filed opening brief 1 25 final final
TRANSCRIPT
IN THE SUPREME COURT OF NEVADA
COALITION FOR NEVADA’S FUTURE, a Nevada political action committee, Appellant, vs. RIP COMMERCE TAX INC. PAC, a Nevada political action committee; and THE HONORABLE BARBARA K. CEGAVSKE, in her official capacity as Secretary of State of the State of Nevada, Respondents.
) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )
CASE NO. 69501 First Judicial Dist. Ct. 15 OC 00244 1B
APPELLANT COALITION FOR NEVADA’S FUTURE’S
OPENING BRIEF
MATTHEW M. GRIFFIN
The Griffin Company
Nevada Bar No. 8097
401 S. Curry Street
Carson City, NV 89703
(775) 882-4002
KEVIN BENSON
White Hart Law
Nevada Bar No. 9970
2310 S. Carson Street #6
Carson City, Nevada 89701
100 North Carson Street
Carson City, Nevada 89701-4717
(775) 461-3780
Electronically FiledJan 25 2016 01:10 p.m.Tracie K. LindemanClerk of Supreme Court
Docket 69501 Document 2016-02471
i
NRAP 26.1 DISCLOSURE
The undersigned counsel of record certifies that the following are persons
and entities as described in NRAP 26.1(a) and must be disclosed. These
representations are made in order that the judges of this Court may evaluate
possible disqualification or recusal.
1. Appellant Coalition for Nevada’s Future is a committee for political action
("PAC") registered with the Nevada Secretary of State. It has no parent
corporation and has no stock issued.
2. Matthew M. Griffin, Esq., Nevada Bar No. 8097, of the law firm The Griffin
Company, LLC, represents the Coalition for Nevada’s Future in this Court
and also appeared for the Coalition in the district court.
3. Kevin Benson, Esq., Nevada Bar No. 9970, of White Hart Law, represents
the Coalition for Nevada’s Future in this Court and also appeared for the
Coalition in the district court.
ii
TABLE OF CONTENTS
NRAP 26.1 DISCLOSURE ........................................................................................... i
TABLE OF CONTENTS ................................................................................................ ii
TABLE OF AUTHORITIES .......................................................................................... iv
JURISDICTIONAL STATEMENT ................................................................................. vi
ROUTING STATEMENT ............................................................................................. vi
ISSUES PRESENTED FOR REVIEW ........................................................................... vii
STATEMENT OF THE CASE ......................................................................................... 1
STATEMENT OF FACTS ............................................................................................... 3
SUMMARY OF THE ARGUMENT .................................................................................. 4
STANDARD OF REVIEW .............................................................................................. 7
ARGUMENT ................................................................................................................ 7
I. The Petition is Invalid because it is a Referendum on a Senate Bill, not
on a Statute, Which Causes the Petition to be Confusing and Misleading. .... 7
A. The Petition is invalid because it is a referendum on a senate bill, not a
statute, and therefore it fails to strictly comply with Nevada’s constitutional
requirements. ....................................................................................................... 8
B. The Petition is invalid because it includes an “Explanation” that is
confusing, misleading and inapplicable to a referendum. ................................12
C. This Petition is invalid because it contains the enacting clause for
initiative petitions, even though referenda petitions cannot enact law. ............16
II. The Petition is Invalid Because it Includes Administrative Details and
Therefore Exceeds the Petition Power. .............................................................19
A. The district court erred when it refused to apply the long-standing test
used to determine whether provisions in a petition are administrative or
legislative. .........................................................................................................20
B. The reasons for prohibiting administrative provisions in initiative
petitions apply even more strongly to referendum petitions. ...........................24
C. The Petition is invalid because it contains numerous administrative
matters. ..............................................................................................................27
III. The Petition is Invalid because it Violates Nev. Const. Article 9,
Section 2. ..............................................................................................................30
iii
A. The challenge to the Petition based on its violation of Article 9, § 2 is
ripe for pre-election review. ..............................................................................30
B. The Petition is invalid because it would unbalance the State’s budget, in
violation of Nev. Const. Art. 9, § 2. ..................................................................32
IV. The Petition’s Description of Effect is Inaccurate and Misleading. .....37
CONCLUSION ............................................................................................................41
iv
TABLE OF AUTHORITIES
Cases
Caine v. Robbins, 61 Nev. 416, 131 P.2d 516, 517 (1942) .......................................................... 18
Campen v. Greiner, 15 Cal. App. 3d 836, 839, 843, 93 Cal. Rptr. 525 (Ct. App. 1971) ............. 35
Citizens for Train Trench Vote v. Reno, 117 Nev. 169, 177, 18 P.3d 1034, 1039 (2001) 20, 21, 28
City of N. Las Vegas v. Cluff, 85 Nev. 200, 201, 452 P.2d 461, 462 (1969) ................................ 30
Costa v. Superior Court, 128 P.3d 675, 706 (Cal. 2006) (Kennard, J., dissenting) ....................... 9
Educ. Init. v. Comm. to Protect Nev. Jobs, 129 Nev. Adv. Op. 5, 293 P.3d 874, 879 (Nev. 2013)
............................................................................................................................................. 37, 38
Forman v. Eagle Thrifty Drugs & Markets, Inc., 89 Nev. 533, 537, 516 P.2d 1234, 1236 (1973)
................................................................................................................................. 16, 20, 21, 24
Garvin v. Ninth Judicial Dist. Court ex rel. Cnty. of Douglas, 118 Nev. 749, 59 P.3d 1180 (2002)
............................................................................................................................................ passim
Herbring v. Brown, 180 P. 328, 330 (Or. 1919) ........................................................................... 11
Herbst Gaming, Inc. v. Heller, 122 Nev. 877, 141 P.3d 1224 (2006) ................................ 8, 18, 31
In re T.R., 119 Nev. 646, 651, 80 P.3d 1276, 1279 (2003) ........................................................... 32
Myers v. City Council of City of Pismo Beach, 241 Cal. App. 2d 237, 243, 50 Cal. Rptr. 402 (Ct.
App. 1966) ............................................................................................................................... 35
Nevadans for Nevada v. Beers, 122 Nev. 930, 942, 142 P.3d 339, 347 (2006) .................... passim
Nevadans for Nevada v. Beers, 122 Nev. 930, 949, 142 P.3d 339, 351 (2006) ....................... 8, 39
Nevadans for the Protection of Property Rights, Inc. v. Heller, 122 Nev. 894, 141 P.3d 1235
(2006) ................................................................................................................................. passim
Personhood Nevada v. Bristol, 126 Nev. 599, 602, 245 P.3d 572, 574 (2010) ............................ 31
Prior v. Noland, 68 Colo. 263, 268, 188 P. 729, 731 (1920) ........................................................ 10
Rossi v. Brown, 9 Cal. 4th 688, 889 P.2d 557 (1995) ............................................................. 35, 36
Stumpf v. Lau, 108 Nev. 826, 833, 839 P.2d 120, 124 (1992) .................................................. 8, 18
Tesoriere v. Second Judicial Dist. Court in & for Washoe Cnty., 50 Nev. 302, 258 P. 291, 293
(1927) .................................................................................................................................. 15, 16
Whittemore v. Terral, 140 Ark. 493, 215 S.W. 686, 687 (1919) .................................................. 10
Statutes
1957 Statutes of Nevada, Ch. 2 ..................................................................................................... 11
2015 Statutes of Nevada, Ch. 487 ................................................................................................... 3
NRS 220.085 ................................................................................................................................. 27
NRS 220.120 ................................................................................................................................. 27
NRS 295.009 ................................................................................................................. 1, 37, 38, 40
NRS 295.055(4) ........................................................................................................................... 39
NRS 295.061 ............................................................................................................................... 1, 4
Other Authorities Senate Bill No. 483 .......................................................................................... passim
Regulations
NAC 295.050 ............................................................................................................................... 39
v
Constitutional Provisions
Nev. Const. Art. 10, § 1 ................................................................................................................ 35
Nev. Const. Art. 19, § 1 ......................................................................................................... passim
Nev. Const. Art. 19, § 2 ................................................................................................................ 25
Nev. Const. Art. 19, § 4 ................................................................................................................ 23
Nev. Const. Art. 4, § 22 ................................................................................................................ 34
Nev. Const. Art. 4, § 23 ................................................................................................................ 10
Nev. Const. Art. 9, § 2 ........................................................................................................... passim
Nev. Const. Article 19, § 3 ........................................................................................................... 17
vi
JURISDICTIONAL STATEMENT
This Court has jurisdiction over this appeal pursuant to NRAP 3A(b)(1) and
3A(b)(3). This is an appeal from a final order resolving all claims presented to the
district court. NRAP 3A(b)(1). It is also an appeal from an order refusing to grant
an injunction. NRAP 3A(b)(3).
