Nevada mining tax change moves easily through Senate panel

CARSON CITY — Senate Revenue Committee members voted unanimously Tuesday for a potential constitutional amendment that could lead to much higher taxes on the mining industry in 2015.

Sen. Greg Brower, R-Reno, said all that passage of Senate Joint Resolution 15 would do is let future legislatures determine how mining is taxed. Now a constitutional provision caps the industry’s tax at 5 percent of the net proceeds of the gold and other minerals it sells.

But Nevada Mining Association lobbyists Tim Crowley and Jim Wadhams told legislators that passage of the resolution could backfire and lead to mining paying less in taxes than it now pays.

The resolution, if approved by the full Senate and then the Assembly, would be placed before voters in the 2014 election.

Because it is a resolution, it does not require support from Gov. Brian Sandoval, who has said he will not raise taxes.

The hearing was the first for the proposal this session.

MINING’S TAX ARGUMENTS

Wadhams said SJR15’s approval would take out of the state constitution a requirement that mining pay a 5 percent net proceeds tax. Instead mining companies, like all other home and property owners, would pay the county property tax rate, now a maximum of 3.64 percent in most counties, but that tax is based on assessed value, or 35 percent of the market value of the property, they argued.

Kevin Powers, the deputy legislative counsel, argued that was not correct, releasing a legal opinion that mining would continue to pay at least the current tax rates if voters approve the resolution.

Crowley — when repeatedly questioned by Senate Minority Leader Michael Roberson, R-Las Vegas — would not say whether the mining industry would sue the state if not given the lower tax rate.

Wadhams upset legislators when he said they now could decide to tax mining at less than the current 5 percent rate.

The debate is destined to be one of the hottest this session because passage could lead to additional mining taxes at a time when the economy is emerging from a recession that has cut into state revenues.

Most Senate Republicans have pledged to increase mining taxes significantly in 2015 and use the extra revenue, estimated at $600 million to $800 million, for public education.

About 80 people attended the hearing in Carson City, with a couple dozen more in meeting rooms in Las Vegas and Elko. The hearing was teleconferenced between the three cities.

Wadhams repeatedly argued the Nevada Constitution requires equal and uniform taxation so mining, because of repeal of the 5 percent requirement, would be entitled to the same property tax rate as everyone else.

The hearing was punctuated by a virtual debate on the constitution between Roberson and Brower, both lawyers, and Wadhams.

“I have a lot of respect for your intelligence,” a peeved Roberson told Wadhams, a lawyer who has been lobbying for more than 30 years. “I am not sure you have respect for our intelligence. You have misled the committee.”

That is a strong statement because legislators have the ability to expel lobbyists they believe are not truthful.

SUPPORTERS, OPPONENTS

Widely different statistics were thrown around by the pro and con speakers at the meeting.

Michael Ginsburg, the Southern Nevada leader of the Progressive Leadership Alliance of Nevada, said mining pays only about $100 million a year to the state general fund and receives a constitutional cap not afforded other businesses. The umbrella advocacy organization represents more than 40 liberal-leaning groups in Nevada.

Crowley, however, said mining pays payroll, sales and all taxes that other businesses pay, plus the 5 percent net proceeds tax. He said mining contributes 8.3 percent of the money going to the general fund, about $400 million a year.

“Things people say do not become true because they are stated repeatedly, loudly and frequently,” added Wadhams about the alliance and others who say mining is undertaxed.

One of the supporters of SJR15 was Marla Turner, the stepdaughter of the late Assemblyman Marvin Sedway, D-Las Vegas.

Sedway opposed the 5 percent limit on the mining tax in the 1989 session. He had advocated a $20 per ounce tax on gold.

“Nevada faces an unprecedented budget shortfall,” said Turner in advocating passage of the resolution.

She added that Sedway had warned legislators that the 5 percent limit in the constitution would prevent them from controlling taxation on mining.

After the committee’s 7-0 vote Tuesday, Assemblyman Ira Hansen, R-Sparks, complained that legislators treated the mining lobbyists “shabbily” and disrespectfully. He also noted that none of the Revenue Committee members represents a rural gold mining county.

But in an interview, Hansen acknowledged he missed much of the exchanges between Crowley and Wadhams and legislators because he was at another hearing.

Contact Capital Bureau Chief Ed Vogel at evogel@reviewjournal.com or 775-687-3901.