GOP blocks Democrats’ play to raise mining taxes in late-night grandstanding session

But could there be more to it?

By: - July 17, 2020 5:35 am
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Signs placed in the grass by Americans for Prosperity, a libertarian/conservative political advocacy group funded by brothers, David and Charles Koch in front of the Legislature on the ninth day of the 31st Special Session in Carson City on Thursday, July 16, 2020. (David Calvert/Nevada Independent)

In an outcome that surprised few, a whirlwind push by Nevada Democrats to raise taxes on the mining industry was blocked by Senate Republicans early Friday.

Assembly Democrats on Thursday introduced Assembly Bill 4, which would have set a 60 percent cap on the deductions available to mining companies. When combined with Senate Bill 3, which the Legislature passed Wednesday, the changes to mining would have brought in an additional $100 million to the state coffers and helped stave off some of the half-billion worth of budget cuts currently being considered by the Legislature.

The bill easily passed the Assembly, where Democrats have a clear supermajority. It fell one vote shy in the Senate, where Democrats are one senator shy of a supermajority.

Proponents of raising mining taxes had hoped one Republican might break party lines.

None of the eight did.

Instead, the Assembly and Senate hearings were a marathon of partisan talking points. From the left came calls for a $7.8 billion industry to “pay its fair share” and from the right concerns that an additional tax burden could lead to business closures and layoffs that would do more harm to the state already struggling with a high unemployment rate.

“I’d be a strong yes if this were going to education but it is not,” said state Sen. Keith Pickard, a teacher-turned-lawyer who is often characterized as the reason the chamber has no supermajority. With the endorsement of the Clark County Education Association — a teacher’s union that is pushing the state to raise revenue for education — Pickard edged out his Democratic competitor by just 24 votes during the 2019 election.

Added Pickard, “No one has said what is going to be done with this money.”

Sen. Scott Hammond, also a former teacher, explained his vote similarly. He also took issue with the late introduction and processing of the bill, which was announced around late afternoon Thursday and heard during Assembly and Senate hearings that stretched into the wee hours of Friday.

“I’m not about to start taxing or changing tax policy in the middle of the night,” said Hammond. “There is a time to do this.”

Senate Majority Leader Nicole Cannizzaro shot back, accusing Republicans of always making excuses for why they cannot support much-needed revenue.

“At the end of last session there was a bill earmarked for education specifically,” she said, referring to a 2019 session commerce tax bill that no Republicans backed, “but that point in time it was, ‘We didn’t need money. We have enough.’ Here we are talking about cutting education. There is no easy answer. There is not $1.2 billion hiding in the budget.”

The debate continues

Why Nevada Democrats brought forth a bill with little shot of passing is debatable but some believe it’s setting the stage for a battle over larger, structural changes that have the potential to bring far more revenue to state coffers than a bill like AB 4 would.

At worst, the failed vote solidifies the renewed public interest in the issue.

The Nevada Constitution carves out special standards for the mining industry, most important among them is that companies must be taxed on “net proceeds” rather than gross revenue, and that their tax rate is capped at 5 percent.

This results in mining companies routinely deducting huge percentages of their revenue. In 2019, the mining industry brought $7.7 billion in gross revenue down to $2.3 billion through the use of deductions.

Once the total taxable “net proceeds” is determined, the numbers are run through a formula that takes into account property taxes and county taxes to determine the tax rate, which is between 2 and 5 percent.

The end result: Nearly half of Nevada’s gold mines paid nothing to the state general fund in 2019.

The 2011 and 2013 Nevada Legislatures passed with bipartisan support a joint resolution to remove the 5 percent tax cap on net proceeds of minerals from the constitution. That pushed it to voters in 2014, where it was narrowly defeated by 3,209 votes.

Cannizzaro gave a noncommittal answer to the question of whether or not the Nevada Democrats planned on using the momentum of the introduction of AB 4 to further larger reforms. Advocates are renewing the push for a constitutional amendment.

The legislator-driven process for approving a constitutional amendment involves passing with a simple majority a joint resolution in two consecutive sessions and then passing a vote of the people during a general election. Typically, that means five years, since the legislature meets only on odd-numbered years.

However, the process can be sped up with the help of a special session.

However, before that can be addressed, lawmakers must resolve the issue of the $1.2 billion budget shortfall. Both parties on Thursday released budget plans that would spare $100 million in cuts currently detailed in Assembly Bill 3 and Assembly Bill 1, which cuts the state budget by half a billion dollars. The Legislature is adjourned until Saturday.

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April Corbin Girnus
April Corbin Girnus

April Corbin Girnus is an award-winning journalist with a decade of media experience. She has been a beat writer at Las Vegas Sun, a staff writer at LEO Weekly, web editor of Las Vegas Weekly and a blogger documenting North American bike share systems’ efforts to increase ridership in underserved communities. An occasional adjunct journalism professor, April steadfastly rejects the notion that journalism is a worthless major. Amid the Great Recession, she earned a B.A. in journalism from the University of Nevada Las Vegas, where she served as editor-in-chief of the student newspaper. She later earned an M.A. in media studies and a graduate certificate in media management from The New School for Public Engagement. A stickler about municipal boundary lines, April enjoys teaching people about unincorporated Clark County. She grew up in Sunrise Manor and currently resides in Paradise with her husband, two children and two mutts.