The final order was entered on December 17, 2015. Notice of entry of the
order was served on December 18, 2015. The notice of appeal was filed on
December 30, 2015. This appeal is timely because it was filed less than 30 days
after the entry of the final judgment, as required by NRAP 4(a)(1).
ROUTING STATEMENT
This is case is presumptively retained by the Supreme Court pursuant to
NRAP 17(a)(3) because it is a case involving a ballot or election issue, more
specifically: whether the Secretary of State should be enjoined from placing a
referendum petition entitled “Referendum on Provisions Related to the Commerce
Tax From Senate Bill No. 483 of the 2015 Legislative Session” on the 2016
general election ballot.
vii
ISSUES PRESENTED FOR REVIEW
1. Nev. Const. Art. 19, § 1(1) only permits referenda on a “statute or
resolution,” or part thereof. Petitions must strictly comply with constitutional
requirements. Did the district court err when it found that this Petition
complies with Article 19, § 1, even though it proposes a referendum on a
senate bill, not a statute?
2. Is a referendum petition valid where it seeks to repeal language which is not
current law, proposes to enact new language, and contains the enacting
clause for initiative petitions, rather than simply asking voters to approve or
disapprove an existing law?
3. Did the district court err when it refused to apply the test set forth by the
Nevada Supreme Court for determining whether a provision is
administrative or legislative in nature, and instead held that the Petition is
valid, regardless of whether it contains administrative provisions?
4. Given that the people’s petition power is coequal, coextensive, and
concurrent with the power of the Legislature, does a referendum which
repeals a tax and therefore unbalances the State’s budget violate Nev. Const.
Article 9, § 2(1), which requires sufficient taxes to be raised to pay for
expenditures in each year?
viii
5. Is this referendum Petition valid, even though its Description of Effect fails
to mention that the Legislature must replace the Commerce Tax, or eliminate
some expenditures, under Article 9 section 2 of the Nevada Constitution?
1
STATEMENT OF THE CASE
On October 8, 2015, defendant RIP Commerce Tax, Inc. PAC (“RIP PAC”)
filed its “Petition for Referendum on Provisions Related to the Commerce Tax
from Senate Bill No. 483 of the 2015 Legislative Session” ( “Petition”) with the
Secretary of State. Joint Appendix (“JA”) 11.
On October 29, 2015, plaintiff Coalition for Nevada’s Future (“CNF”)
initiated this case by filing a Complaint for Declaratory and Injunctive Relief
pursuant to NRS 295.061 and NRS 295.009 in the First Judicial District Court. (JA
1) The Complaint and opening brief asserted that the Petition was invalid because:
(1) It attempts to refer a senate bill, rather than a “statute” as required by Nev.
Const. Art. 19, § 1(1), and that this causes confusion and ambiguity in the
language; (2) It contains impermissible administrative provisions; (2) It violates
Nevada’s balanced budget requirement under Nev. Const. Art. 9, § 2(1); (3); and
(4) It contains an invalid Description of Effect which fails to mention a critical
effect: that the Petition would unbalance the State’s budget, which would in turn
require either new taxes be raised, or programs to be cut. (JA 1-9)
After full briefing, the district court held a hearing on December 2, 2015 and
heard arguments from counsel. (JA 124-202) The district court denied all relief
requested in the Complaint and declined to enjoin the Secretary of State from
placing the Petition on the ballot. (JA 209-10)
2
First, the district court held that the Petition was valid, regardless of whether
it contained administrative provisions. (JA 206) Instead of applying the Nevada
Supreme Court’s test for determining whether any of the provisions were
administrative in nature, the district court held that a referendum petition can be
run on any provision passed by the Legislature, even if it contains provisions that
are plainly administrative. Id.
Second, the district court held that the Petition was valid, even though it
would unbalance the budget passed by the 2015 Nevada Legislature by repealing a
tax that is necessary to pay for the State’s expenditures in its current budget year.
(JA 206) The district court held that Nev. Const. Art. 9, § 2(1) only imposes a duty
upon the Legislature to balance the budget, and the people have no similar
constraints under Article 19. Id.
Third, the district court held that the Constitution’s requirement that the
people propose a “statute” in a referenda petition is satisfied by referring a senate
bill because the bill was passed by the Legislature and approved by the Governor.
(JA 206-07)
Fourth, the district court held that the explanation included as part of the
petition did not render the petition invalid. (JA 207) The court stated that it found
no legal authority that requires the explanation to be accurate or not confusing, and
3
since this explanation is similar to that used when the Legislature considered the
entirety of SB 483, it is permissible. Id.
Finally, the district court held that the Description of Effect is adequate,
even though it fails to inform potential signers that the Legislature must enact new
taxes, or cut existing expenditures, if the Commerce Tax is disapproved. (JA 208)
STATEMENT OF FACTS
In 2015, the Legislature created a budget based on the Executive Budget
submitted by the Governor, estimates from the Economic Forum, and reports from
the Legislative Counsel Bureau’s Fiscal Division. The budget provides for
expenditures for state agencies and programs, and also provides for taxes, fees, and
other revenue sufficient to fund those expenditures in each of the next two years.
Nev. Const. Art. 9, § 2.
Senate Bill No. 483 provides for a new tax called the Commerce Tax. It was
passed by the Legislature and signed by the Governor on June 9, 2015. 2015
Statutes of Nevada, Ch. 487. The Commerce Tax is part of the overall tax and
revenue package passed by the Legislature in 2015 to fund the expenditures that
were also passed by the Legislature in 2015.
Defendant RIP Commerce Tax, Inc. PAC is a registered Nevada political
action committee. (JA 72)
4
On October 8, 2015, defendant RIP Commerce Tax filed its “Petition for
Referendum on Provisions Related to the Commerce Tax from Senate Bill No. 483
of the 2015 Legislative Session” with the Secretary of State. (JA 11)
Plaintiff Coalition for Nevada’s Future timely challenged the Petition under
NRS 295.061 when it initiated this case on October 29, 2015. (JA 1)
SUMMARY OF THE ARGUMENT
The Nevada Constitution, Article 19, § 1(1) permits a referendum petition
asking the voters to approve or disapprove a statute, or part thereof. Petitions must
strictly comply with this constitutional requirement. In this case, the Petition
attempts a referendum on a senate bill, not a statute. This results in a Petition
which contains confusing and misleading language, such as asking voters to
approve or disapprove of language that is not even current law. Additionally, the
Petition’s explanation of its text fails to accurately inform voters what the effect of
voting “yes” or “no” on the petition will be. Finally, the Petition contains the
enacting clause used for initiative petitions. Because of these errors, the Petition
fails to strictly comply with Article 19, § 1(1), is confusing and misleading, and is
therefore invalid.
The petition power is limited to legislation; it does not extend to dictating
administrative details. This limitation applies to referenda as well as initiative
petitions. If a statute is approved by referendum, its provisions can never be
5
changed by the Legislature. A referendum that contains administrative provisions
is therefore void, because it goes beyond approving or disapproving of the policy
of the statute and instead risks enshrining into law the smallest of bureaucratic
details. The district court therefore erred when it refused to even consider whether
any of the provisions of the Petition are administrative in nature. This Petition is
invalid because it goes far beyond a referendum on the Commerce Tax by
containing numerous administrative provisions related to the execution of the
Commerce Tax.
