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Resolutions concerning constitutional tax caps for mining advance to 2021


By Jeri Davis and Lucia Starbuck

Mining’s constitutional tax caps could be changed by any of three measures that will be advancing to the 2021 session of the Nevada Legislature. 

Nevada lawmakers on Saturday introduced a third bill proposing an amendment to the Nevada Constitution as it relates to taxing the mining industry in what Assembly Speaker Jason Frierson called “an olive branch” extended to the industry.

Assembly Joint Resolution 2 would increase the existing cap on net proceeds of minerals extracted in the state from 5% to 12%. It would allow the legislature to change tax percentages mining operations pay and would also set a minimum tax rate within the Nevada Constitution. 

As is currently the case with tax revenue raised from mining, revenue raised by AJR2 would be split between the counties where the minerals are extracted and Nevada’s general fund. However, rather than continuing the roughly 50-50 split between counties and the state, AJR2 would keep county revenues near their current rates while increasing more than three-fold the amount of money funneled into the general fund. 

Assembly Speaker Jason Frierson on Saturday, Aug. 1, 2020 during the second day of the 32nd Special Session of the Legislature in Carson City.
Assembly Speaker Jason Frierson on Saturday, Aug. 1, 2020 during the second day of the 32nd Special Session of the Legislature in Carson City. (Pool Photo by David Calvert/Nevada Independent)

Frierson said during the marathon Assembly hearing Saturday that while it was not written into the resolution, lawmakers had agreed to introduce companion legislation during the 2021 session to ensure that only mining operations with gross proceeds in excess of $20 million would pay the 12% rate.

That would amount to fewer than 10% of mines in the state—10 out of 104—and all gold mining operations. It was not entirely clear at what percent mines grossing less than $20 million would be taxed on their net proceeds under the promised companion legislation. 

Both Assembly Joint Resolution 1 and Senate Joint Resolution 1 would change mining tax rates from net to gross and increase them to 7.75% of gross proceeds. There are differences in how the funds raised by them would be allocated; however, unlike AJR2, both would eliminate the share counties receive of the money. 

Under SJR1, the proceeds from the tax would be divied up, 50% to be used “exclusively to fund a program to make payments to eligible persons domiciled in this State.” The use of the remaining 50% of the tax proceeds would not be restricted by the provisions of the Nevada Constitution.

AJR1 would see 25% of the proceeds of the tax spent on education. The use of the other 75% would not be written into the state constitution. 

According to Legislative Counsel Bureau staff, using 2019 net-proceed figures from Nevada mines, the tax structure outlined in AJR2 would result in more than double the tax revenue that was collected, $260 million versus the $113 million. One the other hand, the tax structure laid out in both AJR1 and SJR1 would amount to more than $600 million. 

Assembly members stayed through Saturday night and into the early hours of Sunday morning in order to pass all three resolutions. Senators finalized their votes on the three measures shortly after 4 p.m. on Sunday. 

Final votes on two of the resolutions did not follow party lines. Senator Joseph Hardy (R-Clark County), who is termed-out this session, joined Senate Democrats and voted in favor of AJR2. On SJR1, four Democrats–Dina Neal, Ellen Spiegel, Maggie Carlton and Richard Carillo, all from Clark County–joined their Republican colleagues and voted in opposition.

Having passed both chambers of the legislature, each will be considered during the 2021 legislative session. Of course, any of the three measures would have to pass again in 2021 in order to go on the 2022 general election ballot for voters to decide upon. 

Organizations, companies and people in favor or opposition of the measures now have nearly six full months to consider the arguments they’ll make before the Feb. 1 start of next year’s session, an opportunity often not provided to opponents of measures through the bill draft request process of a standard session. They also still have nearly three months before Election Day 2020 to broadcast to voters their messaging on the measures and the legislators who voted for and against them. 

Citizens share their opinions

Patrick Donnelly, the Nevada State Director with the Center for Biological Diversity, did not support SJR1 but supported AJR2 because it earmarked money to go to education and health services.

“Nevada faces a desperate hole in our budget, and our state makes sacrifices for mining. We sacrifice our clean drinking water and our public lands,” Donnelly said. “We sacrifice sacred cultural sites for our Native American nation. Meanwhile, mining makes off like bandits with their pockets full of loot, paying a pittance in taxes, while our schools and public health rank among the worst in the country due to woeful underfunding. Those burdens fall disproportionately on disadvantaged communities and people of color. The time has come for mining to contribute to our society and pay its fair share.”

