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Nevada Families Win First Round in Fight to Restore Tax Credits for Scholarships

Lawsuit maintaining that the Legislature ignored the state’s Constitution to reduce support for educational choice will proceed

Las Vegas, Nev.—Today, Clark County District Court Judge Rob Bare handed Nevada families a first-round win in their constitutional challenge to a 2019 law that eliminated the automatic annual increase in the amount of tax credits available for donors to the Nevada Educational Choice Scholarship Program. Attorneys for the state were seeking to dismiss the lawsuit. Today’s ruling clears the way for Judge Bare to fully consider the lawsuit and rule on whether AB 458, a revenue-raising measure, was passed with the necessary two-thirds majority in the Senate. Three mothers of scholarship students, a scholarship granting foundation and two donors to scholarship programs are represented by the Institute for Justice (IJ) in the suit filed in August 2019.

“As expected, the court found that our clients have standing to challenge the bill that took away their children’s scholarships,” said IJ Attorney Joshua House. “We now look forward to demonstrating that the bill is unconstitutional and ensuring that students will be able to continue at the schools their parents have chosen for them.”

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 passed with only 13 of 21 votes in the Senate—one short of the two-thirds requirement.

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