Nev. SC rules budget measure unconstitutional

Jessica M. Karmasek May 26, 2011, 3:32pm


CARSON CITY, Nev. (Legal Newsline) - The Nevada Supreme Court on Thursday declared a bill mandating the transfer of $62 million from the Clean Water Coalition into the State's general fund unconstitutional.

Confronting a statewide budget crisis, the Nevada Legislature, during the 2010 special session, undertook various revenue-adjustment and cost-cutting measures in an effort to balance the state's budget. This resulted in the enactment of Assembly Bill 6.

Under Section 18 of AB 6, $62 million in securities and cash from a political subdivision of the State created by interlocal agreement -- in this case, the Clean Water Coalition -- was to be deposited into the State's general fund for its unrestricted, general use.

At issue is whether AB 6, Section 18 violates the Nevada Constitution.

"We recognize that the Legislature is endowed with considerable lawmaking authority under Article 4, Section 1 of the Nevada Constitution. But that authority is not without some restraints," Justice James W. Hardesty wrote for the Court.

The Court said two such restrictions are contained in Article 4, Section 20, which prohibits, among other things, local and special laws for the "assessment and collection of taxes for state... purposes," and Article 4, Section 21, which requires laws to be "general and of uniform operation throughout the State" in all cases "where a general law can be made applicable."

The Court concluded that AB 6, Section 18 violates both.

AB 6, Section 18, it explained, converts $62 million collected by the Clean Water Coalition as user fees into a tax that is contrary to Article 4, Section 20's prohibition against local or special taxes.

"Because AB 6, Section 18 applies only to the CWC, and a general law could have applied, it also violates Article 4, Section 21's mandate that all laws shall be general and operate uniformly throughout the state in all cases where a general law can be made applicable," the Court wrote.

The Court, in its ruling, reversed the decision of the Eighth Judicial District Court, Clark County, which declared the bill constitutional.

The Clean Water Coalition was created pursuant to an interlocal cooperative agreement among four Nevada political subdivisions, all located in Clark County: the Clark County Water Reclamation District and the cities of Henderson, Las Vegas, and North Las Vegas.

Its powers include, among others, preparing, reviewing, approving, and implementing regional water quality plans; adopting and amending operating and capital improvement plans and budgets; financing facilities that may be needed to carry out its conferred functions, including funding all aspects of the SCOP; assessing members for their agreed share of administration, operation, maintenance, and capital costs; and establishing and adjusting regional sewer connection and user fees to defray CWC costs.

Nevada Attorney General Catherine Cortez Masto, Solicitor General C. Wayne Howle and Deputy Attorney General Blake A. Doerr represented Gov. Brian Sandoval, State Treasurer Kate Marshall and State Controller Kim R. Wallin in the case.

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