Mining tax measures stall

educators lobby for ballot issue while industry digs for a deal

PHOTO/EMPOWER NEVADA TEACHERS: Teachers demonstrated outside the Nevada Legislature building on April 26.

Teachers are pushing hard to let Nevada voters decide whether the state’s mining corporations should pay more in taxes to support education, but proposals for ballot issues are on hold as the industry maneuvers to cut a more favorable deal with lawmakers.

With about three weeks left in the legislative session, three mining tax reform measures remain stalled in committees. The joint resolutions cleared a special session last summer, but must pass a second vote in order for one or more to be placed on the ballot next year.

“Huge, multinational mining corporations have taken advantage of Nevada’s government handouts and tax loopholes, resulting in paying crumbs in taxes and while our education system suffers,” said Hector Fong, spokesman for the Progressive Leadership Alliance of Nevada. “If mining corporations doing business in our state paid what they owe, we could provide our kids with a world-class education and the opportunities that come with it.”

The Nevada Mining Association says the industry already has “the highest tax burden in the state” and that it’s unfair to target mining with a big tax increase. The industry’s position is reported in a Reno News & Review sidebar to this story, based on an interview with Tyre Gray, mining association president.

The ‘first to be cut’

Some teachers, meanwhile, are frustrated that the same politicians who approved the ballot issues in August are now balking at getting them to the voters. In April, about 20 educators held a rally in Carson City in support of AJR-1, which would earmark 25% of the minerals tax revenue for health care and education.

“Every time that there is a budget crisis, education is the first to be cut,” said Selena La Rue Hatch, a teacher at North Valleys High School, who took part in the rally April 26. “We are already pretty much last in the nation for funding and last for class sizes. (Lawmakers) cut education funding and cut again, without even asking our mining corporations or any of our other most-wealthy corporations to chip in.”

Mining, Nevada’s original industry, has been enshrined in the state’s constitution since 1864. The Silver State’s mining tax is now capped at 5% of a company’s net proceeds, a system that allows the firms to take advantage of so many deductions that some firms pay no taxes at all.

Some mines paid no minerals tax

In 2019, for example, the mining companies that operate in Nevada reported nearly $8 billion in gross revenue, but deducted about $5 billion in allowable expenses. That year, 13 gold and silver mines paid no taxes, according to state reports, and the state collected $122 million in taxes from the remaining firms. Under the 7.75% rate plan, $541 million would have flowed into the state’s coffers in 2019, more than four times the amount brought under the 5% cap.

The teachers’ union supports AJR-1, a measure that members said is long overdue.

PHOTO/EMPOWER NEVADA TEACHERS

Alex Marks, communications director for the Nevada State Education Association, said teachers have been pushing for lawmakers to pass AJR-1, but “unfortunately, it seems they don’t really have an appetite for a ballot initiative and they’d rather work out something more immediate.” The union isn’t opposed to an alternative, he said, “as long as it’s comparable to the amount of money that we’re looking at (in AJR-1),” which is about $488 million a year.

“That’s a good start for an industry that’s been given sweetheart deals since Nevada’s beginning,” Marks said. “It’s definitely enough to move the needle on the chronic underfunding. There are provisions in the resolution that would dedicate 25% of the revenue to health care and education.”

‘Let the voters decide’

He noted that in Nevada, a two-thirds vote of the Legislature is required for passing tax increases, a high bar for lawmakers afraid of a backlash from voters. “So from our perspective, the best thing to do is to put AJR-1 on the ballot and let the voters decide,” he said. Marks speculated that both mining industry lobbyists and lawmakers assume Nevadans would approve the measure.

“I think that’s why they are apprehensive about putting AJR-1 on the ballot,” he said. “They know that for the next 18 months groups like NSEA are going to get their political activity going and will be rallying around that (ballot initiative)… I don’t think they want a tax increase on the ballot during a midterm (election) year.”

Instead, Marks said, some lawmakers would rather allow mining to come up with its own proposals. “Sometimes what mining wants isn’t what’s best for the state. This is a way to modernize Nevada’s mining tax by removing the billions of dollars that they get in deductions for their international mining corporations. They take Nevada for granted and then they leave. This is the only proposal that directly addresses the budget cuts in education and health care,” he said.

