A very bad day for mining

Even for a Legislative Building that has pretty much seen it all, the exchanges last week between state Sen. Michael Roberson, R-Henderson, and Nevada Mining Association President Tim Crowley was bizarre.

Roberson asked Crowley whether his group was opposed or neutral on Senate Joint Resolution 15, which would amend the state constitution to remove a passage that limits the net-proceeds-of-minerals tax to 5 percent.

But Crowley would not answer.

It seems like an easy question, especially since Crowley had just wrapped up testimony before the Senate Revenue and Economic Development Committee that predicted if SJR 15 were adopted by the Legislature and passed by voters on the 2014 ballot, the industry would actually pay less in taxes than it does now.

Miners believe current language in the constitution provides a special tax on minerals, and if that language were removed, then those minerals would simply be taxed like any other property in Nevada, subject to local property tax rates.

And that would apparently make the industry sad, because that could impose a hardship on local communities in which mines operate, to say nothing of the impact on the state, which Crowley estimated relies on mining taxes for 8.3 percent of its general fund.

“We believe it’s a mistake,” Crowley said.

So is the industry opposed to the resolution? Or neutral?

Crowley repeatedly refused to answer. Ultimately, state Sen. Greg Brower, R-Reno, got him to admit the industry was neutral on the resolution in 2011, when it first came up for a hearing, although Crowley had not characterized the measure as “a mistake” two years ago.

The scene — one of many from a tense hearing — was also unusual for the fact that mining is hardly ever subjected to such vigorous cross-examination, and never from a pair of Republicans. But times have changed for the industry in Carson City, and it now finds itself fighting a growing effort to raise taxes.

Not even veteran lobbyist Jim Wadhams could turn the tide, arguing the legal side of mining’s case in the face of a Legislative Counsel Bureau opinion that said mining taxation would continue as usual, just under a different section of the constitution. At least Wadhams had a ready answer when the committee chairman, state Sen. Ruben Kihuen, D-Las Vegas, asked if mining paid its “fair share” in Nevada.

“Yes, sir,” Wadhams replied without hesitation.

But even that’s debatable. Back in 2011, activist and blogger Hugh Jackson — working with the Progressive Leadership Alliance of Nevada — told the Legislature that some very productive mines paid no taxes at all, after deductions were taken. Between 2000 and 2009, mines that generated more than $4.3 billion in gross production value reported zero taxable value, Jackson found. PLAN’s Michael Ginsburg told the committee last week that the industry pays an effective tax rate of just 1 percent.

And although the mining industry likes to compare itself to the average homeowner when it comes to paying property taxes, there aren’t very many average homeowners in Nevada who have managed to utilize deductions to reduce their payments to zero.

That’s probably why Crowley in 2010 said he’d rather see the mining industry pay more in fees, or pre-pay its taxes, rather than lose some of the deductions the industry enjoys in state law. He even suggested adjusting the state’s across-the-board 65 percent exemption for property taxes — at least for business — before eliminating deductions.

But this time, lawmakers are talking about an entirely new law imposing an entirely new — and likely much higher — tax on the industry. And in a Legislature where mining lobbyists have always found friendly faces, they now find unlikely adversaries.

“We have studied the issue. We’re just not convinced by your arguments,” Roberson told Wadhams.

The committee then passed SJR 15 unanimously.

Steve Sebelius is a Review-Journal political columnist and author of the blog SlashPolitics.com. Follow him on Twitter (@SteveSebelius) or reach him at (702) 387-5276 or ssebelius@reviewjournal.com.