Nev. Const. Art. 9, § 2 requires the State to maintain a balanced budget,
which is set forth every session of the Nevada Legislature. The Commerce Tax is
one of the sources of revenue that the Legislature enacted in 2015 in order to fund
the expenditures in each of the next two years. It is not necessary, useful, or
possible in the short time challenge a petition to demonstrate exactly how big of a
hole in the State’s budget will result if the Commerce Tax is repealed. As the
holder of the State’s purse strings, the Legislature passed the budget and the
Commerce Tax was necessary to raise the revenue required to fund expenditures
over the next two years.
Under Nev. Const. Article 9, § 2, the Legislature has no power to repeal a
tax that is part of the current annual budget, without either raising new revenue to
replace it, or cutting expenditures. This Court has previously held that the people’s
6
petition power is “coequal, coextensive, and concurrent” with the power of the
Legislature. As a result, the people likewise cannot repeal a tax that is part of the
Legislature’s 2015 annual budget. This Petition therefore exceeds the petition
power and is invalid.
The Petition’s Description of Effect is inadequate because it fails to inform
voters about the actual consequences of repealing a tax that is part of the current
budget: that the result is that either new taxes must be raised or expenditures must
be cut. The district court erred in holding that the Petition’s Description of Effect is
sufficient, even though it makes no mention of this effect, and therefore gives the
impression that there are no consequences to repealing a current source of State
revenue. The purpose of the description of effect is to promote informed decision-
making. The Petition does not exist in a vacuum and voters must be told of this
effect of the Petition in order to decide whether to sign the Petition.
7
STANDARD OF REVIEW
When, as here, the district court’s decision denying relief on a challenge to a
ballot question is made in the absence of any factual dispute, this Court reviews the
district court’s order de novo. Nevadans for Nevada v. Beers, 122 Nev. 930, 942,
142 P.3d 339, 347 (2006).
ARGUMENT
I. The Petition is Invalid because it is a Referendum on a Senate Bill,
not on a Statute, Which Causes the Petition to be Confusing and
Misleading.
The Petition fails to comply with the requirements of Nev. Const. Art. 19, §
1(1) because it proposes a referendum on part of a bill, not on a statute. This causes
confusion and misleads voters. For example, the Petition attempts to refer language
that is not in current law and contains a confusing “explanation” of the language.
The RIP PAC also asserts that, if Senate Bill 483 is disapproved, the Petition
would re-enact language which is not currently in the law. Finally, to make matters
worse, RIP PAC includes an enactment clause stating that the petition enacts law,
which misleads voters as to the fundamental nature and purpose of the Petition.
Strict compliance with the Constitution is required because such compliance
is easy to achieve and avoids exactly this kind of confusion. This Petition fails to
comply with the requirements of Article 19, § 1. The district court therefore erred
8
when it held that the Petition refers a “statute” and that it is not misleading or
confusing.
A. The Petition is invalid because it is a referendum on a senate bill, not a
statute, and therefore it fails to strictly comply with Nevada’s
constitutional requirements.
All petitions for referendum or initiative must strictly comply with the
requirements of the Nevada Constitution. Nevadans for Nevada v. Beers, 122 Nev.
930, 949, 142 P.3d 339, 351 (2006). The power to change the law through petition
is a powerful one, “[b]ut that power exists within the current constitution’s
boundaries.” Id., 122 Nev. at 947, 142 P.3d at 350. Petitions outside those
boundaries may not proceed to the ballot. See e.g., id. (petition was void where the
circulated version was not the version which was filed with the Secretary of State,
as required by the Nevada Constitution); Stumpf v. Lau, 108 Nev. 826, 833, 839
P.2d 120, 124 (1992) (petition void for failing to indicate whether it would amend
a statute or the constitution) (overruled on other grounds by Herbst Gaming, Inc. v.
Heller, 122 Nev. 877, 141 P.3d 1224 (2006)).
The holding in Beers was grounded on the policy that Nevada’s Constitution
provides important safeguards to protect the petition process and prevent voter
confusion. Beers, 122 Nev. at 949, 142 P.3d at 351-52. It also recognized that
“there is no good reason put courts in the position to decide whether the
discrepancy was so insignificant that it satisfies a ‘substantial compliance’
9
standard, when a requirement is clearly and unambiguously mandated by the
Nevada Constitution.” Id. Strict compliance with those rules protects the petition
process, while substantial compliance creates “significant risk of confusing or
misleading the public.” Id., 122 Nev. at 946, 142 P.3d at 349 (favorably citing
Costa v. Superior Court, 128 P.3d 675, 706 (Cal. 2006) (Kennard, J., dissenting)).
Such a policy “holds especially true given the shortened time frame for an
initiative's preelection challenge, which does not allow courts to reliably determine
whether the degree of noncompliance was significant to voters or groups in
deciding whether to support an initiative.” Id.
Thus, to strictly comply with Article 19, § 1(1), the Petition must refer a
“statute.” If it does not, it fails to satisfy strict compliance with the Constitution.
Nev. Const. Art. 19, § 1(1) provides in full:
A person who intends to circulate a petition that a statute or resolution or
part thereof enacted by the legislature be submitted to a vote of the people,
before circulating the petition for signatures, shall file a copy thereof with
the secretary of state. He shall file the copy not earlier than August 1 of the
year before the year in which the election will be held.
(Emphasis added.)
Similarly, Nev. Const. Art. 19, § 1(3) provides:
If a majority of the voters voting upon the proposal
submitted at such election votes approval of such statute or
resolution or any part thereof, such statute or resolution or
any part thereof shall stand as the law of the state and shall
not be amended, annulled, repealed, set aside, suspended or
in any way made inoperative except by the direct vote of
10
the people. If a majority of such voters votes disapproval of
such statute or resolution or any part thereof, such statute or
resolution or any part thereof shall be void and of no effect.
(Emphasis added.)
The referendum power is limited to those items which the constitution states
are subject to referendum. See Whittemore v. Terral, 140 Ark. 493, 215 S.W. 686,
687 (1919) (holding that a resolution to ratify the Prohibition Amendment was not
an “act” subject to referendum); Prior v. Noland, 68 Colo. 263, 268, 188 P. 729,
731 (1920) (same).
Under the plain language of Nev. Const. Art. 19, § 1(1), the referendum
power extends only to statutes and resolutions, or parts thereof. The referendum
power does not extend to bills, bill draft requests, memorials, or other legislative
items. A referendum petition must strictly comply with this requirement that it
refer a statute. Beers, 122 Nev. at 949, 142 P.3d at 351.
The Petition in this case purports to refer to the people “Provisions related to
the Commerce Tax from Senate Bill No. 483 from the 2015 Legislative Session.”
Senate Bill No. 483 is not a statute, nor does the Petition anywhere identify the
statute that it is referring for a vote of the people.
The district court held that Senate Bill No. 483 is a “statute” because it was
passed by the Legislature and signed by the Governor. This was error, because a
bill is not a statute. See Nev. Const. Art. 4, § 23 (stating that all laws must be
11
enacted by bill); Herbring v. Brown, 180 P. 328, 330 (Or. 1919) (recognizing that a
bill is a mere draft of a law, which may never be enacted and is therefore distinct
from a law).
Nor is a law synonymous with “statute.” The term “statute” refers only to
the Nevada Revised Statutes or the Statutes of Nevada. Nev. Const. Article 19, §
1(1) requires that a referendum petition be on a “statute” or part thereof. This
language was changed in 1962. See Question 2, 1962.1 Previously, Article 19, §
1(1) stated that a referendum must be on a “law or resolution.” Id. It was changed
in 1962 to state a “statute or resolution,” or part thereof. Id. Tellingly, the Nevada
Revised Statutes had only fairly recently been adopted in 1957. 1957 Statutes of
Nevada, Ch. 2. Accordingly, the difference between a “law” and a “statute” was
very recently at the forefront and well-understood. The fact that the Constitution
was changed to refer specifically to a “statute” instead of a “law” shows that the
referendum power extends only to the Nevada Revised Statutes and the Statutes of
Nevada.
