Las Vegas Sun

September 4, 2015

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Sun Editorial:

A deal with mining

Constitutional fight doesn’t address the need for revenue this cycle

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Senate Minority Leader Michael Roberson stunned the Legislature this month when he and several members of his caucus came out in support of Senate Joint Resolution 15, which would strip the mining industry’s tax protection from the state constitution.

Tim Crowley, president of the Nevada Mining Association, told the Sun’s Anjeanette Damon the move appeared to be punitive and an attempt to damage the industry. (See Crowley’s op-ed piece on the issue here.)

Roberson, R-Henderson, says the mining proposal is not punitive but is an alternative to an initiative that would create a business margins tax.

“We support the mining industry,” Roberson said. “We are glad they are here. We want them to be profitable and productive, but we also want to look at the mining industry and how they generate revenue for the state compared to how we generate revenue from the gaming industry.”

The concern about mining paying its fair share is long-standing and understandable. When Nevada came into statehood 149 years ago, mining interests prevailed in a debate over taxes and had a favorable tax provision written into the state constitution. In 1989, the provision was updated to cap the amount the state can tax mining operations.

The state also provides mining companies with healthy deductions, which have in the past been embellished by the Nevada Tax Commission. Then there’s the lax oversight — the state went a few years without an auditor trained to examine mining deductions, which can be complex. There also are mining’s record profits and relatively small tax bill. Taken together, the reason for the concerns are clear.

The mining industry and its supporters have complained that SJR15 will lead to an industry-specific tax, but that claim only seems to further the argument for the measure. If anything, the constitutional provision offers industry-specific tax protection; no other industry enjoys such an enviable position, including gaming, which generates far more tax revenue and paces the state’s economy.

Setting aside the issue of the fairness of the mining industry’s constitutional protection, there’s a practical issue facing the Legislature: The state needs more money to pay for its ailing schools and other services, and SJR15 wouldn’t solve that any time soon.

If SJR15 passes the Legislature this year, it will go to the voters in November 2014. If voters approve the measure, it will be up to the Legislature in 2015 to consider any tax policy changes, and any resulting tax revenue would come months after. The state needs the money now.

The mining industry has said it is willing to work with the Legislature to find a solution, and that’s welcome. We’d like to see a deal made this session rather than wait a few years.

Proponents of SJR15 argue that the mining industry pays higher tax rates in other states, so it would stand to reason that if mining companies can afford to pay more in other states, they can afford more here. Perhaps the mining industry could agree to pay something closer to what they’re required to in other states and start paying in this budget cycle, rather than in future years.

Such a deal — it’s what’s called compromise, and it fuels politics— could avoid the messy constitutional fight and guarantee the state a stable revenue stream for years to come. That would be a win for everyone.

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