Bill sponsor says little chance to boost mining tax increase this year

CARSON CITY -- Frustrated Senate Majority Leader Steven Horsford conceded Tuesday that there is little legislators can do to grab more taxes from the mining industry without amending the state constitution.

"For people who tell us why we don't just do it, this is why," said Horsford, D-Las Vegas, during a Senate Revenue Committee hearing on Senate Joint Resolution 15. "For the next five or six years we are limited by the constitutional provision. It binds the hands of the Legislature to make adjustments."

Gold sold for a record $1,457.40 per ounce Tuesday, and Horsford and Senate Revenue Chairwoman Sheila Leslie, D-Reno, said their constituents ask why the state cannot share more in this largesse.

The resolution calls for a public vote to amend the state constitution and allow the Legislature to determine how mining should be taxed. SJR15 must be approved by the Legislature this year and again in 2013. Voters in 2014 would decide whether to amend the constitution. If they approve, legislators could act one year later.

Under the state constitution, approved in 1864, mining companies pay taxes based on their "net" proceeds. Deductions for extraction fees, labor costs and numerous other items are made before the 5 percent tax is calculated. The state will receive about $84 million in net proceeds taxes this year, with a similar amount going to rural counties where mines are located.

No action was taken on the resolution. While the governor opposes tax increases, he doesn't have to sign off on resolutions calling for constitutional amendments.

During the hearing, Nevada Mining Association President Tim Crowley said his industry wants fair treatment and already pays sales, payroll and all other state taxes on businesses. While Leslie expressed doubt, Crowley said the increase in net proceed taxes paid by the industry parallel gold price increases.

The hearing began with former state Archivist Guy Rocha telling how the net proceeds tax was added to the constitution by voters during a mining recession 147 years ago.

"Mining was been a sacred cow since the beginning of the state," added Jim Hulse, an author and retired college professor. "It is time for voters to take another look at it."

Senate Minority Leader Mike McGinness, R-Fallon, noted from reading Rocha's report that William Steward, the lawyer for leading mining companies when the net proceeds requirement was approved, earned a $200,000 annual salary -- a vast fortune in that time.

"Somewhat the same politics are going on today as back then," McGinness told Crowley. "That time your side won their side of the issue."

Steward became a U.S. senator from Nevada. Steward Street, on the east side of the Legislative Building, is named in his honor.

Contact Review-Journal Capital Bureau chief Ed Vogel at evogel@reviewjournal.com or 775-687-3900.