Efforts to raise Nevada’s gaming, mining and business taxes through the initiative process never seem to get far — and that held true Tuesday when Kermitt Waters’ latest effort was rejected by a judge.
Part of a lawsuit filed by Waters to get a tax initiative on the ballot — this one exempting large casinos — was rejected by Clark County District Court Judge Jerry Wiese in Las Vegas.
Waters, a Las Vegas eminent domain attorney known as an advocate for citizen access to the ballot, said he hadn’t seen the ruling issued by Wiese on Tuesday but probably would appeal it to the Nevada Supreme Court. He’s also prosecuting a separate part of the lawsuit in federal court.
Wiese, in his ruling, rejected claims by Waters that certain election bills passed by the Legislature violated a constitutional requirement that bills stick to a single subject.
Waters had hoped that Wiese would find the bills violated the single-subject rule as such a ruling could clear the way for his initiative, which is all over the map when it comes to subject matter.
Wiese also refused to extend a fast-approaching deadline for Waters to collect signatures for his initiative, likely leaving the Nevada Supreme Court as Waters’ only hope to get his measure on the 2012 ballot.
During a hearing Monday in Wiese’s courtroom before the judge issued his ruling, Waters wasn’t surprised when attorneys who showed up to fight him were representing the mining and retail industries as well as the Las Vegas Chamber of Commerce, the Nevada Development Authority and the Nevada Taxpayers Association.
These same parties will all likely collide again in the federal part of the case and in Waters’ planned state Supreme Court appeal.
“The last thing Wall Street wants is for this to go to a vote of the people,” Waters said. “They run this state like a plantation.”
The miners and officials from other affected industries regularly interject themselves into initiative issues, legislative debates and other forums to protect themselves from tax hikes. In the Waters’ lawsuit, they’re represented by two influential law firms — Jones Vargas and Brownstein Hyatt Farber Schreck LLP.
Also opposing Waters are attorneys for the Nevada Legislature and Secretary of State Ross Miller.
Even the gaming industry, while exempted from Waters’ latest initiative after he targeted it in an unsuccessful 2008 initiative, opposed his new initiative.
That’s because Waters is trying to “unravel many of the procedures and safeguards of the initiative process,” and that could hurt the casino industry down the road, attorneys for the Nevada Resort Association told Wiese.
Waters, however, called the Resort Association “an intermeddler” trying to block him from proposing a “fair, broad-based tax.”
He said it was trying to intimidate Wiese and will try to intimidate the Nevada Supreme Court should he appeal there.
“Like mining, most Nevadans are not aware that gaming pays to Nevada the lowest gaming tax in the United States,” Waters said.
Usually in the initiative process, groups proposing initiatives gather signatures and file them with the Nevada secretary of state. That creates a process by which affected parties can challenge them with lawsuits that must be filed in Carson City.
One such initiative hiking taxes for a Caesars Entertainment Corp. arena, for instance, is pending before the Nevada Supreme Court.
Instead of going through that process, Waters in January filed suit against the state in Clark County District Court in hopes of clearing such roadblocks in advance.
His suit complained the Legislature had created a “death trap” by requiring initiatives to cover just one subject, requiring backers to write short “description and effect” summaries of initiatives and then requiring initiative backers outside of Carson City to travel hundreds of miles to the state capital to defend them in court.
Because of these requirements, he said, initiative petitions are regularly filed but don’t qualify for the ballot, often because of actual or threatened legal action. In fact, Waters led the last successful initiative petition in Nevada, a 2006 measure to protect property owners in eminent domain situations when government takes their land.
In his January lawsuit, Waters turned the tables on the Legislature, claiming it had violated the Nevada Constitution by passing election bills in 2005 and 2011 that violated the single-subject rule.
His suit sought to invalidate those bills or to have Wiese declare that his new initiative doesn’t violate the single-subject rule. Wiese, however, said in his ruling that case law has found there’s a liberal interpretation for the single-subject rule for the Legislature and a strict interpretation for initiatives. Wiese chose not to challenge that case law.
Waters’ new initiative would hike mining taxes from a net (after expenses) 5 percent of the value of minerals mined to 20 percent gross (before expenses).
It would establish a gross receipts tax for businesses — except utilities and casinos with non-restricted gaming licenses — ranging from 1 to 2.5 percent. Sales of food purchased for home consumption would be exempted.
The initiative would eliminate property taxes for homeowners, create an intermediate appellate court, boost teacher pay, hike spending for children’s health insurance, require investments in clean energy and transportation infrastructure, beef up the Millennium Scholarship Fund and improve the ballot initiative system with an electronic process.
After all the changes, the state budget would be boosted by $2 billion to $3 billion, he said.
Waters said the changes are necessary because the Legislature won’t act to address long-standing needs in the state.
“We need some reform in this state. We need some relief in this state,” Waters said. “It’s not going to happen with the Legislature.”
Given the fast-approaching June 19 deadline to collect 72,400 signatures for his petition, a job Waters says is not under way because of lawsuit delays, Waters also asked Wiese to extend that deadline to Oct. 1 — something attorneys fighting him said wouldn’t give election officials time to confirm the signatures are valid, run the initiative through the legal vetting process and put it on the November election ballot.
Waters blamed opposing attorneys for dragging out his lawsuit. But they said Waters could have gone through the usual process and have his signatures collected by now. They also said the single-subject rule for initiatives doesn’t apply to the Legislature.
Wiese sided with the opposing attorneys on the single-subject issue and, given that ruling, said in his order that “there appears to be no reason for such an extension” of the June 19 initiative signature deadline.
As far as Waters’ complaints about the gaming industry, it says it consistently pays its fair share of taxes — more than $2 billion, or 46 percent of state general fund revenue, more than any industry. The mining industry says it has always supported adequate funding for government and that public needs should be sufficiently funded through a broad-based business tax.
The federal part of Waters' lawsuit covers claims that the Legislature has enacted so many roadblocks to citizens putting initiatives on the ballot that their free speech rights are threatened.