Accordingly, although S.B. 483 may be a law, it is not a statute, and as a
result the Petition fails to comply with Article 19, § 1(1). The district court held
that the Petition was valid, despite the fact that it does not refer a statute. By doing
1 Available at:
https://leg.state.nv.us/Division/Research/VoteNV/BallotQuestions/1962.pdf
12
so, the district court essentially applied substantial compliance instead of strict
compliance. As explained below, attempting to refer a bill to the voters makes the
petition confusing and misleading. For example, this Petition attempts to refer
language that is not existing law, and also attempts to re-enact other language that
has been repealed. These are only two of the numerous problems caused by
attempting a referendum on a bill instead of a statute.
As the Nevada Supreme Court discussed in Beers, strict compliance with the
Nevada Constitution is required, and it is a simple matter to comply with the
requirement that a referendum be proposed on a statute. See Beers, 122 Nev. at
949, 142 P.3d at 351-52. Because the Petition does not request a referendum upon
any statute or part thereof, it does not comply with Article 19, Section 1, and is
therefore invalid.
B. The Petition is invalid because it includes an “Explanation” that is
confusing, misleading and inapplicable to a referendum.
The Petition is also invalid because the format of the text of the measure and
the explanation of the measure is confusing and misleading. At the top of the first
page, the Petition provides:
REFERENDUM ON PROVISIONS RELATED TO THE COMMERCE TAX
FROM
SENATE BILL NO. 483 OF THE 2015 LEGISLATIVE SESSION
13
EXPLANATION – Matter in bolded italics and matter in brackets [omitted
material] is the material from Senate Bill No. 483 to be considered for
approval or disapproval in this referendum.
(JA 11)
The Petition then sets forth the full text of the measure, which is taken
verbatim from Senate Bill 483, including language in bold, italic text, as well as
bracketed text with a strikethrough. However, the Explanation states that both the
bold, italic text and the bracketed text (“[omitted material]”) is material from SB
483 “to be considered for approval or disapproval” in this Petition. Id.
Thus, read literally, the Explanation states that the “[omitted material]” and
the bold, italic language shall be treated the same: if the people vote to disapprove,
both will be repealed, and if the people vote to approve, both will be approved. Yet
such a proposal is not possible, as the omitted material is language that is not part
of existing law and therefore cannot be repealed through a referendum. Nor can it
be put back into law through a referendum, because a referendum cannot enact
law. Such confusion underscores the reason that petitioners must propose a
referendum on a statute, not a bill. Under Article 19 § 1, the “[omitted material]”
cannot be voted on by the people in a referendum because it is not a statute or part
thereof.
In the district court, RIP PAC asserted that, despite the literal language in the
Explanation, disapproval of the measure would mean the bold, italic language
14
would be repealed, and the “[omitted material]” would be re-enacted into law. (JA
96) The district court did not make a finding on this argument, but did hold that the
Explanation was “similar” to the explanation found in Senate Bill 483 and
therefore the Explanation is not misleading. (JA 207) This was error for two
reasons: first, it contradicts the Explanation itself; and second, a petition which
enacts language that does not currently exist in the law is an initiative, not a
referendum.
With respect to the district court’s holding, the explanation found in Senate
Bill 483 is, in fact, significantly different from the Explanation on the Petition.
Senate Bill 483’s explanation provides: “EXPLANATION – Matter in bolded
italics is new; matter between brackets [omitted material] is material to be
omitted.” This explanation makes clear that bold, italic language is treated
differently from [omitted material]. By contrast, the Explanation in the Petition
states that they are treated exactly the same: both will be either approved or
repealed. This makes the Petition confusing. For example, what does it mean to
“approve” the [omitted material]? Does that mean that the voter wants the omitted
material reenacted into law, as RIP PAC contends? Or does that mean the voter
approves of the fact that Senate Bill 483 repealed that language? From this Petition
and this Explanation, there is no way to tell, and voters may interpret it differently.
15
That is why a referendum must be on a statute, and cannot ask voters, as this
Petition does, to approve or disapprove language that is not even existing law.
Second, according to the RIP PAC, if voters disapprove of Senate Bill 483,
the “[omitted material]” would be added back into the law. RIP PAC conceded as
much before the district court. (JA 95) However, this interpretation conflicts with
the literal words of the Explanation, which says nothing of reenacting the omitted
material. Additionally, the “[omitted material]” is not existing law, thus, according
to RIP PAC, the Petition would be adding language to the statutes that does not
currently exist. That is, by definition, an initiative petition, not a referendum.
Tesoriere v. Second Judicial Dist. Court in & for Washoe Cnty., 50 Nev. 302, 258
P. 291, 293 (1927).
Allowing this kind of confusion is senseless, and just as the court pointed
out in Beers, it is easily fixed. Also, it demonstrates how “substantial compliance”
can lead to confusing and misleading voters, and why the court in Beers held that
strict compliance is required. 122 Nev. at 946, 142 P.3d at 349. These problems
can be easily avoided by strictly adhering to the requirement in Article 19, § 1 that
a referendum petition be on a statute, not a bill. See e.g., Beers, 122 Nev. at 943,
142 P.3d at 347 (strict compliance with constitutional provisions is required
because it promotes informed decision-making and avoids confusion).
16
In this case, the district court’s decision employed a substantial compliance
standard rather than strict compliance. This led the district court to determine that a
senate bill is the same as a statute and that the Explanation was “similar” to that
used for the explanation in Senate Bill 483, and therefore not misleading.
However, as discussed in Beers, because strict compliance is easy to achieve, there
is no reason to risk this kind of confusion for voters, nor to put the courts in the
position of trying to determine whether the petition substantially complies or not.
122 Nev. at 949, 141 P.3d at 352.
Therefore, applying strict compliance solves all of these problems, and the
district court’s determination that the Petition complies with Article 19, § 1, even
though it is on a bill, not a statute, must be reversed.
C. This Petition is invalid because it contains the enacting clause for
initiative petitions, even though referenda petitions cannot enact law.
A referendum cannot amend or create new law; it can only refer an existing
law to the people for approval or disapproval. Forman v. Eagle Thrifty Drugs &
Markets, Inc., 89 Nev. 533, 537, 516 P.2d 1234, 1236 (1973) (overruled on other
grounds by Garvin v. Ninth Judicial Dist. Court ex rel. Cnty. of Douglas, 118 Nev.
749, 59 P.3d 1180 (2002)); Tesoriere v. Second Judicial Dist. Court in & for
Washoe Cnty., 50 Nev. 302, 258 P. 291, 293 (1927).
The confusion created by referring a senate bill is compounded by the
Petition’s use of the enacting clause required for initiative petitions. See Petition, p.
17
1. Just before the full text of the measure, the Petition states: “The People of the
State of Nevada do hereby enact as follows:” Id.
The plain language of Nev. Const. Article 19, § 3(1) repeatedly addresses
both referenda and initiatives, except for the last sentence, which intentionally
excludes referenda and applies the enacting clause requirement only to initiatives.
Nev. Const. Article 19 § 3(1) states, in full:
Each referendum petition and initiative petition shall
include the full text of the measure proposed. Each signer
shall affix thereto his or her signature, residence address
and the name of the county in which he or she is a
registered voter. The petition may consist of more than one
document, but each document shall have affixed thereto an
affidavit made by one of the signers of such document to
the effect that all of the signatures are genuine and that each
individual who signed such document was at the time of
signing a registered voter in the county of his or her
residence. The affidavit shall be executed before a person
authorized by law to administer oaths in the State of
Nevada. The enacting clause of all statutes or amendments
proposed by initiative petition shall be: “The People of the
State of Nevada do enact as follows:”.
(Emphasis added.)
This demonstrates that the enacting clause is only permitted in an initiative
petition. This makes sense because of course only initiative petitions propose new
law. Yet this Petition, a referendum, states: “The People of the State of Nevada do
enact as follows:.” Immediately following that enacting clause is the full-text of the
measure, which is all of the language from Senate Bill 483, including text
18
presented in bold, italic and [bracketed, strikethrough]. This will mislead voters
into believing that a “yes” vote will amend the law to add the bold, italic language
– rather than approve existing law. This might at first appear to be an insignificant
issue, but as discussed below, the consequence of a “yes” vote is that the language
can never be repealed or amended again, except by another direct vote of the
people.
