It doesn’t take a cynic to laugh at mining’s tax limits
It was a morning for conspiracy theorists.
Those who wonder how Nevada's mining industry has managed to so deftly avoid hefty tax increases for so many decades need have looked no further than Thursday's Interim Finance Committee meeting. Those who believe there's a shadowed hand that controls too much of Nevada politics would have had their darkest suspicions inflamed.
Representing the Nevada Mining Association was Pete Ernaut of R&R Partners, the political and advertising firm that has helped create the career of ambitious state Senate Majority Leader Steven Horsford, D-Las Vegas. Next to Ernaut was longtime mining lobbyist and attorney Jim Wadhams of the powerful Jones Vargas Law Firm, which is also the legal home of state Senate Minority Leader William Raggio, R-Reno.
Add to those obvious connections a dozen other cozy relationships between Nevada mining and key legislators, and you have a web of political intrigue that would drive a conspiracy theorist to distraction.
But let's not start cynically.
With Nevada facing an $887 million budget deficit and a dismal economic outlook, there has been talk among legislators -- tremulous whispers, mostly -- that the mining industry will need to deliver in a substantial way.
Gov. Jim Gibbons, meanwhile, dreams of winning re-election by sticking to his blanket "no new taxes" pledge. But even Gibbons has left the door open to reducing some deductions mining is allowed to take before coughing up its 5 percent net proceeds tax.
To hear Ernaut's opening statement, delivered with a remarkably straight face, you would have thought mining paid its fair share since statehood.
"We pride ourselves in being good corporate citizens," Ernaut said. "We pride ourselves in being part of every tax session, at least in my memory, and I'm sure my colleague to my left's memory goes back a little farther. We are proud of that historic support and certainly sit here today saying we, again, will support this state and try to help this state through this current fiscal crisis. We understand the depth of it. We understand the problems that you all face as legislators, the problems the governor faces as governor. We are here today saying we want to be part of this. We're willing to be part of this."
Then Ernaut added, "But there are some limitations."
Somehow, I thought there might be.
"Clearly we do not agree with the governor's plan," Ernaut continued. "I think everybody that's on this panel understands very vividly that we have a very strident position when it comes to deductions and changes in net proceeds of minerals."
Do you suppose Ernaut was delivering a message?
Mining's idea of good corporate citizenship doesn't include a tax increase or the elimination of any of its deductions. Ernaut's plan is to increase fees and prepay taxes at a time gold prices are near record highs. In addition, Wadhams said, mining would work to "encourage our colleagues in broader business" to support proposals that only help ensure Nevada continues bare-bones support for public education and social programs for children, the elderly, and the mentally ill.
"We need mining to pay and to help us in this crisis," Assembly Speaker Barbara Buckley, D-Las Vegas, said. "And I appreciate you indicating that you're willing to do it."
Willing, but not very willing.
In the end, it was Raggio who stated the obvious: The tax prepayment plan was insufficient. "And that is a disservice not only to those who pay those taxes, but certainly a disservice to our constituency and the people that we are obligated under our oath to serve," he said.
That scolding aside, no one in that room expects Big Mining to take much of a hit in the special session.
It's not a grand conspiracy, just a political reality in Nevada.
John L. Smith's column appears Sunday, Tuesday, Wednesday and Friday. E-mail him at Smith@reviewjournal.com or call 702-383-0295. He also blogs at lvrj.com/blogs/smith.