CHART SOURCE/LEGISLATIVE COUNSEL BUREAU: Lawmakers since the 2012-2013 session have whittled away at education’s share of the state’s general fund. According to national metrics, Nevada ranks 48th in per-pupil funding, 50th in class size, 50th in national funding report, 47th in teacher turnover rate, 48th in funding for mental health services, bottom quartile in counselor-student ratio, and child phycologist-student ratio.

Last in the nation

Brian Rippert, NSEA president, said the increase in education funding would eventually help the state get to the level of “adequate” in comparison with school systems in other states.

“We are 48th in the nation in per-student funding,” he said. “I don’t think any of our citizens believe we are the 48th worst state.” The two-thirds requirement for passing tax increases, he said, is “a tyranny of the minority” that has prevented Nevada from making progress in improving its schools.

“We can’t have a legitimate debate when just a small number (of lawmakers) can take their ball and go home,” Rippert said. “Get it to the ballot and let the people decide instead of allowing a few people to hold up an idea. AJR-1 has a great shot a year from November, but the mining industry is not willing to let the voters decide.”

Hatch, who has been a teacher for 10 years, said reducing class sizes is among the state’s immediate needs. Mining, she said, must share more of the burden to fix the state’s broken system.

PHOTO/NEVADA STATE EDUCATION ASSOCIATION: Teachers rally in support of AJR-1 at the Nevada Legislature building April 26.

Playing ‘accounting games’

“We just want to see everyone sharing in the sacrifice,” Hatch said. “We see mining corporations posting record profits but not sharing those with the state that made those profits possible. That must change… What’s the mining industry’s fair share? A heck of a lot more than they are paying now.”

With the 5% rate cap that’s now in place, she said, the industry is able to whittle down their revenues to the point where its liability is drastically reduced or gets down to zero. With AJR-1 in place, she said, the minerals companies “can’t play those accounting games to get around paying the taxes that they should be paying.”

Hatch said the negotiations between mining lobbyists and lawmakers spotlight the industry’s “sweetheart” status in the Silver State. “The talks are going on behind the scenes and we’re not at the table.” She noted that voting rights and safeguarding democracy has been a focus of the current session.

“But if you trust in democracy, then put AJR-1 on the ballot and let Nevadans have their say. We don’t get to go to Legislature and have a special deal made for us. Let the people decide and don’t make backroom deals.”

Selena La Rue Hatch, a teacher at North Valleys High School.

 

Overcrowded classrooms

Hatch noted that because the state is getting an infusion of federal funds to help it recover from the effects of the pandemic, some lawmakers may feel more secure about the state budget. That’s a temporary fix, she said, and when the money runs out in two years Nevada’s education system will still be broken.

 “The federal money is a Band-Aid and after two years there’s a fiscal cliff,” she said. “We’ve got two years of breathing room to take action to prevent us from going off that cliff. I don’t think people understand how dire it is.”

This fall, Hatch will be teaching 40 or more students in each of her geography and history classes. That translates into her being able to spend about six minutes of one-on-one time per student, per week. The overcrowding has a “severe effect on the kids and the quality of education we can deliver,” she said.

Hatch and the union leaders said they will continue to push for passage of AJR-1.

Session ends May 21

“With COVID-19, we’ve been through a crisis as a community,” Hatch said. “A lot of people stepped up to help us weather the storm. We are simply asking mining, the people who are making billions off the resources of our state, to do the same.

“They claim they are, but I don’t think they’d be running a multi-million dollar ad campaign and lobbying the Legislature if they weren’t so afraid of paying more, if they weren’t afraid that AJR-1 would pass. They can, and should, be contributing more to our children’s future.”

Proponents of AJR-1 urged Nevadans to reach out to their representatives in support of the ballot resolution by calling them, writing letters and emails, and voicing support of AJR-1 on social media.

 “The Legislature is going to adjourn soon and (lawmakers) need to take action on those resolutions,” Hatch said.

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