For the first time since the 1860s, Nevada began its fiscal year without a state budget. But after two special legislative sessions, the Silver State’s fiscal crisis ended on July 22, when “Republican” Gov. Kenny Guinn signed into law a $4.9 billion budget with a $833 million tax increase — an amount nearly three times the size of the previous record tax hike.
The impasse was resolved only after the state supreme court issued a potentially devastating decision that could damage grassroots, free-market government reforms nationwide — and boost the reelection prospects of the U.S. Senate’s no. 2 Democrat, Nevada’s own Harry Reid. That’s why if you haven’t yet paid close attention to our constitutional crisis, it’s time to tune in.
SUPREME CHALLENGE TO DEMOCRACY
On July 10, the Nevada supreme court temporarily set aside the state’s constitutional requirement that any tax increase must receive the approval of at least two thirds of the members of both houses, ruling that the “procedural” two-thirds mandate should take a backseat to the “fundamental” requirement that the legislature fund the public schools. While a challenge is now pending before the 9th U.S. Circuit Court of Appeals, if the decision stands, it could be used as a template for constitutional mischief by teachers unions and other big-spending interest groups nationwide.
Timothy Sandefur’s July 13 NRO article offered a concise overview of both the fiscal showdown that led to the call for court intervention, and the Nevada justices’ ruling. Facing a $700 million current account deficit, Gov. Guinn initially proposed a $5 billion budget that would increase spending by $1.3 billion and taxes by $860 million (tax revenues are expected to grow by roughly $400 million over a two-year period). Guinn was unable to get two-thirds of the members of each house to approve the tax hike. The controversy went to the state supreme court, which issued its laughable July 10 opinion.
The next day, the state assembly “passed” a tax increase by a 26-16 margin, two votes shy of the two-thirds mandated by the constitution. Two-dozen GOP lawmakers and a group of state taxpayers then filed suit in federal district court, arguing that the Nevada justices had violated lawmakers’ and residents’ federal due-process rights by diluting the value of their votes.
On July 18, following a rare en banc hearing, Nevada’s seven federal district judges (unlike their Nevada colleagues) exercised admirable judicial restraint. The federal jurists said they did not have jurisdiction to decide the case. So as the appeal sat at the 9th Circuit, the legislature went back to work. On July 21, a tax hike of $833 million passed by 17-2 in the senate and 28-14 in the assembly — the minimum number of votes needed in that house to get a two-thirds majority.
THE OTHER RECALL CAMPAIGN
No matter how the federal courts eventually handle the Nevada supremes’ decision, this ruling could turn the state’s political establishment upside-down, and quickly. A group of conservative activists is preparing petitions to recall the six Nevada supreme court justices who voted to temporarily suspend the Gibbons Tax Restraint Initiative (named after its original sponsor, former assemblyman — and now U.S. congressman — Jim Gibbons). Gov. Guinn may be targeted for a recall as well.
REVENGE OF THE GOP?
If initial outrage over the decision is any guide, some of the recalls could be successful. Feedback to the editorial page of the Las Vegas Review-Journal, the state’s largest newspaper, is running roughly 90-to-1 against the decision, with many letter-writers and e-mailers eager to throw the judges out of office — for starters.
Also, GOP Assemblyman Bob Beers, the 43-year-old Las Vegas CPA who spearheaded resistance to the new taxes, is confident that Republicans will take control of the lower house in 2004. (The senate is nominally controlled by Republicans, but its leadership is populated by RINOs.)
This would be a stunning turnaround for the state GOP, which held only 15 of the 42 seats in 2001, and saw its prospects for legislative gains last year dashed by a redistricting plan that should have cemented the Democrats’ grip on that body for a decade.
Still, there’s justification for Beers’s optimism: The GOP gained four seats in 2002, giving it 19 Assembly members, and the 23 Democrats have voted for every tax increase this session. Each contested Democratic district next year will feature an incumbent whose fingerprints are all over the unpopular tax heist.
Which brings us back to Harry Reid. The senator won his last election by 428 votes, and is considered vulnerable — outside Nevada. The Bush administration in particular would love to get rid of the feisty, partisan attorney, as Republicans salivate over the prospect of ousting the Senate’s top two Democrats — Reid and Tom Daschle — on the same day.
The White House has openly courted Jim Gibbons to take Reid’s seat. A four-term lawmaker from Reno, a veteran pilot of both Vietnam and the first Gulf War, and a pro-choice Republican in a pro-choice state (Nevada voters modified the constitution to affirm Roe v. Wade in the 1990s), Gibbons is wildly popular in his hometown and has run well in southern Nevada, a portion of which he still represents in Congress.
But it’s far from certain Gibbons will offer a challenge — even though, as he’s said, he’s in “the catbird seat” right now. The congressman has been coy about his plans, saying he’ll save any announcements until Labor Day or thereabouts. When Gibbons spoke by telephone with Review-Journal editors on July 15, he demurred when asked what role this controversy might play in his plans.