However, Donnelly later aired his grievances on Twitter that lawmakers will have to spend time addressing three different measures to raise taxes on mining.

AJR1 received support from educators as well. Several callers said they protested outside of the legislative building on the first day of the 31st special session, urging lawmakers to lessen the millions of dollars cut from education. 

Selena La Rue is a teacher and a member of the Washoe Education Association. 

“We are in a time of crisis, a time which demands sacrifice,” La Rue said. “Health care workers, educators and essential workers are sacrificing their very lives in order to keep our community safe and functioning. We are asking that mining corporations share in that sacrifice to keep our state healthy.”

The mining measures were continuously hit with opposition from miners and rural Nevadans. Some voiced concerns that amending the constitution would drive mines out of the state.

Mary Walker, representing Lyon County, said AJR1 would hurt rural residents. 

“We are very concerned about the potential loss of good paying jobs in our community and harm to our rural economies,” Walker said. “In some rural counties, mining is the only industry rurals have, and, in my opinion, there’s nothing that can really replace it. It’s not as if Tesla is going to, you know, go off to Eureka or Humboldt. For 150 years, these rural counties have relied upon mining revenue to fund local services to their citizens. How do we replace that revenue if it’s not defined in the bill?”

Other callers voiced concerns that those who would be impacted did not get enough time to review the measures, as AJR1 and AJR2 were presented for the first time in the wee hours of the night on Saturday.

Janine Hansen, State President of Nevada Families for Freedom, opposed AJR2.

“I think it would really be a good exercise for all those supporting this bill that they would pay their fair share by voluntarily increasing their taxes to the state from whatever they’re paying to another 7%,” she said. “I think it would be a good financial exercise. This whole process has been incredibly difficult to participate in. Regular people have not been able to participate with the incredible hours that we’ve been meeting. Ordinary people cannot arrange their lives to participate. I object to the manner in which this has been conducted.”

Lone Republican Vote

State Senator Ira Hansen on Sunday, Aug. 2, 2020 during the third day of the 32nd Special Session of the Legislature in Carson City. (David Calvert/Nevada Independent)
State Senator Ira Hansen on Sunday, Aug. 2, 2020 during the third day of the 32nd Special Session of the Legislature in Carson City. (Pool Photo by David Calvert/Nevada Independent)

Senator Ira Hansen (R-Esmeralda, Humboldt, Lander, Mineral, Nye (Part), Pershing, Washoe (Part) voted against all of the mining measures, agreeing with others who’d said it was inappropriate to introduce the measures during a special session in the first place.

“It’s starting to sound a little bit like a broken record around here. Number one, this does not belong in a special session,” Hansen said in regards to AJR1.

“There’s nothing extraordinary about this. It does not meet the constitutional requirements. Secondly, listening to some of the testimony in favor was almost shocking, somehow, ‘They’re all robber barons, capitalist enterprises, greedy fat cats,’ when in reality, all of these mining companies that we’re discussing, are, in fact, publicly traded companies, and some of the largest purchasers of those stocks are none other than the teachers’ unions and various government entities who invest their pension and retirement funds in those very portfolios. So, they better be careful when they start labeling greedy fat cats as though these are some sort of companies owned by J.P. Morgan and John D. Rockefeller.”

The rest of the Republicans in the Senate voted against the three mining measures, except for Hardy, who, as previously mentioned, voted in support of AJR2.

“The voters are ultimately going to decide this,” Hardy said. “I think the next time we see it as a legislature will be the time where we get to have input because I don’t think the input that we’ve had today is adequate. I don’t think it was appropriate. I think we need to have more time. I would like to see this in a real session, with real witnesses and real people to talk about this. I feel badly that we’ve had people who are neutral that may have alternative agendas. 

“I think of the three resolutions, this is the least worst. I think realistically, mining is going to be under the microscope of how much they’re going to pay and how much the constituents that we have are going to require of them. I don’t know of a fair tax. I’ve never understood the term fair tax. I would love to have somebody explain to me what a fair tax is because the people who pay it don’t think it is, and the people who don’t pay it think it isn’t, and so on. This will give us time to have the big guys talk to the little guys, and the little guys figure out if they can survive with the 12%,” Hardy added.

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