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September 5, 2015

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Memo from Carson City:

Lawmakers preparing for mining tax fight

The biggest legislative battle next year might not be over school spending, public employees’ bargaining rights or even the never-ending struggle over taxes, at least the usual kinds of taxes. The most contested issue, many legislative observers believe, will be a proposal that would eventually remove the industry-specific mining tax from the constitution.

Senate Joint Resolution 15, or SJR15, passed the 2011 session and will have to pass in 2013 to go before voters in 2014.

Why so controversial?

The state constitution, ratified in the 19th century, provides that mines and minerals can only be taxed as outlined in the document. It was amended in 1989 to set the net proceeds tax — after deductions — at 5 percent.

The mining industry wants to keep its tax in the constitution. And who wouldn’t? It’s a very high barrier — a five-year fight — to any change to the tax.

For liberals seeking higher taxes next session, SJR15 might be the best they can do.

“We’re going to go to the mat on this,” said Bob Fulkerson, executive director of the Progressive Leadership Alliance of Nevada, a liberal umbrella group.

But Fulkerson is worried the politics of initiative petitions might kill the coalition that got SJR15 passed in 2011.

Click to enlarge photo

Tim Crowley

The state’s AFL-CIO, Nevada’s largest labor organization, and teachers union are supporting an initiative to institute a business margins tax. Gaming, so far, hasn’t decided whether to support it. Mining, the other ally of a broad business tax, is also waiting.

The fear is this: Mining will support the initiative only if labor, and Democrats, pull their support for SJR15.

Tim Crowley, president of the Nevada Mining Association, said he has not had any such discussions. Asked if SJR15 will be a major fight, he said, “We’ll address it when we get to the 2013 Legislature.”

Mining is also being targeted with an initiative. Monte Miller, a conservative businessman who has opposed taxes, is proposing a constitutional amendment that would raise the mining tax-cap to 9 percent.

Fulkerson said he has not yet met with Miller, and it’s unclear what would happen if both constitutional initiatives passed — Miller’s proposal requires two votes of the people, in 2012 and 2014. Regardless, Fulkerson said, Miller’s initiative “highlights the fact that mining needs to pony up. It puts mining in the public eye.”

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Tick Segerblom

Mining argues against industry-specific taxes by saying it would further narrow the tax base that funds public education and government services. Eliminating the net proceeds on minerals tax “would be harmful to the counties that rely on net proceeds and the state which gets 50 percent of the money,” he said. “This is not the time to roll back the tax on the mining industry.”

Fulkerson, though, said the state should replace it with a severance tax, like other states have.

Assemblyman Tick Segerblom said removing the mining tax from the constitution would level the playing field.

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Sen. Michael Roberson

“Right now, we have hotels and business, but we don’t have mining as something we could look at,” he said.

Another layer of intrigue is the position of Republican lawmakers on mining. Barrick, the state’s largest mining company, has donated $30,000 to the Keystone Corp. business group, which opposes all tax increases. Business groups in general have also favored Republicans in their political donations, hoping control of the state Senate switches from Democrats to Republicans.

Sen. Ben Kieckhefer, R-Reno, who voted for SJR15 in 2011, said, “I’ll review it again when it comes back in ’13, but at this point no one has told me why I should change my mind.”

Sen. Michael Roberson, R-Las Vegas, who is in position to be the Republican leader in 2013, said he, too, still supports SJR15. Taxes “should not be based on protections in the state constitution from 100 years ago,” he said.

Not that he supports raising mining’s tax, but lawmakers should have the option, he said.

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