Failure to include an enacting clause in an initiative is, on its own, a fatal
defect that renders the initiative void. Caine v. Robbins, 61 Nev. 416, 131 P.2d
516, 517 (1942). That is because initiative petitions create new law, and the
enacting clause sets forth the authority by which it is enacted. This case presents
the logical inverse of Caine, and therefore the referendum Petition in this case is
also void. Because a referendum petition, by definition, cannot enact a law,
inclusion of the initiative petition enacting clause renders the Petition void.
Moreover, inclusion of the initiative petition enacting clause fundamentally
confuses voters and misrepresents what is being proposed. This is very similar to
Stumpf v. Lau, where this Court held that the failure of an initiative petition to state
whether it was proposing an amendment to a statute or to the constitution rendered
the petition void. 108 Nev. 826, 832, 839 P.2d 120, 124 (1992) (overruled on other
grounds by Herbst Gaming, Inc. v. Heller, 122 Nev. 877, 141 P.3d 1224 (2006)).
The court in Stumpf reasoned: “This failure to specify the nature and purpose
19
of the initiative is not merely an obscurity of language; it is a fatal omission that
effectively prevents the signers from knowing what they are signing.” Id. The same
holds true in this case. By purporting to run a referendum on a bill, instead of a
statute, this Petition attempts to re-enact into the law language that does not
currently exist. It also prefaces the full text of the measure with the initiative
enacting clause, stating “The People of Nevada hereby enact as follows:” which
misleads a person to believe that the language that follows is proposed law, not
existing law. Like in Stumpf, this Petition is confusing and misleading as to its
fundamental nature and purpose, and is therefore void.
In sum, this Petition is invalid because it fails to strictly comply with Article
19, § 1(1), which requires a referendum to be on a statute. This attempt to refer
Senate Bill 483 to the voters causes confusion because the Petition asks voters to
approve or disapprove language that is not even existing law. The Petition is also
misleading as to its fundamental purpose because it states that the people are
“enacting” the full text of the measure, rather than voting to approve or disapprove
it. The district court erred when it essentially applied substantial compliance to find
that the Petition was sufficient, therefore that ruling must be reversed.
II. The Petition is Invalid Because it Includes Administrative Details
and Therefore Exceeds the Petition Power.
The district court held that the Petition in this case is valid, regardless of
whether it contains administrative provisions. The district court refused to apply
20
the test set forth in Forman v. Eagle Thrifty Drugs and Markets, Inc., 89 Nev. 533,
537 (1973) and its progeny to determine whether provisions of a petition are
legislative or administrative. This was error for three reasons. First, the prohibition
on including administrative details in petitions applies to all types of petitions:
initiatives, referenda, local, statewide, constitutional, or statutory. Second, the
public policy reasons for prohibiting administrative details apply with even greater
force to referenda than to initiatives. Third, the Petition contains numerous
administrative provisions and is therefore invalid.
A. The district court erred when it refused to apply the long-standing test
used to determine whether provisions in a petition are administrative or
legislative.
This Court has a long line of cases recognizing that the petition power
reserved to the people under Article 19 of the Nevada Constitution does not extend
to dictating the administrative details of implementing the measure. See e.g.,
Nevadans for the Protection of Property Rights, Inc. v. Heller, 122 Nev. 894, 141
P.3d 1235 (2006); Citizens for Train Trench Vote v. Reno, 117 Nev. 169, 177, 18
P.3d 1034, 1039 (2001); Garvin v. District Court, 118 Nev. 749, 751, 59 P.3d
1180, 1181 (2002).
In Garvin v. District Court, the Supreme Court reaffirmed that “Nevada's
initiative and referendum powers are still limited by the Constitution to
legislation.” Garvin, 118 Nev. at 764, 59 P.3d at 1190 (emphasis added). In Train
21
Trench, this Court held that “regardless whether an initiative proposes enactment
of a new statute or ordinance, or a new provision in the constitution or city charter,
or an amendment to any of these types of laws, it must propose policy—it may not
dictate administrative details.” Train Trench, 118 Nev. at 583, 18 P.3d at 1039.
The test for determining whether a provision is legislative or administrative
was first adopted in 1973. Forman v. Eagle Thrifty Drugs and Markets, Inc., 89
Nev. 533, 537 (1973) (overruled on other grounds by Garvin, 118 Nev. at 765). A
legislative provision “originates or enacts a permanent law or lays down a rule of
conduct or course of policy for the guidance of the citizens or their officers,
whereas impermissible administrative matters simply put into execution
previously-declared policies or previously-enacted laws or direct a decision that
has been delegated to [a governmental body with that authority].” Property Rights,
122 Nev. at 915, 141 P.3d at 1249 (internal quotations omitted).
However, the district court refused to apply this test and did not make any
determinations as to whether any of the provisions in the Petition are
administrative. Instead, the district court held:
The administrative details objected to by Plaintiff are contained in Senate
Bill (“SB”) 483 which was enacted by the Nevada Legislature, a purely
legislative body. Even if the Nevada Legislature enacts a statute that
includes provisions which dictate administrative details related to the
implementation of the legislation, the people do not lose their Article 19
Section 1 Constitutional right to submit the entire statute to a vote of the
people.
22
(JA 206)
The district court therefore concluded:
Regardless of whether SB 483 contains provisions which dictate
administrative details related to the implementation of the Commerce Tax,
the inclusion of those provisions do not render the Petition void.
(JA 206)
The district court reasoned that, because the Legislature is a “purely
legislative” body, everything that it passes is, ipso facto, legislative in nature. In
other words, the district court refused to analyze the substance of what was passed
by the Legislature, and instead labeled the provisions of the petition as
“legislative” simply because they was passed by the Legislature. Essentially, this
holding would mean that the prohibition on administrative provisions does not
apply to statutory referenda petitions at all. However, this ruling appears to be
based on a misreading of Property Rights.
The petitioners in Protection of Property Rights proposed a constitutional
initiative petition dealing with eminent domain. 122 Nev. at 915-16, 141 P.3d at
1249. However, the petition also included three sections that dealt with to the day-
to-day operations of the courts in assigning and managing cases. Id. The court
found that all three of these sections were administrative, and therefore invalid as
23
being in excess of the people’s constitutional power to petition. 122 Nev. at 916,
141 P.3d at 1249-50.
Nev. Const. Art. 19, § 4 explicitly limits local initiative and referendum
petitions to “legislation.” The petitioners in Property Rights argued that the
statewide initiative power was broader than the local power because of the absence
of similar language explicitly limiting the statewide petition power to “legislation.”
Id., 122 Nev. at 914, 141 P.3d at 1247. The court acknowledged that the
administrative / legislative distinction has its origins in local petitions, but
nevertheless rejected that argument. Id. It held that Article 19 did not need to
contain such explicit limiting language because:
The people's initiative power is “coequal, coextensive, and concurrent”
with that of the Legislature; thus, the people have power that is legislative
in nature. That the people have only legislative power, by definition,
explains why Article 19, Section 2 does not include any “legislation”
language—it would be redundant.
Property Rights, 122 Nev. at 913. (Emphasis added).
The court further explained: “Unlike the Legislature, which performs strictly
legislative functions, a local government body performs administrative functions as
well.” Id., 122 Nev. at 914, 141 P.3d at 1248 (emphasis added). But in this case,
the district court erred because it took the phrase “strictly legislative” out of
context.
24
In describing the Legislature as a “strictly legislative” body, the Nevada
Supreme Court was simply distinguishing it from a local government, which is
often expressly vested with executive powers. Nothing in Property Rights suggests
that the identity of the governing body (i.e., the Legislature vs. a local government)
is relevant to determining whether a provision is administrative or legislative in
nature. Instead, the court once again reaffirmed and applied the administrative /
legislative test first developed in Forman v. Eagle Thrifty. Property Rights, 122
Nev. at 915, 141 P.3d at 1249.
