Mining for taxes

The 2011 Legislature has already had a session’s worth of eyeball-rolling testimony — and we’re only five weeks into it. But most of those moments were rooted in budget hyperbole and partisanship.

Thursday’s jaw-dropping testimony from state Department of Taxation Director Dino DiCianno was different. He was matter-of-fact serious when he told the Senate Revenue Committee that for the past two years his staff has been unable to audit the mining industry because no one has expertise in mining tax law, and he had never told Gov. Brian Sandoval about the problem.

It was a stunning admission under any circumstance. Considering revenues are far below what majority Democrats want to spend on state services, and the profitable mining industry’s emergence as a top target for tax increases, Mr. DiCianno’s statement had lawmakers shaking their heads.

“I am going to have to start taking blood-pressure medicine,” Senate Majority Leader Steven Horsford, D-Las Vegas, said in response to Mr. DiCianno. “We have a huge increase in net proceeds (taxes), and you don’t have anyone with the skills set to look at these companies at a time we have an enormous challenge with our (revenue) shortfall.”

Few people outside of the far-left agitators at the Progressive Leadership Alliance of Nevada have suggested the mining industry has been cheating the state out of taxes owed. Given the growing appetite to sock it to out-of-state companies benefiting greatly from sky-high gold prices, it would be politically insane for miners to try to short the government. In fact, last year the industry made an advance tax payment to prevent further state spending cuts.

Mr. DiCianno’s comment had nothing to do with the practices of one the state’s biggest industries. Rather, it was an indictment of the bureaucracy and proof of an immense failure of leadership.

How does a department head allow such a void to exist within his office for two years? How does he not take steps to train existing staff, or notify the governor’s office about a critical staffing need?

Moreover, if the net proceeds tax — the industry-specific levy on the mining industry — is so complicated nobody at the Department of Taxation can understand it, why don’t lawmakers take steps to simplify it?

One positive development from Thursday’s drama: Mr. DiCianno retired from his position Friday, less than 24 hours after making headlines statewide.

Gov. Sandoval’s office promoted Deputy Taxation Director Chris Nielsen into the position, where he will develop a strategy to resume audits of mining companies, with the help of State Internal Audit Division staff. And Sen. Horsford has requested emergency legislation for a performance audit on the department’s revenue collection functions.

Good.