From mining industry to brothels, businesses dissecting Sandoval’s revenue plan

By Kyle Roerink

Tuesday, March 17, 2015 | 2 a.m.

Talk of tax season is ripe in the Nevada Legislature, but the chatter has nothing to do with April 15th.

Gov. Brian Sandoval will lobby for his business license fee on Wednesday in the Senate’s revenue committee. The fee, an existing tax the Sandoval administration has reconfigured, would levy the key fiscal component of his $1.1 billion tax plan aiming to bolster the state’s public education system.

Sandoval is breaking with traditional conservative ideologies in the name of offering $438 million to boost new programs and opportunities for the state’s students, teachers and parents in the next two years. He is one of at least 10 Republican governors calling for tax hikes across the country and says he is determined to cement the 2015 session as the foundation for revamping Nevada’s bottom-rung education system.

Sandoval’s education-driven gusto has politicians and special interests singing his praises and willing to write checks.

But how much they want to contribute is still up for debate.

Sandoval’s bill is broad-based legislation with lots of moving parts. The bill already has a range of deductions for the health care industry, mining, investors and gaming. It would apply to more than 300,000 businesses operating in the state. The tax, currently a $200 annual fee, would be rated based on a company’s gross receipts, levied by 30 industry classifications and paid to the state’s taxation department quarterly. Companies could expect to pay between $400 and $2.6 million depending on their earnings every four months.

Lawmakers in both parties are crafting an array of alternatives as lobbyists comb through the details of the 130-page license fee bill. It’s uncertain if their plans can win the hearts of businesses and the votes of a two-thirds majority in both houses of the Legislature.

On Friday, two days after the bill landed in the legislature, dozens of lobbyists said their clients hadn’t read the bill — a piece of legislation that’s dominated political discourse since January.

But some were willing to talk. Here’s what industries have to say about Sandoval’s plan:

Mining

The bill's language has some in the mining industry scratching their heads.

James Wadhams, a lobbyist for Fennemore Craig who represents Newmont Mining Corp., said his company would support the governor but expected “changes to the bill.”

The mining industry expects that it's fully taxable under the governor’s tax proposal. But a mining-specific tax already in law — the net proceeds of minerals tax — prohibits any other tax be levied upon those types of commodities in the industry. The bill also mentions deducting revenues that are exempt thanks to the industry’s constitutional exemption from paying property tax.

Wadhams called the current draft of the bill “confusing.”

“There’s never a bill that’s perfect on the first day,” he said.

Transportation

The state’s truckers raised two red flags about the bill.

Companies with multistate operations are exempt, while intrastate operators are not.

“That will leave in-state businesses to shoulder the burden,” said Paul Enos, a lobbyist for the Nevada Trucking Association.

Another concern allows companies with multiple operations to choose what rate they pay, a provision that could undermine the revenue state officials expect from the tax every year.

There are trucking concerns that also own warehouse companies. Warehouse companies in Nevada would pay less if the bill becomes law.

“If my business does both, I choose the rates myself," Enos said. "Would I rather be trucking or warehousing? I think you will see a lot of businesses jumping from category to category.”

Gaming/resorts

Gaming revenues subjected to the state’s license fee would be exempt from the business license fee. Revenues from the state’s live entertainment tax, which levies money from shows at gaming and non-gaming establishments, would not.

Boyd Gaming and the Nevada Resort Association kept quiet about the bill.

“We will be reviewing the bill over the next few days and plan to make a more public statement regarding our industry’s position in the near future,” said Virginia Valentine, a lobbyist for the Nevada Resort Association.

On Friday, Boyd representatives said the company hadn’t looked over the bill.

Brothels

George Flint, representing the Nevada Brothel Organization, said there were a lot of questions his industry wanted answered. For instance, the prostitutes in the state's legal brothels work as independent contractors who pay the brothel owners to rent a room. The women now pay the $200 state's business license fee. Some of them come from out of state for a short time, collect their money and then return, Flint said. He raised concerns about how transient independent contractors would be taxed.

In 1985, there were 38 legal brothels in the rural counties and it's now down to 17. The tax will mean more closures, Flint said.

“There are more hookers on the street. They earn more and if they get caught they pay a fine of several hundred dollars and go on their way," Flint said.

Sun reporter Cy Ryan contributed to this report.