CARSON CITY — In a dramatic reversal of their no-new-taxes position, Senate Republican leaders said Tuesday that state government must spend more money on education and announced they support increasing mining taxes to accomplish that goal, although not until 2015.
Several Republicans, including Sen. Scott Hammond, said that because of front-door discussions with voters during the fall election campaigns, they were convinced that more money must be spent on education.
“I knocked on doors, and it became apparent to me, from talking with mothers and fathers, that it is time we do something like this for education,” said Hammond, an Indian Springs schoolteacher.
Democrats already have vowed to increase education spending this year by at least $310 million more than the
$135 million increase that Republican Gov. Brian Sandoval included in his proposed $6.55 billion budget. But they lack enough Republican support to increase spending beyond the governor’s plan and have not yet announced their own tax plan.
In Tuesday’s news conference, Senate Minority Leader Michael Roberson, R-Las Vegas, said his party wants to work with Democrats and develop the ballot question that would be placed before voters in the 2014 election.
The question would spell out how much more money they want to collect from mining and how that money would be spent in 2015 and subsequent years.
OPTION TO A BUSINESS TAX
The proposal was presented as an option for voters who are expected to vote in 2014 on the Nevada State Education Association’s 2 percent business margins tax, a proposal Roberson contends would kill job creation and devastate the economy.
The question that receives the most votes, if it is more than 50 percent, would become law.
On that same ballot, voters probably also will vote on Senate Joint Resolution 15, a constitutional amendment introduced by Democrats in the 2011 session that would remove from the state constitution a clause that allows the Legislature to tax only the “net proceeds of mining,” now at a 5 percent rate.
With voter approval of the Democrats’ SJR15 and the GOP mining tax measure, legislators could set a higher tax rate and tax the “gross proceeds” that mining earns — $8.8 billion in 2011.
Nevada mines produce about 80 percent of the gold mined in the United States. Gold sold Tuesday morning for $1,575 an ounce, down $40 from a week ago and $130 from a year ago.
While Republicans did not say how much more mining should pay, they issued a statement that if mining were taxed at the same 6.75 percent rate as the gaming industry, then Nevada education would reap an additional
$780 million during the next two-year budget period.
Immediately after the Republican announcement, Democratic leaders complained the proposal does nothing to boost public education spending now, when it’s really needed.
The mining industry declared its opposition Tuesday. And a key Republican, Sen. Pete Goicoechea of Eureka, said approval might result in mining companies reducing production and postponing new mine openings.
Instead, he said, they could “let the deposits sit in the ground.”
SANDOVAL still OPPOSED TO NEW TAXES
Through his press secretary, Mary-Sarah Kinner, Sandoval reiterated that he increased education spending and balanced his proposed budget without tax increases and won’t support tax increases.
“What’s more, because the economy is growing and local revenues are up, overall spending on K-12 education is up over $400 million from last biennium,” Kinner said.
But the tax increase that Senate Republicans want would not start until 2015 and only would occur if approved by voters.
Sandoval already has agreed this session to sign a bill to increase sales taxes to hire police in Clark County because voters approved the tax increase. His signature on this latest measure would not enact a new tax but just put the mining tax plan before voters.
In the first hearing Tuesday before the Assembly Taxation and the Senate Revenue committees on the teacher-backed margins tax, education representatives, labor officials and others lined up in support, saying it would bring in desperately needed revenue to adequately fund education.
But business representatives called it overly complex and a disincentive for economic expansion in Nevada.
Richard Sims, the chief economist for the National Education Association, said the margins tax proposal would improve tax fairness and stability of revenue for public education.
“Passage of the margins tax would greatly increase the overall fairness of the tax system,” he said.
The proposal, which was qualified through the initiative petition process by the Nevada State Education Association, would levy a 2 percent tax on the gross revenues of companies in excess of $1 million a year.
Some but not all expenses of companies could be deducted before the tax is calculated. The tax would raise an estimated $800 million a year for public education.
The Legislature must approve the tax by March 15, or the plan will go before voters next year. It is not expected to act on the tax by the deadline.
If voters approve the measure, the tax liability would start in 2015 with the first collection due in January 2016.
The committees heard that businesses that are not profitable could be required to pay the tax.
Assembly Minority Leader Pat Hickey, R-Reno, asked why a tax would be proposed for Nevada that now exists only in Texas.
Gary Peck, executive director of the teachers association, defended the tax, saying it raised more than $3 billion a year in Texas from 2007 through 2010.
“That represents billions and billions raised during a great recession that no one could have anticipated,” Peck said. “And Texas remains one of the most inviting states for business in the country.”
But Randi Thompson, state director of the National Federation of Independent Business, said the Texas tax brings in far less than was anticipated.
“What happened in Texas should stay in Texas,” she said.
OPPONENTS AND DEMOCRATS
Tim Crowley, president of the Nevada Mining Association, called the GOP senators’ mining tax plan “short-sighted” and said it misses “the larger need to broaden Nevada’s tax base.”
Not all Republican senators back their leaders’ plan. Four conservative Republican senators, including Goicoechea, did not attend the news conference.
“Do you realize what a 10 percent mining tax would do to the mining industry,” Goicoechea said in an interview. “Do you think Newmont (Mining Corp.) is going to bring that (Long Canyon east of Elko) project forward with a 10 percent tax hanging over them?
Democrats, usually the first to talk about tax increases, withheld judgment on the Republican proposal.
Senate Majority Leader Mo Denis, D-Las Vegas, said that the Republican plan wouldn’t bring the kind of lower-class sizes and additional revenue for education that Democrats want until 2015. He wants those improvements implemented now.
Democrats will continue to examine all tax sources before announcing their own plan to increase revenue if that is necessary, he added.
Legislators do not need to prepare an alternative ballot question if they do their job this session to properly fund public schools and higher education. Voters would reject a business margins tax once they saw how the Legislature already has fixed education funding, Denis said.
“It is good they are willing to do more for our kids, (but) we need help for our kids today,” he said.
Bob Fulkerson, director of the Progressive Leadership Alliance of Nevada, applauded the Senate Republicans, calling their plan a “game changer.”
His liberal-leaning organization has been trying since 2010 to induce legislators to increase taxes on mining.
His counterpart Geoff Lawrence, deputy policy director of the conservative Nevada Public Research Institute, reacted differently.
“Calls for higher Nevada taxes — whether on the mining industry or on everyone else through the job-killing margin tax — regularly rely on a faulty premise that Nevada needs to pour always more dollars into its monopolistic government schools,” Lawrence said.
Contact Capital Bureau reporter Sean Whaley at firstname.lastname@example.org or 775-687-3900. Contact Capital Bureau Chief Ed Vogel at email@example.com or 775-687-3901.