Judge to change petition that seeks increase in state mining tax

CARSON CITY -- A judge said Friday he will rewrite part of a petition calling for a state mining tax increase because it doesn't adequately explain the measure's true intent.

The decision tosses out 12,000 signatures already gathered but proponents said they won't have any problem getting enough people to sign and place the measure on the ballot.

Carson City District Judge James Wilson said he will complete by Monday a new description for the petition submitted by the Progressive Leadership Alliance of Nevada.

"The voters need more information," said Wilson, who received permission from lawyers for PLAN and the Nevada Mining Association to rewrite the petition's description. "The public should not be confronted with a misleading petition."

After the hearing, PLAN state Director Bob Fulkerson said he would refile the petition -- with Wilson's new description -- on Monday with the secretary of state.

Fulkerson said he was "absolutely" confident that his organization can collect the 97,004 valid signatures it needs to put the matter before voters in the November general election. Deadline to turn in those petitions is June 15.

Before mining taxes can be increased, voters must approve the proposal in both the 2010 and 2012 elections.

Wilson agreed with Mining Association lawyer Bradley Schrager's arguments that the petition description was misleading.

"The people should have some idea of what it (the petition) is and a better idea of what they are being asked to change," Schrager said.

As written by PLAN, the petition description states only that voters can change how mining is taxed from 5 percent of its "net proceeds" to a rate of not less than 5 percent of its "gross proceeds."

But Schrager pointed out that description does not even mention what types of minerals would be affected by the tax increase. He noted that even the "steam" produced from geothermal wells would taxed.

"Say what minerals are being taxed," Schrager said. "People need to know that."

He also pointed out that if the tax increase is approved, then it would represent a 300 percent increase over the current taxes paid by mining companies.

In rewriting the description, Wilson agreed to mention that the minerals affected by the tax would include gold, silver and copper, along with the geothermal well steam.

He also will mention that voters, if they approve the tax, will be levying the higher tax on the value of minerals without any regard to the costs of labor, equipment and other processes used to extract them.

For example, an ounce of gold sold for $1,106 Friday, but costs about $400 to produce, according to state estimates.

Wilson also will mention that if the tax had been in effect in 2008, then the tax paid by mining companies to state and local governments would have been $284 million, not the $91 million that they actually paid. The judge also will mention that represents about a 300 percent increase.

After the meeting, Mining Association President Tim Crowley said his organization wanted "to make sure voters knew what they were getting into" by signing the petition.

"I don't think most knew it would affect the geothermal industry and our future is geothermal," Crowley said.

He added that the higher tax also would be placed on molybdenum, a mineral used in electric car batteries.

"Voters may not want to do that," Crowley said.

James Wadhams, another Mining Association lawyer, said his organization still could decide at a later date to file another legal challenge to the petition.

"We will leave our legal options open," Crowley said.

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