It is of course possible that the Legislature might go beyond enacting policy
to also enacting administrative matters. Indeed, it did exactly that in this case. But
as discussed below, this is not a sound reason to allow administrative provisions in
a referendum petition. The district court therefore erred by relying on the fact that
the provisions in the referendum were passed by the Legislature, instead of
applying the Forman test to determine if the provisions are actually legislative in
nature. This Court must reverse because proper application of the Forman test
shows that the Petition is replete with administrative matters.
B. The reasons for prohibiting administrative provisions in initiative
petitions apply even more strongly to referendum petitions.
It is well-settled that administrative details cannot be included in any kind of
petition, regardless of whether it is an initiative or a referendum. See Garvin, 118
Nev. at 764, 59 P.3d at 1190 (“Nevada's initiative and referendum powers are still
25
limited by the Constitution to legislation.”) (emphasis added). The reason is the
same for all types of petitions: the petition power is limited to policy;
administrative matters are not policy; therefore, administrative matters are always
invalid as being in excess of the petition power. Thus, allowing administrative
provisions in a referendum petition fundamentally conflicts with the nature of the
petition power, just as with initiative petitions.
Furthermore, there are differences between a referendum petition and an
initiative petition which make it even more important that administrative
provisions not be included in a referendum. If the voters vote “yes,” on an
initiative, its provisions become law. However, if necessary, the Legislature can
amend it after three years. Nev. Const. Art. 19, § 2(3). More importantly, if the
voters vote “no” on an initiative petition, nothing happens - there is no change or
effect in law, and the status quo is maintained. Such is not true for referenda.
In a referendum, if the voters disapprove the statute, it is void and of no
effect. Nev. Const. Art. 19, § 1(3). But if voters approve the statute, then the statute
can never be amended or repealed by the Legislature. Id. It can only be changed in
the future by another direct vote of the people. Id. Because of the operation of Nev.
Const. Art. 19, § 1(3), once a referendum petition qualifies for the ballot, there will
be a legal consequence: either the provisions in the petition will be voided, or they
will be enshrined in the law beyond the Legislature’s reach. Thus, unlike an
26
initiative, simply qualifying a referendum for the ballot changes the status quo.2
The danger of including administrative provisions in a referendum petition is
that, if the law is approved, then technical, bureaucratic processes will be enshrined
in the law such that the Legislature can never change those provisions. Nev. Const.
Art. 19, § 1(3). See, e.g., the Sales and Use Tax Act of 1956. In this case, take for
example Section 21 of the Petition. That section sets forth a records retention
schedule for businesses, and other details related to record keeping. If the voters
vote “yes” on this Petition, the Legislature will never be able to change such minor
details as how long a business must keep those records. The people will have to
directly vote on it again, essentially putting the voters in the seat of an
administrative agency.
As this Court has repeatedly reaffirmed, the petition power is limited to
legislation. See e.g., Garvin, 118 Nev. at 751, 59 P.3d at 1181. The role of a
lawmaker is to set forth policy, not to oversee the execution or administration of
that policy. Those functions belong of course to the executive branch. Id. The
absurdity of requiring a statewide vote every time something like the records
retention schedule needs updated is why referendum petitions, even more so than
2 As more fully discussed below, because merely qualifying a referendum petition
for the ballot guarantees a change in the status quo, it is even more critical that a
referendum petition be properly drafted to avoid confusing or misleading voters,
and also that it include an accurate, non-misleading description of effect.
27
initiative petitions, must not contain administrative matters.
Finally, there is simply no reason to run the risk of locking administrative
details into the law. Even though administrative matters are outside the scope of
the petition power, the people of course still have the power to run a referendum on
what really matters: the policy. If the petitioners succeed in repealing the policy
sections of the statute, then the related administrative provisions would effectively
be nullified as well.3 Thus there is a lot of risk, but no utility, to allowing
administrative provisions to be included in a referendum petition. Accordingly, this
Court must reverse the district court’s decision that the Petition is valid, even if it
contains administrative provisions.
C. The Petition is invalid because it contains numerous administrative
matters.
There is no question that Section 24 of the Petition sets forth policy: it
identifies and imposes the commerce tax on businesses meeting a revenue
threshold, sets forth how the amount of the tax is calculated and when it is reported
to the State, and the amount of interest to be paid on permissive late payments. (JA
14)
However, the Petition thereafter goes far beyond a referendum on that
3 See NRS 220.120 and NRS 220.085 (granting authority to the legislative counsel
bureau and the legislative commission to remove obsolete provisions and correct
clerical errors, etc.).
28
policy. See Garvin, 118 Nev. at 766, 59 P.3d at 1191 (holding initiative that
proposed to “establish[] a general building cap on residential units to regulate
growth” was “policy-driven, and . . . legislative in nature,” but that “[e]xecuting
this new policy will be an administrative matter”). Indeed, the balance of the
Petition is almost exclusively concerned with administrative details related to
execution of the Commerce Tax.
In this matter, Respondent did not dispute that the Petition includes
administrative matters. (See JA 87, ll. 1-7) Instead, it merely asserted, and the
district court held, that the provisions of the Petition are irrelevant because the
mere fact that the Legislature enacted the provisions is determinative of the issue.
The district court’s decision ignores this Court’s decision in Property Rights that
the inclusion of these administrative details violates the Nevada Constitution’s
policy-only rule. Nevadans for Prop. Rights, 122 Nev. at 898, 141 P.3d at 1238;
Train Trench, 118 Nev. at 585, 53 P.3d at 393-94. Thus, in the absence of any
findings by the district court, this Court must either apply the Foreman test itself,
or remand the matter to the district court to apply the test and make the necessary
findings.
A proper application of the Foreman test will show that the Petition contains
numerous administrative provisions. For example, the following sections of the
Petition are just a few of the provisions geared toward merely executing the
29
commerce tax and which do not establish permanent policy for the State. These
provisions, among others, were identified by the Legislative Counsel Bureau as
being “administrative” in another version of this petition which was furnished by
LCB to the RIP PAC.
Section 15: Sets forth what shall be considered the “taxable year;”
Section 21: Imposes certain record keeping requirements on businesses, sets
the period of retention, and various other administrative details;
Section 23: Authorizes the Executive Director of the Department of Tax to
request information from other agencies, and provides the Executive Director with
the discretion to determine which records may be requested when administering
her duties;
Sections 50 – 61: These sections set forth accounting methods and
procedures, governs issues related to overpayments and refunds, sets forth the time
to file for a refund, interest on overpayments, anti-injunction provisions, judicial
review of denied / disallowed claims, the Department’s ability to recover erroneous
refund or credit allowed in district court and the Nevada Attorney General’s Office
is to prosecute an action according to Nevada Rules of Civil Procedure, and sets
forth other remedies that are not excluded;
Sections 63-67: Adds reference to the commerce tax to existing provisions
dealing with interest, penalties, etc. on under payments or failure to pay, requires
the Department of Tax to determine the annual revenue of the Commerce Tax and,
in the circumstance where the revenue exceeds the projections by 4% annually, use
that calculation in determining the proper rate to meet the projections of the
Economic Forum.
Including these provisions in a referendum risks enshrining these
administrative matters into law. The district court therefore erred when it
determined that the Petition is valid, even if it includes administrative provisions.
But most importantly, there is absolutely no reason to do this, because the
30
people of course still have the right to run a referendum on any and all policy
provisions of the statute. Accordingly, the decision of the district court must be
reversed, and the Petition declared invalid because it contains administrative
provisions.
III. The Petition is Invalid because it Violates Nev. Const. Article 9,
Section 2.
The district court held that the Petition is valid, despite the fact that it would
unbalance the State’s current budget by repealing a tax without replacing that
revenue or cutting expenditures. This was error because the coequal power of the
people and the Legislature means that the people, acting in their legislative
capacity through the petition process, are subject to Article 9, Section 2, just as the
Legislature is.
A. The challenge to the Petition based on its violation of Article 9, § 2 is
ripe for pre-election review.
