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Nevada to mining: never mind

<p>Hugh Jackson</p>

Hugh Jackson

The Legislature doesn’t start its every-other-year session until next month, but the mining industry has already won.

Mining’s tiny state-tax rate is capped in the state constitution. The last time legislators met, in 2011, they passed a resolution to get it out of there. The resolution must pass the Legislature again this year, and be approved by voters in 2014. Then the next time legislators slap together one of their duct-tape-and-bailing-wire contraptions that masquerade as Nevada tax policy — raising your sales tax again, tinkering with the state payroll tax, jacking gaming taxes by a tenth of a percentage point, whatever — the world’s largest and most profitable gold mining companies can be part of the mix. For a change.

The resolution to take mining out of the constitution was an unprecedented act of lawmaker resistance to the industry’s wishes, a truly admirable achievement from a body that typically warrants no admiration.

But now legislators are poised to scuttle their rare accomplishment by failing to pass the resolution the required second time. And voters will be deprived the chance to decide whether mining should continue to be the only industry in Nevada protected against taxation in the state constitution.

One reason lawmakers are flip-flopping is their love of sumptuous dinners and fine wines enjoyed in the company of industry executives accustomed to flattering out-of-their-depth local officials in economically and politically backward jurisdictions — the Dominican Republic, Ghana, Nevada, etc. The lovemaking is reinforced by constant attentive stroking from the corporations’ Nevada lobbying underlings eager and willing to pretend they like and respect the Nevada lawmakers to whom they’ve been assigned.

And legislators who resist the industry’s charms risk an election campaign against an opponent flush with mining contributions as well as third-party and independent attacks funded by mining.

But legislators can’t say, “I’m been seduced” or “I’m afraid of mining.” Fortunately for them, the industry is always keen to provide lawmakers with publicly palatable rationalizations that can be trotted out to justify why legislators are bending over for mining, you know, this time.

In the case of the resolution to take the mining’s Lilliputian tax rate out of the constitution, the industry has instructed legislators to say that if the tax isn’t in the constitution, then gosh, there wouldn’t be any mining tax at all! Alert news consumers may have heard several legislators sharing this profound policy revelation in recent weeks.

While it is true Nevada’s teensy-weensy tax rate is enshrined in the state constitution, it is also enshrined in state statutes — where it would remain even if mining tax language is stripped from the constitution.

Don’t take my word for it. Below is an exchange between former state Sen. Sheila Leslie (who was taken out by mining industry money in the 2012 election, btw) and Brenda Erdoes, a longtime attorney with the Nevada Legislative Counsel Bureau. The exchange is taken from the minutes of a 2011 Senate Revenue Committee hearing on the resolution to remove mining’s itsy-bitsy tax rate from the constitution. Emphases in talics are mine.

Edroes: “It leaves the Legislature free to tax mines and mining proceeds in the manner as currently taxed. If the amendment is passed by the (2011) Nevada Legislature and the 2013 session, the provision would be voted on by the people at the next general election or a special election. If approved by the voters, the constitutional change would be effective upon canvass, which is the third week in November after the general election. The taxes on mining would remain the same until the Legislature made a change to chapter 362 of Nevada Revised Statutes (NRS) to change the manner in which the taxation is applied to mining.”

Leslie: “If this were passed this session, nothing would change in terms of how taxes are paid by the mining industry.”

Erdoes: “That is correct.”

Leslie: “If it were passed again the second time in 2013, nothing would change.”

Erodes: “That is correct.”

Leslie: “If approved by the voters, nothing would change unless the Legislature changed the way mining was taxed.”

Erdoes: “That is correct.”

Many and maybe most legislators don’t know that the tax rate is not just in the constitution, but in the statute. Since the only information many and maybe most legislators get about mining tax law comes from mining industry lobbyists, legislative ignorance about the existence of the tax rate in the statute proves what legislators should already know — there’s another side to the story, and legislators won’t hear it from mining lobbyists.

I also testified at that 2011 hearing, and showed several charts, including the one below comparing the mineral industry’s tax burden in Nevada to another mineral-rich state, Wyoming. Instead of asking if Nevada would lose money were the mining tax stripped from the constitution — for the record, the answer is no — legislators should ask why the industry gets away with humiliating the state and playing Nevadans for chumps by paying such a pittance in taxes. For the record, the answer is because the mining tax is in the state constitution.

HUGH JACKSON blogs at The Las Vegas Gleaner ( and co-hosts The Agenda on KSNV Channel 3.