Opinion ID: 2629871
Heading Depth: 1
Heading Rank: 4

Heading: The Initiative's funding

Text: Nevada Constitution article 19, section 2(1) provides that the initiative process is subject to the limitations of [article 19, section 6]. Article 19, section 6, in turn, does not permit the proposal of any statute or statutory amendment which makes an appropriation or otherwise requires the expenditure of money, unless such statute or amendment also imposes a sufficient tax, not prohibited by the constitution, or otherwise constitutionally provides for raising the necessary revenue. Section 6 applies to all proposed initiatives, without exception, and does not permit any initiative that fails to comply with the stated conditions. Consequently, section 6 is a threshold content restriction, under which we must address the Initiative's validity. [6] If the Initiative does not comply with section 6, then the Initiative is void. [7] Thus, we must first determine if the Initiative makes an appropriation or requires an expenditure of money. Simply stated, an appropriation is the setting aside of funds, and an expenditure of money is the payment of funds. [8] Historically, Nevada's Legislature has provided for the general support of schools every year. In 1873, a state school fund was established, and interest accrued from the revenue raised from selling land was divided among Nevada's elementary and secondary schools. [9] In 1912, the state distributive school account was established, with funds distributed to schools semiannually. [10] Since then, the Legislature has resolved that state financial aid to public schools, grades K-12, is intended to provide each child in Nevada with a reasonably equal education opportunity. [11] To accomplish this objective, the Legislature establishes basic support guarantees for all school districts. [12] These guarantees are based upon a set and equal amount of funding for each student in all school districts. Both state and local revenues contribute to the total basic support guarantees for all districts. [13] After the Legislature determines how much money each local school district can apply toward its total per-student basic support guarantees, the state makes up the difference between the amount of the district's total basic support guarantees and the district's available local funding. [14] This arrangement is known as the Nevada Plan, and the state's share, the total amount of its contribution for all districts, is drawn from the state distributive school account. [15] Based on the Nevada Plan, the Legislature approves a budget for the state distributive school account for the state's portion of over-all education funding. Section 53 of the Initiative would require the Legislature to set the amount of the basic support guarantees each biennium so that the state's share equals at least fifty-percent of the state's total projected revenues: 1. For making the apportionments of the state distributive school account in the state general fund required by the provisions of this Title, the basic support guarantee per pupil for each school district and the basic support guarantee for each special education program unit maintained and operated during at least 9 months of a school year [ ] must be established by law for each school year. For each year of the biennium, the basic support guarantees must be established in such amounts so that collectively, after deducting local money available for public schools, they represent not less than 50 percent of the projected revenue of the state for that year. 2. As used in this section: (a) Local money available for public schools means the sum of the amounts referred to in paragraphs (a) and (b) of subsection 1 of NRS 387.1235. (b) Projected revenue of the state means the amount of revenue to be collected by the state during each year of the biennium, as estimated by the economic forum pursuant to NRS 353.228. 3. All money received pursuant to sections 5 to 44, inclusive, of this measure must be appropriated and expended only for the purposes provided for in section 14 of this measure, and must be used only to supplement sources of funding for education existing on the effective date of this measure and not as a substitute for existing funding for education. No money in the quality schools trust account in the state distributive school account may be used to supplant any state or local general fund [money for] any purpose. [16] To help pay for this fifty-percent amount, the Initiative proposes to levy a four-percent tax on the Nevada taxable income of each business operating in Nevada to the extent the income exceeds $50,000.00 annually. The Initiative also provides that the amount raised from the four-percent tax would only supplement the state's sources of funding for education and is not intended as a substitute for existing education funding. Moreover, the Initiative provides that the revenue from the four-percent tax would only be available to fund education. The Initiative proposes fundamental changes to the budget for Nevada's public elementary and secondary schools. Under the Initiative, the amount of funding allocated for the state's share of the school districts' basic support guarantees cannot be less than fifty-percent of the state's total projected revenues for each year of a given biennium. It requires the basic support guarantees to be set in an amount so that they equal half of the state's projected general fund revenue after deducting local money available for public schools. Accordingly, the Initiative calls for an appropriation and an expenditure: it requires the Legislature to appropriate and spend a specific amount of money for a specified purpose for all future biennia. Additionally, since the Initiative sets the appropriation amount at a minimum of fifty-percent of the state's total revenues, it prevents the Legislature from setting or diminishing the amount of funding. Although NSEA argues that the Initiative's plain language provides that it is meant to augment, and not supplant, existing funding, NSEA fails to recognize that the Legislature is under no continuing obligation to fund education in any particular amount. Currently, the Legislature decides what amount to appropriate for public education each biennium, based in part on a determination of the basic support guarantees, and in part on local funding for public schools. Even if the Legislature has a perpetual duty to fund education, because of its traditional role in funding education and its promise to pay any needed portion of the basic support guarantees, the Legislature is not required to continue funding education at any particular level. A necessary appropriation or expenditure in any set amount or percentage is a new requirement that otherwise does not exist. Thus, although the Initiative is intended to supplement current education funding, by requiring the state's share of the basic support guarantees to be an amount that is at least half of the state's total projected general revenue, the Initiative requires a new appropriation and expenditure in at least the fifty-percent amount for each biennium. The entire amount is a new requirement, since otherwise the legislature has broad discretion in determining education funding. Therefore, since the Initiative requires a new appropriation and expenditure, we must decide whether the proposed four-percent tax under the Initiative covers the required amount. We have not previously considered what funding is necessary when an initiative requires an appropriation or the expenditure of money. Nevada Constitution article 19, section 6 states that the initiative must impose a sufficient tax ... or otherwise constitutionally provide[] for raising the necessary revenue. We must give this provision its plain meaning unless the language is ambiguous. [17] Here, the language at issue is clearthe Initiative must create enough tax or revenue to cover its required appropriation and expenditure. Although proposed taxes and revenues are subject to projections and may not be calculable to a certainty, the proposed tax here is clearly insufficient to cover the Initiative's required fifty-percent-of-revenue appropriation. NSEA's Director of Research testified that the four-percent tax proposed under the Initiative could generate approximately $270,000,000 annually. This amount would arguably be sufficient to fund an increase between the average percentage of the state's overall revenues spent on education in the past, and the Initiative's fifty-percent-of-revenues requirement, but only if the Legislature, in its discretion, kept education funding the same. This amount, in and of itself, falls far short of the total fifty-percent requirement. [18] Consequently, the Initiative fails the threshold-funding requirement of article 19, section 6.