Of Note Nevada

Ethics Reforms

Gubernatorial candidate Rory Reid recently outlined his proposal to reform ethics rules in Nevada.  His proposal includes:  ending lobbying of state agencies by current legislators; penalizing non-willful violations of ethics rules; establishing a two-year cooling off period for lobbying by former legislators or former state employees; and releasing the Governor's "official" schedule to the public.

The first of these proposals might be the trickiest to actually enact into law in light of the recent Nevada Supreme Court decision in Commission on Ethics v. Hardy.  In that opinion, the Court held that the power to discipline current legislators resides solely within the Legislative branch and cannot be delegated to the Ethics Commission.  And because the Legislature can create its own standing rules without gubernatorial approval, whether this reform would be enacted in accordance with Commissioner Reid's plan is an open question.  Regardless, the Ethics Commission would not have any enforcement authority over infractions by current legislators. 

The proposal to penalize non-willful violations of the ethics rules would remove the existing defense commonly used by public officials allowing them to avoid harsh penalties by claiming an ignorance of the law.  It seems to be a well-advised reform to the ethics rules, although even a non-willful ethics violation can serve as a serious black mark on the resume of a public official.

With respect to the cooling off period, existing law requires a one-year cooling off period for former executive branch employees for representation on any case, proceeding, application, contract or determination that was pending at the employee's former agency during his or her employment.  There is no cooling off period for representation by former executive branch employees on legislative measures or administrative regulations.  With respect to former legislators or former employees of the legislative or judicial branches, there is currently no cooling off period whatsoever on any type of representation.  A two year cooling off period as proposed by Mr. Reid would dramatically change the ethics landscape for both former legislators and former state employees of all branches.

The final proposal would be to release the Governor's "official schedule."  What Mr. Reid means by an "official schedule" is unclear.  The current Governor publicly releases his official schedule of events and meetings, but one would be hard-pressed to find any elected official who would be willing to release a schedule of every meeting and phone call that occurs throughout the day.   

Baptism by Fire

The Associated Press ran a story yesterday called "Rookies will be  big factor in 2011 Legislature."  The article notes that newcomers will hold at least 17 of the 42 spots in the Assembly, and at least 8 of the 21 spots in the Senate (with some allowances for legislators who avoid term limits and remain in the Legislature by swapping houses).  The story notes that the 2011 Legislature will be confronted with at least two enormous challenges:  the growing gap between government expenses and revenues; and reapportionment of Nevada's legislative districts. 

The challenges in tackling those issues will be exacerbated by several factors.  The last year saw the retirement of the two most senior fiscal analysts at the Legislative Counsel Bureau (although their replacements are experienced veterans in their own right).  The amount Nevada spends on Medicaid continues to climb as unemployment remains high.  The unemployment insurance trust fund is depleted and the state is borrowing money from the federal government to cover unemployment benefits.  On top of that, there are some major tax refund cases pending dealing with complimentary casino meals and the taxability of coal, both of which could further upset the already tenuous budget outlook.  Furthermore, the largest counties in the state are beginning to experience significant downturns in revenue as property tax assessments decline in response to foreclosures and falling home values, which could trigger additional state expenses in order to hold education harmless by maintaining basic school support levels.

These challenges may leave many of the rookie legislators wondering just what they got themselves into come February 2011 when the Legislature convenes for its 120 day biennial session.  Of course, while the challenges will be daunting, there will also be plentiful opportunities for positive and imaginative reform. 

Setting the Agenda

With the possibility of a special session of the Nevada Legislature comes the speculation about what will be and what won't be on the agenda.  Article 5, Section 9 of the Nevada Constitution provides that the Governor "shall state to both houses when organized, the purpose for which they have been convened, and the Legislature shall transact no legislative business, except that for which they were specially convened, or such other legislative business as the Governor may call to the attention of the Legislature while in Session."

