Mining warns Nevada legislators that tax bill could end up in court

CARSON CITY — Without ever mentioning the word lawsuit, mining industry representatives told Nevada legislators Thursday that if a resolution expected to lead to higher mining taxes becomes law, then they could take their case to court.

“You may generate less revenue than you generate now,” warned Jim Wadhams, a lobbyist for Newmont Mining and the Nevada Mining Association.

Members of the Assembly Taxation Committee listened to dozens of speakers from Carson City, Elko and Las Vegas offer their views on Senate Joint Resolution 15. This proposed constitutional amendment, passed 17-4 by the state Senate, will go before voters in the November 2014 election if it receives Assembly approval.

Voters could remove from the constitution a clause that now limits what mining pays in taxes to 5 percent of selling price of minerals, minus deductions. With approval, the Legislature in 2015 could set higher tax rates and decide to give mining no deductions at all.

Every Democrat and six of the 10 Republicans in the Senate approved the resolution, and Democrats hold a 27-15 lead in the Assembly. So the resolution, which does not need the approval of the governor, likely will appear on the ballot.

But Wadhams and Tim Crowley, the Mining Association’s president, showed they are not going to give up without a fight, perhaps a protracted legal fight.

Their argument, a complex one, is if voters back the resolution and repeal the amendment that taxes them at the 5 percent net proceeds rate, then mining instead would be taxed under property tax provisions that limit the tax rate to 3.64 percent of the assessed value of property.

However, Kevin Powers, the deputy legislative counsel, said that is not true.

He said the taxes on minerals produced by mines would not be property taxes but rather excise taxes that are not tied to the state constitutional provision that taxes must be “uniform and equal.”

Powers said if the mining industry does sue the state, then it still would be required to pay all taxes while the lawsuit was in court.

Wadhams said he respected Powers as a lawyer, but then cited several state Supreme Court decisions that identified the net proceeds of minerals tax as a property tax.

Angry by what he heard while watching the hearing on TV, Assembly Minority Leader Michael Roberson, R-Las Vegas, strode into the hearing room and asked Assembly members to be “smart enough and listen to your lawyer,” despite statements made by people “sent here to deceive you.”

Roberson, who wants to secure $300 million a year from mining to pay for public schools, added senators are working on a bill that would alleviate any harm to “Mom and Pop” mining operations if SJR15 becomes law.

Jim Garza, a White Pine County economic development officer, warned the committee that litigation over the issue could last five to 10 years and create a great deal of uncertainty for local government and school revenues.

Assemblyman John Ellison, R-Elko, argued that rural Nevada now is subsidizing schools in the rest of the state, noting that because of its haul of mining taxes Eureka County takes no state funds for its schools.

Ellison’s statement irritated Majority Leader William Horne, D-Las Vegas, who noted that another legislative committee is considering shifting $21 million from urban counties to help rural Nevada schools.

Assembly Speaker Marilyn Kirkpatrick, D-North Las Vegas, said her constituents often complain about how the Legislature sends gaming tax dollars, most of which are generated in Southern Nevada, to other areas of the state.

“I am really offended,” she told Garza and Ellison.

“It is hard to swallow that we don’t do anything to help the rest of the state.”

Eureka County operates three public schools with an enrollment of 259, compared with more than 311,000 in Clark County.

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