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Gaming, mining industries become early targets for taxes

Day 1 - 2011 Legislative Session

Sam Morris / Las Vegas Sun

Democratic Senators Sheila Leslie, Ruben Kihuen and Mo Denis confer during the first day of the 2011 legislative session Monday, February 7, 2011 in Carson City.

Sun Coverage

CARSON CITY – The miners and the gamers appear to be two early targets in the search by the Nevada Senate for higher taxes.

Sen. Sheila Leslie, D-Reno, the chairwoman of the Senate Revenue Committee, complained that record high profits were being realized in gold production, and it’s not reflected in the tax collections in Nevada, she said. The revenue committee heard its first testimony from the public.

Meanwhile, the Senate Finance Committee got a closer look at four proposed options for higher casino taxes, up to $28 million, to support the state Gaming Control Board in its regulation of the industry.

Jan Gilbert, of the Progressive Leadership Alliance, said she hoped for tax increases to lessen the pain for education and social services, which are facing cuts in the governor's proposed budget.

"I hope you look at the mining tax," she told the revenue committee. “Huge amounts of money are leaving the state” and the money should stay in Nevada, she said.

Geoff Lawrence, policy analyst for the Nevada Policy Research Institute, told the committee the modified business tax that was increased during the last Legislature hurts workers because wages are lowered in response. He said many new taxes end up hitting consumers.

The Gaming Control Board now receives 60 percent of its funding from the state’s general fund and 40 percent from casino fees. Legislators are looking at the possibility of making casino owners pay more -- possibly 100 percent of the board's budget.

Mark Lipparelli, chairman of the Control Board, said Mississippi supports its regulatory agency entirely by taxes collected from casinos.

The board, at the direction of the 2009 Legislature, sent a questionnaire to gaming license holders outlining four options for higher taxes to collect an additional $28 million to support the regulatory system.

There were eight responses and half said “no tax is a good tax,” while the remainder suggested that big casino companies pay the added tab.

One option outlined would be an increase in the quarterly and annual fees on every slot machine by $145.

Another alternative would be a $500 flat fee per machine on casinos with more than 2,000 gaming devices. Those with fewer than 100 machines wouldn't see an increase under the proposal.

Leslie said her committee intends to “really look at the tax system” to make it less volatile. She noted that Gov. Brian Sandoval has said he will veto any increase in taxes, but she said he hasn’t talked about a structural overall of the tax system.

In the past, mining companies paid their net proceeds of the mineral tax the year after production. The last Legislature directed firms to pay in advance, in effect, with the state getting two payments in one year.

That law is expected to expire this year, but the governor has recommended the industry continue to pay taxes in advance.

Russell Guindon, principal fiscal analyst for the Legislature, told the committee that if the law wasn't extended for the next two years the state would not get any returns in 2012 from the net proceeds of minerals.

Senate Majority Leader Steven Horsford, D-Las Vegas, said he initially objected to the pre-payment in advance system. He said the net effect of the recommendation of Sandoval in extending the levy would be a tax increase for the mining company.

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