senate voted 13-8 to pass the two bills. That is one shy of the two-thirds majority the state constitution requires to raise taxes.

That has always been required even to extend a sunset but LCB legal issued an opinion at the request of Democrats in the 2019 session saying it wasn’t required in this particular case because it wasn’t raising a tax, just extending a tax.

While the technology fee at DMV is included, the real issue is the more than $100 million extending the higher level Modified Business Tax would generate for K-12 education.

Russell set April 1 for a hearing in the case.