Risein mining taxes on agenda
Democrats float plan in capital
CARSON CITY — Assembly Democrats on Thursday introduced a new plan to raise taxes on the state’s long-dominant mining industry, cutting out billions of dollars in business deductions they can claim to lower their taxes.
The move comes as the Legislature, meeting in special session in Carson City, struggles with few options for filling a $1.2 billion budget hole short of drastic spending cuts.
The proposal, which was introduced at 7 p.m. Thursday in the Assembly, would put a 60 percent cap on deductions afforded to mining companies, according to a draft of the bill.
The bill would generate about $54 million, legislative fiscal analyst Russell Guindon told lawmakers during the evening hearing.
But the bill would also repeal parts of Senate Bill 3, which lawmakers passed a day before, that would have made mining companies prepay their taxes a year in advance that would have also generated roughly
$54 million for the current fiscal year’s budget deficit.
In effect, the new tax mining bill would only add about $200,000 toward closing that budget hole compared with the legislation that was already passed by lawmakers, Guindon said.
But he added that AB4 would add more revenue each year.
Political hurdles
The hurdle for the bill could be politics. Because it would increase state revenue, the measure requires a two-thirds majority to pass in both houses. If the vote breaks along party lines, Democrats could likely push the measure through the Assembly, but one Republican vote against it in the Senate would see it fail.
“I think the point is that we are all in a pretty dire situation in terms of the state and our economy and
I think it’s about time that we have everybody step up,” Senate Majority Leader Nicole Cannizzaro, D-las Vegas, told reporters Thursday night.
Senate Minority Leader James Settelmeyer, R-minden, said that he doesn’t support the proposal and criticized Democrats for rolling it out in the evening hours on what could be the final day of the special session.
Settelmeyer said, “$1.2 billion budget shortfall and they’re going for $60 million? Last day of session? Seems like a political stunt to bring something like this on Day 9.”
As the Assembly Democrats’ bill became public late Thursday afternoon, Senate Republicans unveiled their own proposal for closing the
state’s budget gap using existing money in the state budget.
The plan draws a total of
$162 million in various reserves and additional federal funding from Medicaid to restore $115 million to health and human services programs and $43 million to the K-12 schools budget.
Their proposal promises to restore threatened optional Medicaid services as well most of the proposed rate cuts to Medicaid providers, along with mental health and programs for developmentally disabled people. The biggest impact in the K-12 budget would restore the Read by 3 program.
Sisolak open to taxes
Gov. Steve Sisolak said last week he would sign on to a new tax to help the state out of the revenue hole caused by the COVID-19 pandemic, but he left it up to the Legislature to propose a plan.
The tax measure was introduced on the ninth day of the special session, as lawmakers also took up bills to create furloughs for state workers and cut some $536 million from state agencies.
The rules on mining taxes date
to 1872 and are part of the state constitution. They set a cap on on how much mining companies can pay in taxes, limiting it to a range of 2 to 5 percent of their gross proceeds, minus deductions. The deductions, unlike the tax cap itself, are subject to revision by the Legislature.
To calculate the tax, mining companies report the market value of the minerals they mine and deduct their extraction costs.
In 2019, total gross proceeds for the Nevada industry were
$7.6 billion and net proceeds were $2.3 billion. The net amount was taxed at a rate of 4.9 percent, generating $122.7 million in revenue, half of which went to the state and the other half to counties. That amount paid to the state represents 1.5 percent of the state’s general fund revenue, though mining companies say their total tax contribution is around 7 percent of general fund revenue when sales and other taxes are included.
Contact Capital Bureau Chief Colton Lochhead at clochhead@ reviewjournal.com. Follow @Coltonlochhead on Twitter.