Mining industry seeks deal to keep deductions

CARSON CITY — To avoid losing some tax deductions, the mining industry worked Saturday to negotiate a deal with lawmakers to make a one-time payment of as much as $24 million to the state.

Such an agreement, if approved, would circumvent a major effort this session to permanently cut the number of tax deductions the industry enjoys.

Assembly Speaker John Oceguera, D-Las Vegas, said he would have no problem letting the industry decide how it delivers the $24 million over two years.

But the move by mining lobbyists might receive a more hostile reception in the state Senate, where Majority Leader Steven Horsford, D-Las Vegas, and Senate Revenue Committee Chairwoman Sheila Leslie, D-Reno, have been leading the charge to reduce deductions.

“They have to convince people it is a good deal,” Oceguera said. Asked if he was convinced, Oceguera indicated yes, saying, “If they are going to write a check for $12 million (a year) and have it here Monday.”

Leslie said she’s opposed to the idea. And she criticized the industry for trying to block efforts to limit deductions.

“Instead of spending so much time trying to find loopholes, mining ought to help us find solutions,” Leslie said. “I’m very disappointed.”

Leslie noted the mining industry might be trying to avoid paying local governments more money, too. That’s because counties where mining is taxed get $1 for every $1 the state collects. So a $24 million state tax hit means mining would pay an additional $24 million to counties, too.

Senate Bill 493 would limit the deductions mining companies are allowed to claim while calculating their net proceeds of mineral tax payments.

The mining companies oppose changes that would prevent them from deducting expenses for sales tax and health insurance they provide employees.

Instead of getting rid of those deductions and perhaps others, mining lobbyists offered to make up the difference in cash by letting the state keep refunds they’re owed for mining claims fees paid under a 2010 law that was recently ruled unconstitutional.

“We want to overpay now to cover the removal of those two deductions,” said Nevada Mining Association President Tim Crowley.

Assembly Minority Leader Pete Goicoechea, R-Eureka, represents a mining district.

He suggested there might be a legal problem with eliminating tax deductions that the industry has had for decades, such as for health care.

“We could find ourselves with a lawsuit,” Goicoechea said, adding that eliminating the sales tax deduction could open the state to charges of “double taxation.”

Jan Gilbert, a lobbyist for the Progressive Leadership Alliance of Nevada, was outraged by the last-minute maneuvering.

She said the industry has long had too much power and influence with lawmakers and has often dictated how it would pay revenues to the state. Eliminating deductions, however, would be a permanent way to cut tax breaks for the industry, she said.

“If we don’t change the deductions permanently, we’re going to have this problem every single session,” Gilbert said. “We’re never going to change this pattern of irresponsibility.”

Contact reporter Laura Myers at
lmyers@reviewjournal.com.