CARSON CITY, Nev. (AP) — Nevada lawmakers introduced a proposal late Saturday to impose additional taxes on the mining industry, reviving a historic debate between an industry seeking to protect a favorable tax structure that has been in place for more than a century and a half and reformers who want to increase state spending on health care and education.
Under a deal brokered by lawmakers from both parties, mining lobbyists and the state’s largest teacher’s union, the state will preserve its Net Proceeds on Minerals tax and add a tax on gross revenue that is tiered and will only apply to mines that gross more than $20 million annually.
Tyre Gray, the president of the Nevada Mining Association, said the industry had been negotiating a mining tax deal with the governor's office since January 2020, hoping to keep its members in business and protect jobs and rural economies that revolve around mining.
Gray said he could not explicitly support a tax hike, but said the measure introduced Saturday, which has no sunset clause, “is really meant to be a definitive answer to whether or not mining pays its fair share.”
“There are those who will say that mining has not paid its fair share. This bill will guarantee that that argument is no longer viable,” he said.
He said the industry preferred the current proposal on the table to the three tax proposals introduced last summer, which would have raised $147 million to $607 million in annual revenue.
Battles over how to tax mining in the state have raged since prospectors first struck silver in the 19th century. The state Constitution requires that mining businesses be taxed at less than 5% of what are called net proceeds — profit minus deductions for certain costs.
Mines in the state produced a $8.2 billion-worth of silver, copper and other minerals in 2019 — more in non-fossil fuel minerals than any state.
They collectively paid $61 million in taxes to the state under its Net Proceeds on Minerals structure, which allows mines to claim more deductions and enjoy a lower effective tax rate than many western states that calculate taxes based on royalties or gross proceeds.
Because neither Republicans nor Democrats command the two-thirds supermajority required in Nevada to raise taxes, its passage will require support from lawmakers in both parties. In an impromptu Ways & Means Committee meeting held on the Assembly floor, lawmakers from both parties backed the introduction of the bill. But it still must officially clear both chambers with two-thirds majorities.
In the past, Republicans have argued the mining industry is a key part of rural economies and too much taxation could jeopardize thousands of jobs in both mines and the businesses that cater to employees and their families.
Democratic lawmakers, all from districts in Reno and the Las Vegas area, point to how Nevada ranks compared with other states for per-pupil K-12 education spending ( 44th ) and healthcare spending per capita ( 48th ) and say mines can afford to pay more.
Mining tax reform fell one vote short of two-thirds approval needed to pass through the statehouse last summer. But as a consolation, with simple majorities, Democratic lawmakers decided to take the first step toward advancing mining tax proposals to the 2022 ballot.
Throughout the latter half of the legislative session, mining industry representatives and Democratic Party operatives have both said they prefer reaching a the compromise deal in Carson City rather than risking the uncertainty of a ballot measure — the presence of which could reverberate to other races up and down the ticket.
Democratic leaders will have to convince progressives who had lobbied to impose for last summer's resolution outlining steeper mining taxes, while Republicans weigh whether to back the industry-supported compromise and risk appearing pro-tax or chance sending a measure to the ballot next year that could lead to more taxes.
Though Republicans are in the minority in both the state Senate and Assembly, they are hoping the two-thirds requirement for tax proposals will provide them power them to extract concessions from Democrats.
In exchange for their support, Republican asks have primarily centered on returning funding to education initiatives like Opportunity Scholarships, which the then-Republican majority created in 2015 to enable low- and middle-income families to pay private school tuition. Two years-worth of funding for the program is included in the bill.
Sam Metz is a corps member for the Associated Press/Report for America Statehouse News Initiative. Report for America is a nonprofit national service program that places journalists in local newsrooms to report on undercovered issues.