11th Hour mining taxation bill is bad lawmaking

Assembly Bill 495 - backroom deal quickly approved with minimal debate or public scrutiny

Kinross Gold operates the Round Mountain mine in Nye County, Nevada. The mine grossed $502,191,697.42 in 2019 and deducted $374,040,732.00 from the gross proceeds to pay $6,407,548.27 in net proceeds tax. $4,472,468.69 went to Nye County. $1,935,079.58 went to the State’s General Fund. Some Nevada mines deduct enough in operating expenses to pay no tax – photo: Uncle Kick-Kick, licensed under CC BY-SA 2.0

Opinion

Does Nevada’s ancient system of mining taxation need to be updated? Yes. Do mines operating in Nevada need to pay more tax? Yes. Should that money be used for better supporting the state’s famously underfunded public schools? Yes. Should a largely unvetted, 39-page bill released on day 118 of the 120-day 2021 legislative session be the guiding document for revising mining taxation in Nevada? No.

Whether you agree or disagree with the proposed policy, the bill should never have been introduced so late in the session, unless the plan was to ramrod it through the process, which succeeded. 

AB495 did not come together overnight, so it’s clear select lawmakers and industry representatives have been hammering out this deal for a while, behind closed doors. Who was at the table? Speaker of the Assembly Jason Frierson, the Clark County Education Association, and the Nevada Mining Association?

Groups who have long advocated for increased mining taxes seemed unaware of the new bill. As the session has drawn to a close, these groups and other long-standing stakeholders began to publicly grumble because the mining taxation resolutions AJR1, AJR2, and SJR1 had all stalled.

During the pandemic, Governor Steve Sisolak called two special sessions of the Legislature to contend with alarming reductions in tax revenue. The heart of Nevada’s economy was closed to prevent the spread of Covid-19, and lawmakers were presented with dramatic graphs of plummeting tax revenue and unprecedented levels of unemployment. 

Mining was deemed an essential business and continued to operate. The price of gold increased as people hoarded precious metals, and gold continues to trade around $2,000 an ounce, $58,000 a kilo. The mining industry’s continued profitability was not lost on those who have long wanted to see mining taxation reform, and AJR1, AJR2, and SJR1 were born, in an emergency.

Should one of these resolutions have ultimately gotten to the statewide ballot as written and voters approved it, mining companies would have paid roughly five times more tax, and rural counties like Humboldt, Elko, and Pershing would have lost roughly 20 percent of their operating budgets – money that currently comes from mining tax.

Again, do mines need to pay more state tax? Yes, but when determining exactly how and how much, the mining companies must be involved in the discussion, and they were not involved in the authorship of AJR1 or the other resolutions. Can mines pay five times more tax and remain profitable? Only the mines can say. 

And what does ending mining tax payments mean for rural county budgets where mines are located? There is poverty, severe poverty and other problems in rural Nevada, and over-extended county governments provide essential services to vast, remote areas of the state.

Yes, it appears that AB495 does increase tax revenue from mining and earmark it for public education. And yes, the bill prevents rural counties from losing all their mining revenue, but the legislation is a nearly impenetrable tangle of words and numbers and education funding earmarks that warrants much greater public scrutiny than a single hearing on day 118 of the 120 day session at 5:00 p.m. on Sunday of Memorial Day weekend can provide.

Just hours after AB495 was released, in an online press conference, the Progressive Leadership Alliance of Nevada (PLAN) expressed its support for the bill, as did the Toiyabe Chapter of the Sierra Club. But the details of AB495 are not close to what was in AJR1, PLAN’s preferred resolution.

The fact that the Nevada Mining Association was a copresenter of the bill along with Speaker of the Assembly Jason Frierson shows mining companies participated in the writing of AB495, which is good news for sustainable policy, but the activist community that has kept this issue front and center for decades had not seen the bill until yesterday evening. The general public is totally in the dark.

Those who want to see mines pay more tax are onboard though. AB495 is grudging progress in the fight for higher mining taxes and more money for education, but several who offered testimony in support of the bill lamented the lack of opportunity to study and fully understand it.

Reporters need time to study the legislation and hear from sources. Sources need to think it through. Again, the public is in the dark, and a major revision in mining taxation in Nevada has been passed within 48 hours of introduction with very little public scrutiny.

The stakeholders on this issue are diverse and all deserve better, to be part of a robust public process. Citizens and their elected representatives, rural and urban, need to have an opportunity to fully consider how to tax mining and what to do with the extra money, before it becomes law. 

When introducing the bill, Speaker Frierson said that AB495 is just a starting point, but agreeing to something hammered out in a back room with the promise of more inclusive discussion later amounts to lip service today. 

We support mines paying more state tax in service to public education, but the process by which AB495 was written and rammed through the Legislative process is a disservice to the State and the Legislature as an institution.

Because the bill will levy a tax, a 2/3rds supermajority was needed for passage, and that means some Republicans had to support the measure as well. The bill passed the Assembly by the minimum number needed, 28 to 14. The Senate voted 16 to 5 in favor.

Governor Sisolak promptly issued a statement regarding the bill he will sign into law. He tried to pass off the process as inclusive, apparently a suitable replacement for the legislative or electoral processes.

“Over the last year, hard decisions had to be made and Nevadans faced unprecedented hardship due to the COVID-19 pandemic, but through it all, I remained committed to the promise that we would emerge from this crisis and build a stronger, more resilient Nevada,” Gov. Steve Sisolak said. “Today’s passage of Assembly Bill 495 is one of the most significant steps our State could take on our road to recovery — one that will provide a meaningful and dedicated investment for every educator, every student, and every family throughout Nevada. Today’s historic vote was only made possible thanks to the partnership of education leaders, business and industry, a bipartisan group of legislators, stakeholders and community members. Our comeback will be strengthened by the continued collaboration and efforts of all Nevadans committed to working together for our families and a brighter future.”