Special Session: Nearly identical constitutional amendments proposed to change mining tax

Lawmakers in the Senate and Assembly on Friday introduced nearly identical resolutions to amend the state constitution so Nevada can collect more tax revenue from the mines.

And after ahearing, the Senate passed the measure out of committee, moving it to the floor Saturday.

SJR1 passed on a party line vote with GOP members opposed.

In both AJR1 And SJR1, the maximum tax on the proceeds of minerals that could be imposed would increase from 5 percent to 7.75 percent. But it would no longer be on the net but on the gross proceeds of mines.

That would eliminate all the deductions miners now enjoy, which greatly reduce their total tax bill. In fact, some 40 of the 104 mining companies that filed returns paid no net proceeds taxes in 2019 because their deductions exceeded their profits.

During the special session to cover the budget shortfall that finished up earlier in July, advocates led by teachers argued the mines tax needs to be changed to generate hundreds of millions of new revenue. They argued the miners take billions from the state and pay far less than their fair share.

Both versions of the proposed amendment also give the Legislature the authority to set the mines tax by a simple majority vote.

But, also in both proposed amendments, it would require a vote of at least two-thirds of lawmakers in each house to reduce the tax or to provide any exemptions from the tax.

Where the two proposed amendments differ is in where the money would go. The Assembly version would require that 25 percent of the gross proceeds tax to education and to provide healthcare to Nevadans.

The remaining 75 percent would be up to lawmakers and the governor to spend.

The Senate amendment would fund an unspecified program to help support “eligible persons” who live in Nevada with the remaining 50 percent sent unrestricted to the General Fund.

In the Senate hearing Friday, Legislative Economist Russell Guindon said based on 2019 calendar year data from the mining industry, the change to gross revenue and the percentage increase would have generated $607 million. He said holding local governments and school districts harmless would increase the General Fund revenue from mining to $271 million from the $57 million it received in 2019. That ill-defined program for poor Nevadans would get the same amount.

Minority Leader James Settelmeyer, R-Minden, asked what other industries in Nevada pay a tax on gross revenues.

Guindon said both the gaming percentage fee and the commerce tax are based on gross revenues.

The plan was opposed by nearly every major lobbyist with any connection to the mining industry.

In addition, a number of local officials said that, while authors say they intend to hold local governments harmless, there is nothing in the amendment that would actually do that.