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Nevada Families Ask Court to Restore Tax Credits for Scholarships

Legislature passed bill without supermajority required for revenue-raising bills

Las Vegas, Nev.—As Nevada students return to classrooms this week, some will not be attending the schools their families wanted for them. Earlier this year, the Nevada Legislature eliminated the automatic annual increase in the amount of tax credits available for donors to the Nevada Educational Choice Scholarship Program. However, this revenue-raising measure was not passed with the necessary two-thirds majority in the Senate. In July, hundreds of families began receiving notices that their scholarships would not be renewed because the tax credits were eliminated. Today, families harmed by the unconstitutional action of the Nevada Legislature, along with a scholarship organization and private donors, teamed up with the Institute for Justice (IJ) to ask Nevada courts to strike down the law.

To accommodate the state’s growing population and increasing educational costs, the 2015 law that established the Scholarship Program increased the number of tax credits available by 10% annually, commonly known as an “escalator provision.” By removing this provision in AB 458, the legislature both increases revenue to the state and limits the growth of the scholarships, leading at least one scholarship organization to reject qualified applicants out of concern that funds will dry up. The legislation repealing the escalator provision only passed with 13 of 21 votes in the Senate, one short of the two-thirds requirement.

“Nevada’s legislature ignored the state’s constitution when it eliminated the tax credits that spur funding for scholarships for low-income families,” said IJ Attorney Joshua House. “The Nevada Constitution clearly requires two-thirds support in the House and Senate for any revenue-raising measure. The families harmed by this unconstitutional law are today asking the courts to restore the tax credits so that scholarship organizations can confidently renew scholarships to qualified students.”

The plaintiffs who filed suit today at the Clark County District Court include three low-income mothers who depend on the scholarships to keep their children in their chosen schools. Also joining the suit are AAA Scholarship Foundation and local business donors Sklar Williams and the Environmental Design Group.

“My son was struggling in public school because of bullying and a crowded classroom,” said Flor Morency. “The scholarship allowed us to afford a new school where he began to thrive. But now, because of the limit on tax credits, the scholarship organization can longer support us. We simply can’t afford to stay in his current school without assistance.”

IJ previously represented families to defend Nevada’s Education Savings Account against legal challenges. In a 2016 decision, the Nevada Supreme Court declared the program to be constitutional. However, that program was never funded by the state, making the tax credit scholarships Nevada’s only educational choice program.

“The quality of school available to a child shouldn’t be based on their zip code or their parents’ income,” said IJ Senior Attorney Tim Keller. “Nevada, like 29 states and the District of Columbia, gives low-income parents genuine school choice. That choice should be expanded, not taken away.”

IJ defends educational choice programs nationwide. Since its founding 25 years ago, IJ has successfully defended such programs in state supreme courts and twice at the U.S. Supreme Court. IJ will once again be in front of the U.S. Supreme Court to defend parental choice in education in the case of Espinoza v. Montana Department of Revenue, which will be heard in the coming term.

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