Mining bets on the don’t pass line

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They want you to believe they always put the interests of Nevadans first. They also want you to believe they’ll pay less in taxes if Question 2 (SJR 15) is approved by voters in November, removing mining’s constitutional protection, a 5 percent cap on the net proceeds of minerals tax.

Most observers doubted SJR 15 would ever make it to the ballot, since it required two approvals by the Legislature. They knew that many legislators are closely aligned with the mining industry thanks to heaps of cash distributed to campaign and caucus accounts and the annual ’party-hearty’ September bash at Lake Tahoe where legislators are treated to high-end hotels, meals and entertainment while they mingle with the mining brass.

The odds were certainly not in its favor.

The resolution was initiated by the Senate Revenue Committee back in 2011. (Full disclosure: I was the chair of that committee.) After extensive hearings where the industry’s manipulation of regulations allowing huge deductions came to light, resulting in many mines paying zero in net proceeds, another Revenue Committee member, Senate Majority Leader (now Congressman) Steven Horsford, was incensed.

By the way, this “zero tax” trend continues today as political commentator Hugh Jackson recently pointed out. Of the 32 gold-producing mines in Nevada in 2013, 11 paid zero in mining taxes despite generating $525.3 million worth of gold, thanks to Nevada’s overly generous regulatory scheme.

Mining executives foresaw inevitable passage of SJR 15 in the Senate, and attempted to kill it quietly in the Assembly with no vote, no fingerprints. But Horsford played hardball in the waning hours of the session to ensure a vote was taken. The measure passed easily and mining lobbyists began plans to destroy it in the next session.

In 2013, the resolution was initially panned by Senate Democrats. When pressed by constituents, they mumbled industry arguments that mining would actually pay less in taxes if the constitutional protection were eliminated, despite clear testimony and an opinion from the Legislative Counsel Bureau that said otherwise. Removing the provision, enjoyed by no other industry, would simply give the Legislature the ability to tax mining differently, perhaps through a severance tax as is done in other states. Or legislators could choose to leave the tax the same.

It was Republican Senate Minority Leader Michael Roberson who blew up the industry’s plan to kill the bill by ignoring it. Roberson, no fan of big mining after living in Kansas and seeing first-hand the devastating impact of a bust cycle, proposed a higher tax on mining once SJR 15 passed, as an alternative to the teachers’ plan for a general corporate tax.

SJR 15 eventually passed both houses with strong support from the Democratic base, sending it to your ballot this November as Question 2.

When the actual language translating SJR 15 into Question 2 was approved by the Legislative Commission last month, legislators debated the arguments “for” and “against” to explain the measure to voters.

The most intensive debate revolved around a sentence referencing the “scarred landscape” left behind when a mining company leaves. Assemblyman Ira Hansen, R-Sparks, insisted the sentence be changed, saying it didn’t reflect reclamation efforts. Various photos posted on Twitter quickly proved otherwise and the sentence was not altered.

Unlike big business opponents to the Education Initiative, big mining has yet to put up a major media campaign against Question 2, knowing that even if passed by the voters, it will be up to legislators to determine the appropriate level of taxation.

Mining companies anticipate better luck protecting their profits in the Legislature where one-third of the members can block any tax bill. They’re going to gamble on Nevada’s history and its legislators’ fondness for campaign cash and ritzy parties instead.

It’s probably a good bet.