Mining industry working to scuttle bill targeting their deductions, find different way to pay $23 million to the state

By Anjeanette Damon

Thursday, June 2, 2011 | 11:56 a.m.

Unhappy with their part in the budget deal struck this week between legislative leaders and Gov. Brian Sandoval, mining lobbyists are scrambling today to find a different way to pay the $23 million lawmakers want from the industry.

Under the budget agreement, lawmakers would eliminate an array of deductions the mining industry uses to calculate its net proceeds on minerals tax.

While the measure would generate $23 million in new revenue for the state, it would also force the mining industry to pay another $23 million to county governments.

Mining lobbyists also argue that lawmakers are targeting legitimate deductions to which the industry is entitled. Under state law, mining companies are allowed to deduct the actual costs of extracting and processing the minerals. Over the years, however, they’ve convinced regulators to expand that definition to include a number of deductions that aren’t allowed in state law.

In a late afternoon meeting Wednesday, the industry tried to convince the Sandoval administration to increase the modified business tax rate paid by the industry. That offer was rejected.

Lobbyists then approached Democratic leaders with an offer to find a way to continue paying an increased mining claims fee that a district court judge recently found unconstitutional. The judge also issued a temporary restraining order barring the state from collecting further fees and the state may have to refund what has already been collected.

In the wake of that decision, lawmakers rejected a proposal to continue the increased claims fee, replacing it instead with the proposal to eliminate deductions.

Eliminating the deductions, however, will net the state about $15 million less than could have been generated by continuing the claims fee.

One mining lobbyist argued lawmakers could rewrite the law imposing the increased fee so that it would stand up in court.

Democrats, however, have rejected that suggestion.

“We’re not trying to get out of anything,” the lobbyist said. “We’ll pay the $23 million they want. We’re exploring a number of avenues to do that.”