There has been a long-running, if subdued, dispute between the Executive and Legislative branches over exactly how far the Governor's power extends to control the agenda of a special session.  The issue has the potential to come to a head if the Governor and Legislature cannot agree in advance how to best resolve the growing budget deficit in Nevada.  The Governor, who is firmly anti-tax, will likely include language in his proclamation prohibiting the Legislature from considering new taxes, raising existing taxes, or otherwise impacting existing tax exemptions.  Legislative lawyers will likely take the position that while the Governor can call a special session to address a budget deficit, to tell the Legislature how they can or cannot address that deficit is tantamount to lawmaking and therefore beyond the scope of the Governor's executive authority.  Similar arguments were raised recently in New Mexico when Governor Richardson included a similar prohibition in his call for a special session.

Of course, heading into an election year the Legislature as a whole may avoid delving into the intricacies of a constitutional debate, making the issue moot by deciding not to consider tax increases in any event.  In that case, we may have to wait until another day to see just how far the Governor's authority extends under Article 5, Section 9. 

State Budget Situation Worsens

Today Governor Gibbons asked state agencies to plan for budget reductions of up to 10%.  The request comes less than a month after agency heads were asked to submit plans for reductions of up to 3%.  The request can only mean that the administration feels that state revenues will not improve anytime soon and that drastic measures will need to be taken in order to maintain a positive cash flow.

Budget reductions of this magnitude, on the heels of significant spending reductions for the biennium that were approved by the Legislature in early 2009, would likely mean that state employees can either expect longer furloughs or layoffs as the bulk of state spending is on personnel.    Either way, Nevadans will experience a reduction in service levels from state agencies as the state government continues to weather one of the worst economic recessions it has ever experienced. 

It looks like Nevada's elected officials will continue to be faced with the herculean task of maintaining basic service levels in a situation where there are no good solutions.

Criminal Charges Against Lt. Governor Dropped

Earlier this week, a Nevada judge dismissed a criminal indictment against the Lt. Governor and his Chief of Staff.   Yesterday, the Attorney General announced that the dismissal would not be appealed and no further proceedings would be pursued.  The charges stemmed from allegations that the Lt. Governor, at the time he was Treasurer for Nevada, failed to comply with state budget laws in the marketing of a college savings program.

Throughout the proceedings, many observers questioned the viability of the indictment as no money was missing and there were reasonable differences of opinion as to how the budget for the college savings program should be approved.  The fact that the indictment was dismissed on the grounds that it was insufficient on its face and failed to satisfy due process highlights the difficulty a prosecutor faces when attempting to criminalize actions taken under the state budget act, particularly when the Legislature has not clearly defined how budgets for programs like the college savings program should be set and approved.  It will be interesting to see if the Nevada Legislature takes action at its next regular session in 2011 to address budget rules for programs, like the college savings program, that are outside the purview of typical general fund budgets.

The Road to a Special Session

There has been rampant speculation on whether the Governor will call a special session in early 2010 to deal with Nevada's worsening revenue collections.  The Governor recently announced plans to convene the Economic Forum and obtain an updated revenue forecast by January 19, 2010.  The announcement came after quarterly revenue reports showed the state was $50 million behind the projections used to build the biennial budget after only a quarter of the first fiscal year of the biennium (fiscal years for state government purposes run from July 1 to June 30).  If that kind of revenue slide continues, it means the state could be facing a deficit of $400 million for the current biennium.

The last time the Economic Forum was convened for an emergency meeting was in June 2008, and a special session to address the forum forecasts was called shortly thereafter.  It seems inevitable that the upcoming meeting of the Economic Forum will serve as a precursor to another budget-related special session, especially given the fact that the Governor has expressed an intent to convene the Legislature in order to qualify for certain federal education dollars.  If a special session is called, it makes sense to call it shortly after the Economic Forum makes its projections, otherwise those projections could quickly become stale.

Welcome to Of Note Nevada

Thank you for visiting my new blog.  By way of introduction, I've been practicing law in Nevada for eleven years and work with the law firm of Brownstein Hyatt Farber Schreck,  Before joining the law firm, I served as Chief of Staff to the Governor of Nevada.  Prior to serving as Chief of Staff, I served as General Counsel to the Governor and was also a Senior Deputy in the Nevada Attorney General's Office.  My professional experiences have taken me from the courtroom to the inner workings of state government and allow me to provide a unique insight into current affairs in Nevada.  

Thanks for taking a look at Of Note Nevada and I hope you find the commentary educational and useful.