         IN THE SUPREME COURT OF THE STATE OF NEVADA


COALITION FOR NEVADA'S FUTURE,                        No. 69501
A NEVADA POLITICAL ACTION
COMMITTEE,
Appellant,
vs.
                                                        FILED
RIP COMMERCE TAX, INC., PAC, A                           MAY 1 1 2016
NEVADA POLITICAL ACTION
                                                            EK   NDEEMAN
COMMITTEE; AND BARBARA
CEGAVSKE, IN HER OFFICIAL                               ..-4416111,
                                                            F DEP
                                                                    11
CAPACITY AS NEVADA SECRETARY
OF STATE,
Respondents.

          ORDER AFFIRMING IN PART, REVERSING IN PART
                       AND REMANDING
            This is an appeal from a district court order denying a
complaint for declaratory and injunctive relief that challenged a
referendum petition seeking voter approval or disapproval of the
commerce tax provisions of Senate Bill 483 from the 2015 Legislative
Session. First Judicial District Court, Carson City; James E. Wilson,
Judge.
            In May 2015, the Nevada Legislature passed Senate Bill 483
as part of the state's overall budget. SB 483, among other things, raises
revenue by imposing a "commerce tax" on businesses earning more than
$4 million in a fiscal year. 2015 Nev. Stat., ch. 487, at 2876, and § 20, at
2884-85. According to the Economic Forum's May 1, 2015 Forecast, the
commerce tax is expected to add, to the state general fund, net revenues of
approximately $119.8 million in fiscal year 2015/16 and $59.9 million in
                fiscal year 2016/17. 1 The tax was signed into law by the governor in June
                2015. 2015 Nev. Stat., ch. 487, at 2876.
                            A few months later, respondent RIP Commerce Tax, Inc. filed
                with the Secretary of State a petition seeking to refer the commerce tax
                portion of SB 483 to the voters for approval or disapproval. Shortly
                thereafter, appellant Coalition for Nevada's Future filed a district court
                complaint challenging the referendum petition. In particular, the
                Coalition asserted that the petition fails to strictly comply with
                referendum requirements under Nevada Constitution Article 19, Section 1
                because it challenges a senate bill rather than a statute, contains
                confusing and inaccurate language in its explanation and enacting clause,
                and impermissibly addresses administrative matters, as opposed to
                legislative matters. The Coalition also complained that the commerce
                tax's disapproval would unbalance the state budget in violation of Article
                9, Section 2(1)'s balanced budget mandate and that the petition's
                description of effect fails to inform signers of the budgetary impact that
                the tax's repeal would have. After a hearing, the district court entered an




                       'We take judicial notice of the Economic Forum's May 1, 2015
                Forecast Report, Adjusted for Legislative Actions from the 2015 Session
                and Approved Tax Credits, available at
                http ://www. leg. state. nv. us/Division/Fiscal/Economic%20Forum/. NRS
                47.130(2)(b); NRS 47.150(1); Mack v. Estate of Mack, 125 Nev. 80, 91, 206
                P.3d 98, 106 (2009). Beginning in fiscal year 2016/17, businesses can take
                a credit against their modified business tax liability of up to 50-percent of
                the commerce taxes they paid for the previous fiscal year. See 2015 Nev.
                Stat., ch. 487, § 67(4), at 2900, and § 70(4), at 2902. Accordingly, that
                year's net commerce tax-related revenue includes $119.8 million in
                projected revenue, less a $59.9 million modified business tax credit.

