Las Vegas Sun

September 22, 2017

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Time to end mining’s sweetheart deal

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Sheila Leslie

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Every Nevadan knows the truth about our boom-and-bust gold mining heritage. When the gold is gone, the multinational mining corporations will decamp for untapped veins elsewhere, leaving behind ghost towns of unemployed people, mercury in our fish and a realization that once again, the profits from our nonrenewable resource are gone forever.

In an effort to right this historic wrong, Senate Joint Resolution 15 was sponsored by the Senate’s Revenue Committee in the 2011 session. As the chair of that committee, I held a frustrating series of hearings as it became increasingly clear that the mining industry has been reaping billions from our gold mines while leaving a pittance behind as their contribution to the state’s general fund. In fiscal year 2011-12, a year when the price of gold continued to soar, Nevada’s gold mines produced $8.76 billion in gold and paid $104 million to the state’s general fund under the special Net Proceeds of Minerals (NPOM) tax, an effective tax rate of 1 percent.

Since Nevada’s inception, when mining forced the state’s original constitution to be rewritten in its favor, the industry has enjoyed a privileged status through taxing provisions written into the constitution to protect shareholders’ profits. Over the past century, the industry has employed legions of high-paid lawyers and lobbyists to ensure these protections remain enshrined in the constitution while taking unbelievable liberties in the often overlooked regulatory process, taking advantage of every possible deduction, sometimes without statutory authority.

After a hard-fought and sometimes bitter battle, led by then-Senate Majority Leader Steven Horsford, the 2011 Legislature reduced some of these deductions. No longer can the industry deduct its dues to the World Gold Council, an industry marketing organization. Mining companies cannot “double dip” by deducting the cost of their employees’ health care from both the NPOM and the Modified Business Tax. Out-of-state development costs are also no longer allowed to be deducted from Nevada taxes.

Although the industry insists the NPOM tax is a property tax, it actually performs like an income tax, allowing for so many deductions that some mines end up paying nothing in NPOM taxes. Zero. You won’t see that fact in the “feel-good” advertising that is ubiquitous these days throughout the state. However, you won’t find the ads on KSNV-TV Channel 3, which ran a series of stories that irked the mining barons. With station owner Jim Rogers standing by the series, the mining industry pulled its ads.

The Revenue Committee realized last session there is no hope of renegotiating how mining is taxed in Nevada unless the special provision protecting the industry is removed from the constitution. The committee reviewed how other states tax mining, through severance taxes or excise taxes, mechanisms unavailable to Nevada due to our constitution’s prohibition.

That’s why the committee sponsored SJR15 to start the process of eliminating mining’s sweetheart tax deal. The resolution passed the state Senate on a 13-8 vote, with two Republican senators voting with all the Democrats.

Yet the resolution stalled in the state Assembly, under the pressure of the lobbying corps, which worked overtime behind closed doors to kill it despite their official “neutral” stand. In the end, SJR15 passed on the last day of the session, on a 27-15 vote, with no Republican support.

In the intervening two years, the Nevada Mining Association has conducted a one-on-one misinformation campaign to convince legislators that the measure would actually reduce the industry’s taxes, despite extremely clear testimony by the legislative counsel that this was not the case.

The industry also continued to whine about being targeted for increased taxation while forgetting to mention it is the only industry protected from a change in taxation by the state constitution.

But the house of cards began crumbling last week when a majority of the Senate Republican caucus declared its intent to vote for the resolution, citing arguments long made by progressives about the patent unfairness of single-industry tax protection and the gross underpayment for our state’s golden treasure.

If the mining industry cannot effectively deploy its head-spinning reasoning to confuse the 2013 Legislature or maximize the constant threat to take mining elsewhere, the measure will go to the ballot, where the people will decide whether it’s time for Nevadans to get their share of the gold before this boom cycle bottoms out.

Our state has tremendous needs to improve funding of education, mental health care, and services for our children and seniors. Don’t we deserve a little more of our own treasure?

Sheila Leslie is a former Democratic member of the state Senate. She lives in Reno.

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