Supreme Court cites imaginary budget concerns, calls Commerce Tax repeal effort ‘deceptive’

Michael Schaus

Tax-and-spend cheerleaders are celebrating today, now that the Nevada Supreme Court has ruled against State Controller Ron Knecht’s Commerce Tax repeal effort.

The ruling sends the issue back to a state judge in Carson City, and requires petitioners to begin their efforts from scratch — with just over a month left to collect more than 55,000 signatures.

At issue is the 200-word explanation used on the petition to put the referendum on November’s ballot. The high court bought into the pro-tax scare tactics, arguing that repeal would put a hole in the state budget, causing some sort of crisis in Carson City.

“Accordingly, we conclude that the referendum’s description is deceptive for failing to accurately identify the practical ramification of the commerce tax’s disapproval, and any signatures obtained on petitions with this misleading description are invalid,” Chief Justice Ron Parraguirre wrote for the court, according to The Review Journal.

Justice Nancy Saitta agreed, saying that the repeal effort “deceived and misled” the public.  

Governor Brian Sandoval called the ruling a “win for transparency,” but in truth it is a win for fear-mongering and obfuscation.

Calling the repeal effort “deceptive” is particularly rich, given that the claims of a budgetary shortfall are essentially pure fiction. Repeal of this depression-era tax scheme will have virtually no impact on the government’s financial affairs before the legislature meets, regardless of the apocalyptic rhetoric coming from state coffers.

And the reason is quite simple — explanation requires nothing more than a calendar:

This year’s revenue from the tax will be collected and in the state’s coffers by August 15, well before the November elections.

Which means that repeal would have no effect on 2016’s revenues.

And as for 2017, collection of Commerce Tax revenues remain on the same schedule as this year, and so would not be collected until August 2017, well after the legislative session. And that means that the 2017 session of the Nevada Legislature will simply have the same task as it always does: balancing the budget.

Which it could easily do by pruning back on a bit of the pork it so loves.

There would be no crisis, no devastation of government agencies and no budgetary hole.

The court’s ruling says the petition must now include language warning against a hole in the state budget — a hole that, in truth, is imaginary.

At the district court level, the judge got this decision right: There is nothing deceptive in the petition language already circulated, which said that the commerce tax would be repealed.

Any voter knows that if a tax is repealed, the funds from that tax will not be available for government to spend in future years. This isn’t a concept that generally requires explanation.

The contortions that Nevada’s high court went through to pretend that voters do not understand this, and to thus pretend that the wording was “deceptive,” suggests the court has learned little since its 2003 pratfall in Guinn v. Legislature.

That results-oriented decision elicited national ridicule — which was entirely merited. 

Michael Schaus is communications director of the Nevada Policy Research Institute, a nonpartisan, free-market think tank. For more visit