Horsford calls for emergency rules to curb mining tax deductions
CARSON CITY — State Senate Majority Leader Steven Horsford on Monday called for the Nevada Tax Commission to issue emergency regulations that would narrow the deductions mining companies are allowed to take when calculating their tax bills.
Horsford, D-Las Vegas, made the suggestion during an emergency meeting of the commission called by Republican Gov. Brian Sandoval, who oversees the commission.
Sandoval called the meeting in response to the revelation that it has been more than two years since the tax department employed auditors specially trained to scrutinize complicated mining tax documents.
Neither the governor nor legislators have accused mining companies of not paying all due taxes, but Democrats have said they don’t pay enough taxes.
In Nevada, mining companies pay in state taxes no more than 5 percent of "net proceeds," an amount that covers the value of minerals they take from the ground minus deductions for the cost of extraction, transportation, processing and other expenses.
Mining industry critics point to the high price of gold and a difference of more than $4 billion between the gross and net proceeds in the latest reporting period as evidence the system needs reform.
"This isn’t about the audits, this is about the deductions," said Jan Gilbert, a lobbyist for the Progressive Leadership Alliance of Nevada, an organization that represents unions and other groups and has long called for mine operators to pay more taxes. "We feel they should be contributing more to the state of Nevada."
Although the meeting was called to give the commission a chance to detail how it would respond to Sandoval’s call for mining company audits, Horsford used it as a platform to announce his vision for reform.
"The problem is we don’t have money to fund education and vital services in part because there is lax oversight," Horsford said. "All of that needs to be corrected, and it needs to get corrected now, not months from now."
Horsford delivered a petition to the commission calling for it to change several regulations he said result in mining company tax deductions going beyond what is allowed by statute and the state constitution.
The petitions called for changes that would ensure salary deductions are limited to people working on Nevada mines as opposed to workers in mining company headquarters, employee housing deductions are restricted to on-site quarters for mine workers, and what is considered a "mining operation" is more clearly defined.
Horsford did not have an estimate of how much money such changes might generate in tax proceeds.
In addition to hearing Horsford’s call for deduction reform, the commission listened to a presentation of how mining companies are taxed and about Sandoval’s proposal to revive auditing procedures that lapsed under former Gov. Jim Gibbons.
Sandoval’s short-term directives issued on Monday called for the commission to notify all mining operators about upcoming field audits.
The governor also hired former Gaming Control Board Chairman Dennis Neilander to lead a team of gaming control auditors to oversee criteria for mining company audits and to start field audits by May.
The contract, which is under $10,000, will pay for Neilander’s services for 100 days, according to the governor’s chief of staff, Heidi Gansert.
In the long term, Sandoval wants to ensure the state completes 20 mining company audits annually and reviews existing regulations for possible changes.
Contact reporter Benjamin Spillman at bspillman@reviewjournal.com or 702-477-3861.