Deal gives mining industry fewer tax deductions, more oversight

Nevada mining companies will have fewer tax deductions and more government oversight under a bill that moved Sunday in the Legislature.

Senate Bill 493 was one of two controversial mining-related measures pushed by Democrats on an industry they believe pays too few taxes.

The bill creates the Mining Oversight and Accountability Commission, a seven-member panel to oversee regulations for mining safety and taxation. An amendment to the measure also eliminates the major deductions mining companies may take when calculating net proceeds of minerals taxes.

The bill and its amendments passed the Senate Revenue Committee late Sunday. It's considered part of a broader compromise to balance the state budget, so it's likely to pass the entire Legislature.

State Sen. Sheila Leslie, D-Reno, said the commission will provide a one-stop location for citizens to bring environmental, safety and tax concerns related to mining.

"There has been no place for them to take those concerns," Leslie said.

She criticized mining industry lobbyists for misleading the public by dragging lawmakers and critics into convoluted discussions and arguments about Nevada's state mining laws and said the commission will help cut through red tape.

A last-minute flurry of lobbying unsuccessfully sought to preserve major deductions the mining industry can take for sales tax and employee health care costs.

Disallowing the health care deduction to mining for a two-year period is worth about $12 million to the state's 2011-13 budget.

The prohibition on the health care deduction would sunset for the mining industry in 2013.

"In the end, when you drill down, mining always wins," Leslie said late Sunday. "Tonight, mining didn't win, at least not this skirmish."

In addition to the oversight and taxation bill, the Legislature on Sunday also considered Senate Joint Resolution 15, which seeks to start the process of amending the state constitution's provision that limits mining tax rates to 5 percent of the "net proceeds of minerals."

The provision, critics say, makes it impossible for the Legislature to set policy that would get more tax revenue from mining, which currently is booming because of high gold prices.

"That provision is the most (restrictive) provision in tax policy that exists in the state of Nevada," Horsford said.

During the hearing on SJR15 before the Assembly Committee on Legislative Operations and Elections, however, Assemblywoman Lucy Flores, D-Las Vegas, questioned whether there would be un­intended consequences to the state if the resolution passed.

The 5 percent rate was imposed on mining in 1989.

Until then, the industry paid only the local tax rate, which is generally between 2 and 3 percent.

Flores said removing the 5 percent provision from the constitution could mean mining simply reverts to the lower county rate and the state would get nothing.

"I'm all for making them pay more," Flores said. "I'm afraid, though, that is not what we are going to end up getting."

If SJR15 passes it would need to be approved by the 2013 Legislature and approved by voters in 2014 before the constitution would change in 2015.

Contact reporter Benjamin Spillman at bspillman@reviewjournal.com or 702-477-3861.