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                order denying all requested declaratory and injunctive relief, and the
                Coalition appealed.
                The petition is not invalid
                             Having considered the parties' briefs and appendices and
                having heard oral argument, we conclude that the Coalition has not met
                its burden to demonstrate that the referendum petition is invalid.
                Nevadans for Nev. v. Beers, 122 Nev. 930, 942, 142 P.3d 339, 347 (2006)
                (explaining that, when no facts are disputed in ballot matters, this court
                reviews orders denying declaratory and injunctive relief de novo). First,
                although Article 19, Section 1 describes a "[r]eferendum for approval or
                disapproval of statute or resolution enacted by legislature," the petition is
                not infirm for referring a senate bill, as the senate bill became a statute
                when signed into law by the governor on June 9, 2015.        See Nev. Const.

                art. 4, § 23 ("[N]o law shall be enacted except by bill."); Nevada Legislative
                Manual, Appendix F, Nevada Legislative Counsel Bureau (May 2015), at
                273, http ://www leg. state. fly. us/Division/Research/Publications/LegManual
                /2015/index.html (defining "Statute" as a "Mill passed by both houses and
                approved by the Governor, or, if vetoed by the Governor, the veto
                overridden by a two-thirds vote of each house"); Statute, Black's Law
                Dictionary (10th ed. 2014) (defining "statute" as "[a] law passed by a
                legislative body; specif., legislation enacted by any lawmaking body, such
                as a legislature").
                             Nor is the petition invalid based on its explanation and
                format. When read as a whole, it is sufficiently clear that the petition is
                referring SB 483 to the voters for approval or rejection of the commerce
                tax, and the Nevada Constitution requires no particular form for a
                referendum petition, except that it include the full text of the proposed
                measure, as this petition does.    See generally Schumacher v. Byrne, 237
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N.W. 741, 745 (N.D. 1931) (concluding that a petition referring a tax bill to
the voters for approval or disapproval was not actually an initiative
petition or otherwise invalid for containing an enacting clause, when the
state constitution failed to prescribe any particular form and the purpose
was sufficiently clear from the petition).
            Finally, SB 483 invokes the basic legislative power to impose
taxes. By seeking approval or repeal of that statute, the referendum is
likewise legislative and does not violate any prohibition against the direct
legislation of administrative matters. Nev. Const. art. 10, §1 ("The
Legislature shall provide by law for a uniform and equal rate of
assessment and taxation, and shall prescribe such regulations as shall
secure a just valuation for taxation of all property . . . ."); Nevadans for the
Prot. of Prop. Rights, Inc. v. Heller, 122 Nev. 894, 914, 141 P.3d 1235, 1248
(2006) (recognizing that the people's legislative power is coequal and
coextensive to that of the Legislature and that, unlike a local government,
"the Legislature . . . performs strictly legislative functions");   Galloway v.

Truesdell, 83 Nev. 13, 20, 422 P.2d 237, 242 (1967) (explaining that the
Legislature's power is "to frame and enact laws, and to amend or repeal
them"). Therefore, we conclude that the referendum is valid.
The petition's description of effect is inadequate
             Although the referendum is valid as written, its description of
effect is not. Under NRS 295.009(1)(b), "[e]ach petition for initiative or
referendum must: . . . [set forth, in not more than 200 words, a
description of the effect of the initiative or referendum if the initiative or
referendum is approved by the voters. The description must appear on
each signature page of the petition."
             A description of effect is intended to "facilitate the people's
right to meaningfully engage in the initiative process" by "prevent[ing]