As an initial matter, the district court erred when it held both that the
Plaintiff’s challenge to the Petition under Nev. Const. Art. 9, § 2 was not ripe for a
pre-election challenge, and also ruled on the merits that referenda petitions need
not comply with Nev. Const. Art. 9, § 2. (JA 206, 209) These holdings are
mutually exclusive. See City of N. Las Vegas v. Cluff, 85 Nev. 200, 201, 452 P.2d
461, 462 (1969) (if a case is not ripe, then a ruling on the merits would amount to
an impermissible advisory opinion); Personhood Nevada v. Bristol, 126 Nev. 599,
31
602, 245 P.3d 572, 574 (2010) (courts’ duty is to resolve controversies and avoid
issuing advisory opinions).
This Court has identified three general types of challenges to petitions: “(1)
the procedural requirements for placing a measure on the ballot were not met; (2)
the subject matter is not appropriate for direct legislation under constitutional or
statutory limits on the initiative power; and (3) the measure, if passed, would
violate substantive federal or state constitutional provisions.” Herbst Gaming, Inc.
v. Heller, 122 Nev. 877, 882-83, 141 P.3d 1224, 1228 (2006).
The challenge that the Petition violates Nev. Const. Art. 9, § 2(1) falls into
the second category because it is a challenge to the scope of the petition power.
Nev. Const. Art. 9, § 2 prohibits a specific category of legislation: appropriations
or expenditures that exceed the annual revenue. Likewise, every petition that
attempts this type of legislation is categorically invalid, regardless of the
substantive provisions of that particular petition. Proposing or referring
administrative provisions is not within the people’s petition power and is ripe for
pre-election challenge because such provisions are always, categorically invalid.
See Herbst, 122 Nev. at 884, 141 P.3d at 1229. It is therefore a waste of public
resources to process the petition, validate signatures, prepare ballots, and so forth
in such cases. The same applies to the Article 9, § 2 challenge.
This challenge also meets the two requirements for ripeness identified in In
32
re T.R., 119 Nev. 646, 651, 80 P.3d 1276, 1279 (2003): (1) there is greater
hardship to the parties caused by withholding judicial review, and (2) the issues are
suitable for pre-election review. First, since this challenge is to the scope of the
petition power, it would cause greater hardship to the parties to withhold judicial
review until after the election. By that time, the parties will have committed
substantial resources to qualifying the petition and campaigning for or against it,
all of which would be wasted if the Court were to then rule the Petition invalid. A
ruling early in the process would avoid this hardship. Second, as evidenced by the
district court’s ruling on the merits of this claim, the issue presented is a question
of law which is suitable for determination now. Especially since this is a
referendum, there is no uncertainty about how it would be interpreted or applied,
since referenda can only repeal existing law.
Accordingly, the district court’s determination that this claim was not ripe
for review should be reversed, and the Court should proceed to the merits of the
claim.
B. The Petition is invalid because it would unbalance the budget passed by
the 2015 Nevada Legislature, in violation of Nev. Const. Art. 9, § 2.
“The people’s initiative power is ‘coequal, coextensive, and concurrent’ with
that of the Legislature.” Protection of Property Rights, 122 Nev. at 914, 141 P.3d
at 1248. The district court held that the Petition is valid, despite the fact that it
would unbalance the state budget. This was error because it means that the
33
people’s petition power is in fact considerably greater than the power of the
Legislature, which is contrary to this Court’s holding in Protection of Property
Rights.
Under Article 9, section 2 of the Nevada Constitution, “[t]he legislature shall
provide by law for an annual tax sufficient to defray the estimated expenses of the
state for each fiscal year; and whenever the expenses of any year exceed the
income, the legislature shall provide for levying a tax sufficient, with other sources
of income, to pay the deficiency, as well as the estimated expenses of such ensuing
year or two years.” (Emphasis added.)
This section is the constitutional mandate that the State maintain a balanced
budget. The Legislature must first determine the anticipated expenditures for the
coming year, and it then must provide revenue for those expenditures. If the
revenue does not cover the actual expenses, the Legislature must provide additional
revenue. Because of Article 9, § 2, the Legislature has no authority to pass
legislation that expends State money unless it also provides for the means to pay
for that expenditure. Similarly, the Legislature has no authority to repeal a law that
provides the State with revenue if such a repeal would result in State expenditures
that exceed State revenue. The 2015 Nevada Legislature complied with Article 9,
§ 2 by enacting the Commerce Tax, among other sources of revenue.
34
The district court determined that Article 9, § 2 applies only to the
Legislature, not to the people. (JA 206) Therefore it found that the Petition need
not comply with Article 9, § 2, and it would be the Legislature’s duty to address
the resulting budget shortfall. Id. This decision is contrary to the holding in
Protection of Property Rights that the petition power is “coequal, coextensive, and
concurrent” with the power of the Legislature. 122 Nev. at 914, 141 P.3d at 1248.
Protection of Property Rights demonstrates that limitations on the petition
power need not be explicit in Article 19. That case held that administrative
provisions cannot be included in petitions, even though there is no such prohibition
or limitation in Article 19. Id. Instead, the court reached this result based on its
reasoning that the petition power is parallel to that of the Legislature’s power,
which is bounded by Article 4 and other provisions of the Nevada Constitution. Id.
By contrast, the district court’s decision would mean that the petition power
is much greater than the Legislature’s power, because it would not be subject to
any restrictions, save those very few that appear explicitly in Article 19. For
example, under the district court’s rationale, a statutory petition that creates a state
lottery would be valid, even though such lotteries are expressly forbidden by the
Constitution. See Nev. Const. Art. 4, § 22. Similarly, a petition could impose a
personal income tax, or create unequal rates of taxation, and that too would
presumably be valid, since it was done by petition, instead of passed by the
35
Legislature. Cf. Nev. Const. Art. 10, § 1(1), (9) (prohibiting personal income taxes
and requiring Legislature enact “a uniform and equal rate” of taxation).
In this case, Nev. Const. Art. 9, § 2 prohibits the Legislature from repealing
a tax unless it also either raises some other revenue, or cuts programs to balance
the budget. But under the district court’s decision, a tax can be cut through the
referendum process, irrespective of the consequences. The district court
determined that the Petition need not comply with Article 9, § 2, and it would be
the Legislature’s duty alone to address the resulting budget shortfall.
Compare this with the petition power in California. California courts
previously recognized that the petition power is limited to prevent interfering with
fundamental government functions, including the ability to fund the current
budget. For example, in Campen v. Greiner, 15 Cal. App. 3d 836, 839, 843, 93
Cal. Rptr. 525 (Ct. App. 1971) (abrogated by Rossi v. Brown, 9 Cal. 4th 688, 889
P.2d 557 (1995)), the California Appellate Court held that a petition which would
repeal the city’s utility tax was invalid because the people lacked the authority to
repeal a source of revenue that was necessary to support spending in the current
budget. See also Myers v. City Council of City of Pismo Beach, 241 Cal. App. 2d
237, 243, 50 Cal. Rptr. 402 (Ct. App. 1966). However, these cases were abrogated
by the California Supreme Court in 1995, when it held that the petition power is
greater than the power of the Legislature. Rossi v. Brown, 9 Cal. 4th 688, 715, 889
36
P.2d 557, 574 (1995).
Of course, that is not the law in Nevada. As this Court has recognized, the
petition power in Nevada is coequal with the power of the Legislature. Nev. Const.
Art. 9, § 2 clearly prohibits the Legislature from repealing a tax without raising
other revenue, and thus unbalancing the budget. The district court therefore erred
when it found the Petition is valid despite the fact that it would unbalance the
State’s budget, since this would greatly expand the scope of the petition power
beyond the Legislature’s powers.
However, this does not mean that the people can never repeal a tax enacted
by the Legislature. It only means that the people must do so by initiative petition,
not by referendum. The Legislature can repeal or reduce a tax if it also raises other
revenue to replace the lost revenue, or it makes cuts to expenditures. Likewise, the
people can bring an initiative petition that repeals or reduces a tax, and raises other
revenue, or makes corresponding cuts to expenditures. Unlike a referendum
petition that simply guts a source of revenue, an initiative petition complies with
Article 9, § 2, avoids a fiscal crisis, and ensures that the State’s bond rating is not
damaged and its contracts are not impaired. This is what the Legislature does to
comply with Article 9, § 2, and it is also what the people must do when acting in
their legislative capacity.
