In the final days of Nevada’s 80th Legislative Session, the Democrat majority in the Nevada State Senate and Assembly wielded their power to pass Senate Bill 551 (SB551) which raised Modified Business Tax (MBT) rates beyond their scheduled July 1, 2019 levels using a new simple majority voting threshold of 50 percent plus one vote. This vote was in direct conflict with the two-thirds supermajority requirement in Nevada’s Constitution.
The two-thirds vote has been used for extending taxes like the 2009 legislative session’s “sunset” taxes, for increases in license fees, room taxes and property taxes. Simply put, the two-thirds supermajority vote provision has not been ignored, rather it’s been respected and upheld for decades. In times when a single political party controls both houses of the legislature and governorship, the two-thirds supermajority vote provision in Nevada’s Constitution for increased revenue is the sole check on the growth of taxes and government.
How Will This Affect You?
The simple majority vote for SB551 created a new and dangerous precedent to increase taxes and fees as well as remove tax credits and exemptions.
Now, with a simple majority vote, you could face increased property taxes on your home by the removal of the 3 percent statutory cap, you could be taxed on life-saving prescription drugs like insulin and you could be taxed on your electricity, gas and water. For businesses, the Commerce Tax could affect more businesses with the elimination of the MBT tax credit, inventories could be taxed and much more.
The Democrat majority forced this vote for two reasons: to establish a much lower threshold to raise taxes and to secure a greater revenue stream to support continued expansion of government. This vote was not about filling a budget hole or shoring up a revenue shortfall.
During these robust economic times, legislative fiscal staff confirmed there was over a $100 million surplus of unallocated funds available when the 2020-21 budget was finalized in late May of this year. The total taxes raised by SB551 were forecasted to be less than this $100 million surplus. And, recently, Governor Sisolak confirmed no budget hole would be created if the revenue from SB551 was eliminated. Resetting the tax voting threshold to a simple majority was critical to Governor Sisolak and his Democrat colleagues because they substantially changed the trajectory of the cost of government by passing legislation to allow collective bargaining for state employees, by requiring higher prevailing wages for school construction, by increasing the minimum wage and more.
While you will hear accusations of Republicans protecting big business and not supporting education, the record is clear. Republicans proposed substantial increases in funding for education with more dollars to the classroom for class size reductions as well as fully funding school safety, Read by Three, Pre-K and Nevada Opportunity Scholarships, all within Economic Forum forecasted revenue levels. We also continued to support education reforms and programs from the 2015 legislative session like Zoom Schools for English language learners and Victory Schools.
In response to the simple majority vote on SB551, Republicans have filed a lawsuit to challenge its validity. Republicans recognize that we are accountable to you, the citizens of Nevada. You trust us to make decisions that affect our schools, your jobs and security, and your quality of life.
It is an honor and privilege to serve you and we are fighting to make sure this critical check on the unrestrained growth of taxes and government is upheld and respected. With the new simple majority precedent on SB551, the Democrats can proceed unchecked to increase your taxes unless the Republicans prevail in the courts or the voters take heed at the ballot box.