GIBBONS VS. REID?
That said, Gibbons has several attractive options: He could challenge Harry Reid, continue to serve in Congress, or try for another office. This final option would mean Gibbons could seek Nevada’s other Senate seat in 2006 if, as has been rumored, GOP freshman John Ensign decides to forgo a second term — or, Gibbons could make a try for the governor’s mansion.
If Gibbons does take on Reid, he’ll face an incumbent who knows how to take care of the homefolks. From delaying the Yucca Mountain nuclear dump, to stopping potential bans on college sports betting, to ensuring federal benefits to residents and workers who have suffered health problems as the result of nuclear testing, Reid is unparalleled in his ability to use parliamentary procedures, logrolling, and old-fashioned arm-twisting to protect Nevada’s interests.
And since no Nevadan has ever risen to such a high-ranking federal office before — when Jim Jeffords left the GOP, Reid was the no. 2 member of the Senate majority — voters might be hesitant to toss such clout aside.
Still, Reid’s non-Nevada political activities make Republicans furious. If an issue does not involve a provincial, Silver State interest, Reid goes straight to the Democratic party’s playbook, launching attacks with relish. Judicial appointments, tax relief, entitlement, and tort reform — Reid is among the most virulently partisan Democrats.
Unfortunately, Reid’s perceived vulnerability could just be wishful thinking by Republicans, particularly those unfamiliar with the inner workings of Nevada politics. Gibbons is the only Republican who has the statewide exposure, access to fund-raising, and high-profile political experience needed to give the incumbent a serious challenge. And the longer Gibbons waits, the better Reid’s prospects for reelection.
A July 9 Mason-Dixon poll for the Review-Journal seems to put the congressman within striking distance: If the election were held today, pollsters found, Reid would defeat Gibbons, but only by 48 percent to 37 percent, with 15 percent undecided; Reid’s favorable rating was just 49 percent. Still, the senator has more than $3 million in the bank, compared with only a few hundred thousand dollars for Gibbons. And Reid will not hesitate to use his influence and contacts to build on that fund-raising advantage as the campaign gets officially underway.
For a challenger who hasn’t announced his candidacy, Gibbons is in a surprisingly strong position. And that’s what has the Reid camp spooked. Reid ekes out statewide victories by building up huge majorities in Clark County, where 70 percent of the state’s population resides, and also running respectably in Republican Reno and Washoe County — while getting clobbered in the rest of the state. If Gibbons were to crush Reid in Reno, it could be impossible for the senator to accumulate enough of a margin in Clark County to overcome his deficits elsewhere.
So the race boils down to how soon Gibbons wants to come home. The 58-year-old lawmaker has made no secret of his interest in winning the governorship. His best — and perhaps only — shot would come in 2006, when the seat will be open.
The congressman has taken the Nevada supreme court’s decision personally. He may believe he can vindicate state taxpayers (and his legacy) only from the governor’s mansion. The tax-restraint initiative Gibbons sponsored a decade ago received more than 70 percent of the vote in two statewide elections, and the congressman seems eager to channel the voter outrage the state justices’ ruling has generated.
It’s certainly possible Nevada’s fiscal conservatives could prevail upon Gibbons to run for governor in 2006; it’s also plausible that post was Gibbons’s preference all along. If that is his decision, the congressman may pass up a winnable Senate race — and Harry Reid should easily land a fourth term in Washington.
What may be most troubling about the Nevada supreme court’s ruling is its vagueness. The justices did not strike down the two-thirds majority requirement altogether; they merely set it aside temporarily until the current legislature funded the state budget.
Not surprisingly, supporters of big government are delighted by this decision. Before the ink was even dry on the ruling, California’s embattled Gov. Gray Davis had his legal eagles poring over it. Indeed, Davis administration officials said they might ask the Golden State’s supreme court to intervene in that budget impasse too, using the Nevada ruling as a precedent.
Legislating from the bench? You ain’t seen nothing yet. Rob Natelson, a University of Montana law professor who has consulted those drafting tax- and spending-limitation initiatives, told the Review-Journal that though last week’s ruling spoke only to the current legislative session, “it points the way for gutting the initiative permanently.”
This could be catastrophic news for other states that require supermajorities in order to raise taxes or increase spending. In addition, state constitutions that prohibit personal income taxes (as does Nevada’s) or enable genuine school choice could be at risk from a raid by welfare-state activists, using Nevada’s precedent to overturn those “procedural” provisions.
Unless the Nevada decision is overturned by federal courts — or unless the Silver State justices reverse course — such “procedural” requirements could be relegated to second-class status as constitutional law nationwide. If so, populist free-market reforms will be imperiled, the initiative process could be emasculated, and our constitutional rights will no longer be secure.
— Rick Henderson is an editorial writer for the Las Vegas Review-Journal and publisher of the Deregulator weblog.