Collecting money from the mining industry is back under discussion for the 32nd special session. The Nevada Senate passed a measure that proposes a constitutional amendment to raise taxes on mining companies in Nevada.
Nevada’s Constitution currently caps taxes on mining operators at 5% of their net proceeds. Senate Joint Resolution One would raise state taxes on mining companies to 7.75% of their gross proceeds annually. Were it ultimately approved, it would go into effect in 2023.
Currently, mining taxes are divided, with half going to the state and the other half going to the counties in which the mines are located. SJR1 proposes that half of the money collected would go to the state, while the other half would go directly into Nevadans’ pockets. If passed, lawmakers would have to establish a program to delegate the money to, “eligible persons domiciled in this State.”
Based on the calendar year 2019, if SJR1 was in place and mines paid taxes based off of 7.75% of their gross proceeds, mining companies would have generated $607 million. After distributing money to local governments, $541 million would be left, providing a potential $270 million directly to taxpayers, according to nonpartisan Legislative Counsel Bureau staff.
Traditionally, bills must reach two-thirds majority vote if they aim to raise taxes. SJR1 would constitutionally provide lawmakers the authority to allow a simple majority of lawmakers to increase the amount of taxes mines must pay. A two-thirds majority would be required to decrease the rate of taxation on mines.
Public commenters hate the bill
This is not the first time lawmakers have attempted to get more money from mining companies. During the 31st special legislative session in mid-July, Democrats attempted to place a cap on the amount of money mines can deduct from their state taxes. That measure ultimately died when it failed to garner support from a single Republican in the Senate.
Even though collecting money from mines is a hot topic in Nevada right now, especially as lawmakers spent the last special session trying to balance a $1.15 billion deficit in the state’s General Fund and thousands of Nevadans are facing economic fallout from the COVID-19 pandemic, the bill failed to garner support from the public.
Not a single person called in support of the bill. Environmental activists and miners alike bashed the bill during public comment.
The first caller in opposition was Patrick Donnelly, the Nevada State Director with the Center for Biological Diversity.
“Our back of the envelope calculation showed maybe $150 to $200 per person, if this were to happen. That is not nothing, and certainly if you’re struggling, that’s going to help, but that’s not going to pull someone out of poverty. That’s not going to pay the rent. That’s not nearly enough to make a substantial difference in people’s lives,” Donnelly told This Is Reno. “Whereas, if you put all that money together, that’s $300 million. That’s enough to keep teachers in the classroom. That’s enough to provide prosthetic limbs to those who need them, low income Nevadans, health care, to create tremendous social good. So, we derive so much more benefit as a society from that $300 million as a single unit than we do doling it out to individuals.”
Donnelly supports the measure to raise taxes on mining coming from lawmakers in the Assembly, Assembly Joint Resolution1, where 25% of the proceeds are earmarked for education, health care services and economic assistance for Nevadans. If passed, both of the proposals would be up for approval during the 2021 session, in which lawmakers would decide which measure to put forward, according to the Las Vegas Review Journal.
Donnelly also warned that sending money directly from mines to wallets can cause other problems, too.
Alaska currently has a similar program in place. At least 25% of mineral royalties from mines, oil and gas reserves are sent to Alaska’s Permanent Fund Dividend (PFD), an early pioneer of the universal basic income model. Checks from the funds are sent to Alaska residents every September, ranging from $1,000 to $2,000, but there have been unintended consequences. The funding has significantly reduced poverty, and many Alaskans rely on the income, but politicians run, and win, campaigns on the promise to raise the PDF.
“The concern here is that, if the mining industry has the ability to put money in people’s pockets, people are going to be far less likely to support regulation of that industry,” Donnelly told This Is Reno. “Mining is currently poisoning our groundwater, and it’s ruining our wildlife habitat and is dirtying our air. So, we need more environmental regulation on mining, not less, and we feel that if the mining industry has enhanced political power because everyone’s thanking them when they get a couple-hundred-dollar check every year, that it will be much more difficult to regulate that industry.”
The remainder of public commenters went on to voice opposition as well, but people stated the tax increase would hurt rural Nevada and drive some mines out of business, including Paul Enos, the CEO of the Nevada Trucking Association.
“Not only are we going to affect the miners, it’s going to have a detrimental impact on all of those other businesses that rely on the mine as their customer, including my trucking company, that moves a tremendous amount of ore from the mines, to the mills, to the processing facilities,” Enos said. “This would have a detrimental impact on them, on the motels, on the hotels, on the restaurants, on all the retail businesses in rural Nevada. This is really going to be the death knell of a lot of those communities.”
James Wadhams, an attorney in Las Vegas, called on behalf of Newmont Mining Company, which has been mining gold from the state for over 50 years.
“As we are coming out of a crisis, in which the economy has suffered greatly because of the major shutdown of the primary industry in this state, it suggests that perhaps as we look for revenue sources, we should look at diversifying rather than being dependent upon single sources. The difficulty presented by this particular bill is it takes the one source that may be somewhat counter cyclical, and may put it out of business,” Wadhams said.
Lawmakers weigh in
Republican Senator Ben Kieckhefer made a very short comment on the bill.
“This is just really, really bad tax policy,” Kieckhefer said.
Republican Senator Keith Pickard voiced his opposition, stating that the bill felt rushed, especially because it will change the state’s constitution.
“If this thing goes through, at what point do we stop, and say, ‘This is important for us to take the time to do it right, rather than ram it through.’ So, I urge my colleagues to consider how you’re going to affect the real lives of people living in these areas that will be essentially obliterated. Their dreams, their futures will be gone. They’ll have to leave, or they’ll have to submit to a life of poverty, and yet we seem to be so cavalier about it.”
By mid-afternoon, Pickard took to Twitter linking layoffs at a Henderson titanium production company to the Senate vote.
“As if on cue, titanium processor TIMET announces layoffs of nearly 200 people in Henderson. And yet the majority proposes a gross margins tax on mining without so much as a clue about how it will actually affect Nevada since they didn’t invite the experts to the table,” he tweeted.
Pickard was referencing TIMET’s layoff of 192 workers due to lost business during the COVID-19 pandemic, as reported by the Las Vegas Review-Journal.
Democratic Senator Julia Ratti supports the bill and said it is a good idea for the bill to be in circulation because lawmakers will have time to discuss it during the regular session in 2021.
“We’re either going to have to make devastating and meaningful cuts to the basic services that we provide to our constituents: education, health care, outdoors, everything that we do as a state, or we’re going to have to consider raising revenue, and because the constitutional amendment process is a lengthy process, if we don’t act now to get it started, then mining and mining revenue, once again, will not be part of a meaningful conversation to address what is going to be a COVID-19-related significant dip in our revenue that is going to affect the ability of the state to remain fiscally sound. I believe that deeply to my core,” Ratti said.
“I think that the Nevadans are counting on us to be on top of making sure that all options are on the table,” Ratti continued. “There’s some hand-wringing about: does it devastate rural Nevada? I am of, and from, rural Nevada; that is where my roots are. I still have many family members who live in rural Nevada. I have family members who have worked the mines. I would not sit here and take a vote that I believed would devastate rural Nevada.”
Should it pass the Assembly, lawmakers must take SJR1 up again during the regular session in 2021, then voters would have to vote on it during the 2022 general election.