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voter confusion and promot[ing] informed decisions."       Beers, 122 Nev. at
939-40, 142 P.3d at 345 (internal quotations omitted). The importance of
the description of effect cannot be minimized, as it is what the voters see
when deciding whether to even sign a petition. See Educ. Initiative PAC v.
Comm. to Protect Nev. Jobs, 129 Nev., Adv. Op. 5, 293 P.3d 874, 879
(2013); Las Vegas Taxpayer Accountability Comm. v. City Council,           125
Nev. 165, 177, 208 P.3d 429, 437 (2009). We have emphasized that
petition signers "must be informed at the time of signing of the nature and
effect of that which is proposed. Failure to so inform the signatories and
voters is deceptive and misleading . . . ."    Stumpf v. Lau, 108 Nev. 826,
833, 839 P.2d 120, 124 (1992) (quotation and emphasis omitted) (reviewing
an initiative petition that failed to describe the nature and purpose of the
proposed measure), overruled in part on other grounds by Herbst Gaming,
Inc. v. Heller, 122 Nev. 877, 888, 141 P.3d 1224, 1231 (2006); see also Nev.
Judges Ass'n v. Lau, 112 Nev. 51, 59, 910 P.2d 898, 903 (1996) (noting in
the ballot context that, while it is impossible "to explain all the conceivable
implications of every initiative placed on a ballot[,}" the failure to explain
material ramifications of the ballot initiative is potentially misleading).
Although "[t]he utility of the description of effect is confined to the
preliminary phase of the initiative [or referendum] process, when the
proponent seeks to garner enough initial support so that the initiative [or
referendum] will be considered by the Legislature and the voters," Educ.
Init., 129 Nev., Adv. Op. 5, 293 P.3d at 880, as the Coalition points out, the
description of effect may hold even more impact with respect to a
referendum, since merely gathering sufficient signatures to place a
referendum on the ballot guarantees a change to the law regardless of the
election's outcome. Nev. Const. art. 19 § 1(3) (providing that, if the voters



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approve the referendum, the statute "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 the people," and if
the voters disapprove the statute or resolution, it is rendered void); cf.
Educ. Init., 129 Nev., Adv. Op. 5, 293 P.3d at 881 (noting that the voters
have the Secretary of State's official explanation and the required
arguments for and against its enactment to review in determining
whether to vote in favor of or against an initiative).
            We review descriptions of effect to determine whether the
description identifies the petition's purpose and how that purpose is to be
achieved in a manner that is "straightforward, succinct, and
nonargumentative," and not deceptive or misleading. 2 Educ. Init., 129
Nev., Adv. Op. 5, 293 P.3d at 879 (quoting Las Vegas Taxpayer
Accountability Comm.,      125 Nev. at 183, 208 P.3d at 441 (internal
quotations omitted)). While the description "does not need to mention
every possible effect," id. (emphasis added), it must "accurately identify the
consequences of the referendum's passage."               Las Vegas Taxpayer
Accountability Comm., 125 Nev. at 184, 208 P.3d at 441.
            Here, the description of effect describes the commerce tax and
explains the legal effect of approval and disapproval, as follows:
            This referendum asks the voters whether to
            approve or disapprove those portions of Senate


