Supreme Court overturns 2019 tax increases that failed to get supermajority

The court issued its decision that both bills required a two-thirds vote in both houses to pass and there were rendered unconstitutional.

The Legislature established a $1 technology fee for every Department of Motor Vehicles fee in 2015 that was to sunset on June 30, 2020.

Senate Bill 542 extended the sunset provision until June 30, 2022, which would allow the DMV to raise another $6.9 million for each year it was in effect.

The Senate voted 13-8, one short of the supermajority required, to extend the fee.

Another measure approved in 2015, reduced the rate of payroll taxes under Nevada’s modified business tax, if revenues exceed projections by a certain amount.

In 2018, the Nevada Department of Taxation announced that 2018 revenues exceeded the threshold and would reduce payroll taxes starting July 1, 2019.

Senate Bill 551 proposed in the 2019 Legislature repealed the law, which would have allowed the state to collect around $98 million over the next two years.

The bill passed by the same 13-8 margin.

After the bills passed and were signed into law, the senators in the minority, led by James Settelmeyer, filed a lawsuit to overturn the laws.

The portions of SB 551 that weren’t subject to the supermajority, were severed from the case.

In their decision, justices said the bills clearly raised taxes without the required supermajority.

Referring to the dictionary, justices said the “words (in the bills) plainly encompass a bill that results in the state receiving more public revenue than it would have realized without it.”

The state argued that the bills didn’t increase taxes, but continued them.

“Adopting the state’s contrary interpretation would also violate the settled rule against interpreting a law in a manner that renders part of it superfluous, as it would require us to ignore the constitutional provision’s use of the word ‘any.’”

Business entities seeking to overturn the bills, including he Retail Association of Nevada, Nevada Trucking Association, Nevada Franchised Auto Dealers Association, and the National Federation of Independent Businesses said they were pleased by the ruling.

“We appreciate the Nevada Supreme Court for ruling today to uphold the will and intent of the Nevada people when it comes to increasing taxation. We also thank Sen. James Settelmeyer and the Senate Republican Caucus for their leadership and commitment to seeing this case to completion. Our organizations speak for hundreds of thousands of Nevada employees and their employers, and we will continue to advocate and remain vigilant in our defense of their rights and interests in our government.”

Gov. Steve Sisolak said the state would work with legislators to determine the effects of the ruling.

“After today’s ruling from the Nevada Supreme Court, we will continue to work with legislative leadership on budget implications and State officials will analyze the decision to determine next steps.”

The high court upheld the rejection of a request for attorney fees and costs against the individual defendants.