Legislature: 2 victories in Nevada crusade to tax mining

A session-long crusade to squeeze more money out of Nevada's mining industry drew to a close Monday with two modest breakthroughs in state tax policy.

Legislators kick-started a multi-year process to remove constitutional tax privileges for the mining industry, and trimmed down mining's tax breaks - with support from the mines.

"The industry is proud to pay more during this time of need," said Tim Crowley, president of Nevada Mining Association, at a Monday hearing.

Both houses approved a resolution that in the future could repeal constitutional provisions limiting taxes on mines to 5 percent of the net proceeds of minerals.

Lawmakers must also approve the measure, SJR15, in the 2013 legislative session to put the change on the ballot for voters in 2014.

The 5 percent tax cap for mining has been in place since Nevada gained statehood in 1864. Recent efforts to circumvent the cap have fallen flat, including a temporary measure passed in a 2010 special session that adds a fee to mining claims.

A district court last month ruled the fees an unconstitutional tax, creating a hole of nearly $19 million on state balance sheets.

State officials have only collected about $4 million of that sum, but will have to reimburse the claims owners to avoid potential lawsuits.

Mining companies are also giving up some of the generous tax breaks they enjoy in existing state law, a move that will bring the state $24 million in the next two years.

SB493, also passed Monday, removes deductions for marketing, fire insurance, association dues, and severance packages.

In a last-minute compromise, the industry agreed to give up their health care tax deductions for the next two years. Companies already deduct the cost of employee health insurance when they file for the modified business tax, but whether they can deduct those costs from their net proceeds of minerals payment is still unresolved.

An official from Barrick Gold, a Canadian company with mines in Nevada, said the company was persuaded Sunday to give up the health care deduction after hearing Nevada's schools badly needed the revenue.

Mining - and its privileged tax status - have been scapegoats throughout the session, as gold prices have risen and the state's general fund has continued to drop after the recent recession.