State returning $8.1 million in mining claims fees

CARSON CITY -- The state is returning $8.1 million in claims fees paid by miners and will pay out even more because a 2010 law was found unconstitutional earlier this year.

Two members of the state Board of Examiners -- Gov. Brian Sandoval, the board chairman, and Secretary of State Ross Miller -- voted Tuesday to approve the expenditure, which had been authorized by the 2011 Legislature.

The state expects to return a total of $18 million to miners through June 2013, the deadline for miners to file with the Taxation Department.

There was no controversy over approval of the mining claim fee return. Money had been set aside in the state budget for the return of the fees.

District Judge James Wilson of Carson City ruled earlier this year that the higher claims fees -- 600 percent higher than the previous fees -- were a unconstitutional tax on mining. Under the state constitution, the only permitted tax on mining is the 5 percent net proceeds of minerals tax.

Owners of smaller mining operations had complained about the fee since it was adopted during a February 2010 special session of the Legislature. The higher fees had been expected to bring in $26 million that the Legislature and then-Gov. Jim Gibbons thought was necessary to balance the state budget at a time when revenues were falling.

Although record high prices have been paid for gold in recent years, some miners gave up claims instead of paying the higher fees. In all, there was a
10 percent decline in claims. Nevada had about 190,000 active claims before the fee increase. Fees charged under the law ranged from $70 per claim to as high as $195 per claim for mining operations with more than 1,300 claims.

The 2011 Legislature rescinded the fee but approved the collection of an extra $24 million from the mining industry because of reports that showed mining had been writing off more in medical expenses than it was allowed under the net proceeds of mineral tax law.

Mining is expected to pay a record $197 million in net proceeds taxes this year.

Attorney General Catherine Cortez Masto, the third member of the Board of Examiners, missed Tuesday's meeting.

In others items before the board Tuesday, the following occurred:

■ The board added another $405 million to a contract with the Health Plan of Nevada to provide managed care services for Medicaid and Children's Health Insurance Program recipients.

With the addition, the Health Plan will receive $1.1 billion through June 30, 2013, for managing these free health care programs for the poor, disabled, blind and some elderly. Fifty-six percent of the money comes from federal grants.

■ The board authorized the Nevada Agency for Nuclear Projects to hire its former acting director and planning chief Joseph Strolin for $150,000 a year to work on the state's effort to oppose the Yucca Mountain nuclear repository.

Strolin will be the first person hired under a new law that requires the state to oversee contracts it executes with former or current state employees.

The law was approved in response to a legislative audit that found some employees were earning hundreds of dollars per hour doing contract work at times they were supposed to working on their regular state jobs.

Bob Halstead, the administrator of the Nuclear Project Agency, said he fears there will be increased attempts in Congress next year to move to open Yucca Mountain, and the retired Strolin's 20-years plus background with the agency gives him a unique understanding of the situation.

"I don't want to say Yucca Mountain is alive," Halstead said. "But our job is to keep Yucca Mountain dead."

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