Special Session: Three different Mining Tax amendments moving through Legislature
Three different joint resolutions that would dramatically change the constitutional language controlling taxation of Nevada mines have now been approved by the legislature.
Sunday, lawmakers approved all three proposed amendments in this session, which will send them to the next legislative session to decide which approach is the best. That could be the 2021 regular session or another special session called after the November election.
SJR was approved Saturday. AJR1 was heard by Senators Sunday and approved by the Senate on a 13-8 party line vote. Following that, AJR2 was approved on a 14-7 vote with only Sen. Joe Hardy, R-Boulder City joining Democrats.
Nevada’s constitution requires that any amendment proposed by lawmakers be approved in the same identical form twice by lawmakers in consecutive sessions. They have been advised by legal staff that while it’s never been done before, that could be done in special sessions following the November election.
After legislative approval, each constitutional amendment must go to a vote of the people during an election. But that too could be a special election instead of a regular election.
Like AJR1, SJR1 it would change the net proceeds of mines tax to a tax on the gross proceeds of mines and increase the maximum allowable tax rate from 5 percent to 7.75 percent.
The Senate version would divide the new revenue 50-50 between the General Fund and and a new program providing annual payments to Nevadans. The Assembly version would dedicate 25 percent of the new cash to education and healthcare. The rest would go to the General Fund.
Each of those plans would have generated an estimated $600 million in 2019. They would also remove the requirement any mining tax increase be approved by a two-thirds vote, requiring just a majority vote, but require two-thirds to reduce the tax.
The third measure, AJR2, would retain the tax as a net proceeds levy, allowing mine operators to keep some legislatively approved deductions. But it would raise the maximum tax to 12 percent.
Groups led by teachers have been demanding changes to the constitutional protections they say allow the mining industry to pay far less than its fair share of taxes. In 2019, the General Fund received just $57 million in net proceeds tax revenue.
But opponents of the proposed amendments point out that the mines make huge contributions to sales tax revenues and pay all the other taxes that other businesses do. In addition, they said mines provide high paying jobs to all those they employ and significant support to local governments and school districts.
In the hearing on AJR1, Sen. Pete Goicoechea, R-Eureka, said changing the tax to a gross proceeds tax would kill the mining industry in Nevada. He also protested the removal of language protecting what local governments and schools receive. Those entities would have to rely on the legislature to provide their funding.
Dagney Stapleton of the Nevada Association of Counties said net proceeds is one of the primary revenue sources for counties. For example, she said, Humboldt County, she said, gets 21 percent of revenue from mining tax and Lander County 55 percent.
Tyre Gray, head of the Nevada Mining Association, pointed out that net proceeds is far from the only tax mines pay. He said they pay property taxes, the business tax, commerce tax and all other taxes that businesses pay in the state.
He said no other state taxes mining on pure gross with no deductions and doing so would increase their taxes by more than 300 percent.
Jim Wadhams representing Newmont said the proposed amendment sets that tax burden at a level that would make Newmont’s business unsustainable in Nevada.
A hearing on AJR2 followed the hearing on AJR1 and received a significantly warmer reception although most Republicans in the Senate continued to oppose it. Several of the lobbyists who opposed AJR1 converted to being neutral since AJR2 maintains the net proceeds tax instead of imposing the tax on gross proceeds. It also leaves untouched the language in the constitution ensuring that counties and school districts get a significant share of net proceeds money. Goicoechea described that as, “a significant improvement.”
That difference also appeased Mary Walker, the lobbyist representing Lyon County, which has a significant reliance on mining taxes.
Lobbyists for Barrick and Newmont, the largest gold mining operations in the state said that if AJR2 is enacted, they will be willing to come to the table and negotiate with lawmakers.
Sen. Ira Hansen, R-Sparks, said he wanted testimony from the mining industry on some of the issues and impacts but Majority Leader Nicole Cannizzaro, D-Las Vegas, rejected that request. Hansen said refusing to take testimony from the people and companies affected by the proposal was unprecedented in his time in the Legislature.