Accordingly, for the same reasons the Protection of Property Rights court
37
concluded that administrative matters were prohibited from statewide petitions,
referenda that violate Article 9 section 2 are also barred as being outside the scope
of the petition power. The district court’s decision that the Petition is valid, despite
unbalancing the budget in violation of Article 9, § 2, must therefore be reversed.
IV. The Petition’s Description of Effect is Inaccurate and Misleading.
The Petition’s Description of Effect is inaccurate and misleading, and
therefore violates NRS 295.009, because it fails to inform potential signers that the
Nevada Constitution requires the Legislature to act to address a violation of Article
9 section 2. This is a material fact that voters deserve to know before they sign the
Petition.
To comply with NRS 295.009, a petition’s description of effect must be
“straightforward, succinct, and nonargumentative,” and “it must not be deceptive
or misleading.” Educ. Init. v. Comm. to Protect Nev. Jobs, 129 Nev. Adv. Op. 5,
293 P.3d 874, 879 (Nev. 2013) (internal quotations and citations omitted). The
description of effect need not mention every possible effect of the petition, nor
must it explain hypothetical effects. Id. However, the description of effect does
have to identify what the petition proposes, and how it intends to achieve that goal.
Id.
In Education Initiative, this Court discussed the correct standard for
reviewing descriptions of effect at length. See id. at 880-85. The court determined
38
that the description of effect should not be subject to rigorous, statutory-
construction type review. Id. at 883. The court pointed out that the sample ballots
would contain an official explanation of the measure written by the Secretary of
State, as well as arguments for and against passage. Id. at 878. These mechanisms,
the court reasoned, would allow sufficient opportunity to inform the voters of the
many more nuanced impacts of the petition, including reasons to vote for or
against it. Id. at 878, 881, 883.
NRS 295.009’s description of effect requirement applies to both initiatives
and referenda. NRS 295.009(1)(a). Its purpose is largely the same in the context of
a referendum petition: to give voters an accurate and succinct description of the
petition’s effect, at the time the voter is presented with the petition. However,
referendum petitions differ from initiatives in that simply qualifying a referendum
for the ballot guarantees that there will be a change in the status quo. Either the law
in question will be approved and forever placed beyond the power of the
Legislature to amend, or it will be rendered void. Nev. Const. Art. 19, § 1(3).
Unlike with an initiative petition, once a referendum has qualified for the ballot,
there is nothing the voters can do to keep the status quo.
For this reason, the threshold decision of whether to even sign a referendum
petition is a critical one, and the description of effect is the primary, if not the only
material that voters use in making that decision. See Beers, 122 Nev. at 940, 142
39
P.3d at 346 (“this descriptive language is what appears directly above the signature
lines, as registered voters decide the threshold issue of whether they even want the
initiative placed on the ballot.”). The Secretary’s explanation and the arguments for
and against that appear in the sample ballot will come much too late to influence
the critical decision of whether to sign the petition.4 As a result, a referendum’s
description of effect must, standing alone, accurately inform a potential signer of
the major effects of the petition, so that the voter can make an informed decision
whether he or she even wants the petition to qualify.
The district court held that the Petition’s Description of Effect is adequate
and non-misleading, even though it fails to inform voters that the Petition would
unbalance the State budget under Article 9 section 2. This ruling is in error because
it means that the Description of Effect can omit the single most important effect of
the petition. Voters have a right to know this information. Repealing taxes could
scarcely be a more popular subject, particularly when voters are unaware of the
inevitable legal and fiscal consequences. Voters must be informed of these
consequences in order to make an informed decision whether to sign the petition.
4 Unlike a person who signs an initiative petition, but then later decides to vote
against the measure, a voter who signs a referendum petition has much less
opportunity to try to maintain the status quo, and must take affirmative steps to do
so. The voter can request his or her name be removed from the petition, but only
before it is turned into the clerk for verification. NRS 295.055(4). The request must
be submitted in writing, with the voter’s original signature, which must match the
signature on file with the clerk. NAC 295.050.
40
Article 9, § 2 provides in part: “whenever the expenses of any year exceed
the income, the legislature shall provide for levying a tax sufficient, with other
sources of income, to pay the deficiency.” Nev. Const. Art. 9, § 2. Interestingly,
this provision would seem to prohibit the Legislature from balancing the budget by
cutting expenditures, and instead mandate that it raise more revenue instead. In
practice, however, the Legislature has done both. But the Description of Effect is
entirely devoid of any explanation of this fundamental effect of the Petition.
Repealing a source of revenue that the Legislature put in place to fund the
current year of the State budget is not something that can be done without any
consequences. Article 9 section 2 gives us the consequences. Petitioners must, at a
minimum, inform voters that the Petition will unbalance the budget enacted by the
Legislature and that therefore either some programs must be cut, or some other tax
raised. There is nothing hypothetical or speculative about that because it is
required by Nev. Const. Art. 9, § 2 if the voters repeal the Commerce Tax. The
failure to include it in the Description of Effect violates NRS 295.009(1)(b) and
renders the Petition invalid.
41
CONCLUSION
For the foregoing reasons, Appellant CNF respectfully requests that this
Court REVERSE the decision of the district court.
THE GRIFFIN COMPANY, LLC
By: ___/s/ Matt M. Griffin_____ MATTHEW M. GRIFFIN, ESQ. Nevada Bar No. 8097 The Griffin Company, LLC Carson City, NV 89703 Telephone: (775) 882-4002 Email: [email protected]
KEVIN BENSON, ESQ. Nevada Bar No. 9970 White Hart Law 2310 S. Carson Street #6 Carson City, NV 89701 Telephone: (775) 461-3780 Email: [email protected]
Attorneys for Plaintiff Coalition for Nevada’s Future
42
CERTIFICATE OF COMPLIANCE
1. I hereby certify that this brief complies with the formatting
requirements of NRAP 32(a)(4), the typeface requirements of NRAP 32(a)(5) and
the type style requirements of NRAP 32(a)(6). This brief has been prepared in a
proportionally space typeface using Word 2013 in 14 font size and in Times New
Roman.
2. I further certify that this brief complies with the page or type-volume
limitations of NRAP 32(a)(7) because, excluding the parts of the brief exempted by
NRAP 32(a)(7)(C), it does not exceed 10,296 words.
3. Finally, I hereby certify that I have read this appellate brief, and to the
best of my knowledge, information, and belief, it is not frivolous or interposed for
any improper purpose. I further certify that this brief complies with all Nevada
Rules of Appellate Procedure, in particular NRAP 28(e)(1), which requires every
assertion in the brief regarding matters in the record to be supported by a reference
to the page and volume number, if any, of the transcript or appendix where the
matter relied on is to be found.
43
I understand that I may be subject to sanctions in the event that the
accompanying brief is not in conformity with the requirements of the Nevada
Rules of Appellate Procedure.
DATED this 25th day of 2016 .
THE GRIFFIN COMPANY, LLC
By: ___/s/ Matt M. Griffin_____ MATTHEW M. GRIFFIN, ESQ. Nevada Bar No. 8097 The Griffin Company, LLC Carson City, NV 89703 Telephone: (775) 882-4002 Email: [email protected]
KEVIN BENSON, ESQ. Nevada Bar No. 9970 White Hart Law 2310 S. Carson Street #6 Carson City, NV 89701 Telephone: (775) 461-3780 Email: [email protected]
Attorneys for Plaintiff Coalition for Nevada’s Future
CERTIFICATE OF SERVICE
Pursuant to NRAP 25(d), I declare that I am an employee of The Griffin Company
and on this 25th day of January, 2016, I served a copy of the foregoing Appellant
Coalition for Nevada’s Future’s Opening Brief by Nevada Supreme Court
CM/ECF Electronic Filing to:
Craig Mueller, ESQ.
MUELLER, HINDS & ASSOCIATES
600 S. Eighth Street
Las Vegas, NV 89101
Nevada Attorney General’s Office
Attn: Lori Story, Senior Deputy Attorney General
100 N. Carson Street
Carson City, NV 89701
____/s/Tia Dietz_____________
An Employee of The Griffin Company