      2 While we may consider a preelection challenge to the description of
effect under NRS 295.009(1)(b), we may not review a preelection challenge
to a referendum's substantive constitutionality, including whether the
referendum violates Article 9, Section 2(1) of the Nevada Constitution by
unbalancing the state budget, because it is not ripe. Herbst Gaming, Inc.
v. Heller, 122 Nev. 877, 883-88, 141 P.3d 1224, 1228-31 (2006).
                            Bill No. 483 from the 2015 Legislative Session
                            which relate to the commerce tax. Pursuant to
                            S.B. 483, the commerce tax is imposed on each
                            business entity engaged in business in this State
                            whose Nevada gross revenue in a fiscal year
                            exceeds $4,000,000. The commerce tax is
                            calculated by multiplying the amount of a
                            business entity's annual Nevada gross revenue (as
                            adjusted by certain authorized deductions) which
                            exceeds $4,000,000 by the tax rate applicable to
                            the industry in which the business entity is
                            primarily engaged.
                            If this referendum is approved by a majority of
                            voters, the provisions of S.B. 483 related to the
                            commerce tax may not be amended, annulled,
                            repealed, set aside, suspended or in any way made
                            inoperative except by a vote of the people. If a
                            majority of voters disapproves of this referendum,
                            the provisions of S.B. 483 related to the commerce
                            tax are void which will have the effect of
                            eliminating the commerce tax. Disapproval of the
                            provisions of S.B. 483 related to the commerce tax
                            does not prohibit the Legislature from enacting
                            future legislation that imposes a commerce tax.
                But nowhere does this description reveal the significant practical
                ramifications of the measure's disapproval.
                            Under Article 9, Section 2(1), "[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." In compliance with this duty
                to balance the state budget, the Legislature enacted SB 483's commerce
                tax to provide a source of revenue for funding state expenditures.
                Eliminating the commerce tax thus will unsettle the balanced budget for
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                this biennium, fiscal years 2015/16 and 2016/17, causing financial
                uncertainty for the government, and thus the people, of this state. Indeed,
                based on the Economic Forum's estimates, the Legislative Counsel
                Bureau's Fiscal Analysis Division has indicated that the people's
                disapproval of the commerce tax in November 2016 would result in a net
                loss to the state general fund of approximately $74.9 million in fiscal year
                2016/17 and approximately $59.9 million in the fiscal years thereafter. 3
                             Yet, even though the tax's disapproval will necessarily
                unbalance the budget approved by the Legislature in 2015 pursuant to its
                Article 9, Section 2(1) duty, the description of effect makes no mention
                whatsoever of this critical consequence. Accordingly, we conclude that the
                referendum's description is deceptive for failing to accurately identify the
                practical ramification of the commerce tax's disapproval, and any
                signatures obtained on petitions with this misleading description are
                invalid. NRS 295.015(2). While we recognize that the description of effect
                is constrained to only 200 words, it is imperative that signers understand
                the effects and ramifications of their signature and later vote. Therefore,
                to facilitate the people's right of direct legislation, the district court on
                remand must clarify the description of effect by taking into account the
                material consequences of the referendum, including that the disapproval
                of the tax will unbalance the state budget prepared pursuant to Article 9,
                Section 2(1).   See NRS 295.061(3) ("If a description of the effect of an


                      3 We take judicial notice of the Fiscal Analysis Division's statement
                entitled Financial Impact of the Referendum on Provisions Related to the
                Commerce Tax From Senate Bill No. 483 of the 2015 Legislative Session
                Petition, available at: http ://nvsos.gov/index.aspx?page=1541 . NRS
                47.130(2)(b); NRS 47.150(1); Mack, 125 Nev. at 91, 206 P.3d at 106.


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                initiative or referendum . . . is challenged successfully . . . and such
                description is amended in compliance with the order of the court, the
                amended description may not be challenged."). Accordingly, we
                                ORDER the judgment of the district court AFFIRMED IN
                PART AND REVERSED IN PART AND REMAND this matter to the
                district court p4
                               for
                                r  )dings consistent with this order. 4




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                SAITTA, J., concurring:
                                The majority has concluded that the commerce tax
                referendum's description of effect is unacceptably flawed. I agree. The
                description of effect is intended to do just what it says—inform petition
                signers of the material effects of what is proposed. I write separately to
                point out that by ignoring the significant effect the referendum would
                have on the balanced budget mandate, the description of effect suggests
                that no such effect exists and is thus materially misleading. As a result,

                         4 In
                         light of the nature and urgency of this matter, we suspend NRAP
                41(a) and direct the clerk of this court to issue the remittitur forthwith.
                See Rogers v. Heller, 117 Nev. 169, 178 n.24, 18 P.3d 1034, 1040 n.24
                (2001).


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                the petition's signers have been both deceived and misled. Educ. Initiative
                PAC v. Comm. to Protect Nev. Jobs, 129 Nev., Adv. Op. 5, 293 P.3d 874,
                879 (2013). Such drafting threatens the sanctity of the petition process
                and consequently is untenable, and thus, I concur with the majority's
                conclusion that the description is invalid.


                                                                                        J.
                                                              Saitta


                cc: Hon. James E. Wilson, District Judge
                     White Hart Law
                     The Griffin Company
                     Mueller Hinds & Associates
                     Attorney General/Carson City
                     Carson City Clerk




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