Mining Tax Proposal Has Surprising Sponsors, Critics

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CARSON CITY, NV - A proposal to raise more money for Nevada schools by raising the mining tax is coming from a surprising source, but even those who've long argued the industry is not paying its fair share aren't signing on.

It's a complicated story about a unique tax.

Beset by arguments they were undertaxed, the mining industry backed a ballot question in a special election in 1989 setting a formula for taxing mining companies. The voters approved it overwhelmingly.

It was a canny move by the industry as the vote put the tax at what many still consider a low rate into the state constitution. Now that tax can only be changed through another vote of the people.

The last legislature began that process, passing SJR15 which would bring the matter back up for a public vote. It's widely expected to pass again and voters will get a chance to reverse that 1989 decision in 2015.

Few expected what happened Tuesday. Six Republican senators floated the idea of a ballot measure raising the mining tax, potentially pumping hundreds of millions more into the state's schools.

That proposal would compete with a ballot initiative launched by the state's teachers, a margins tax on business, something the Republican senators argue would stall economic recovery.

The idea caught Republicans in the other house by surprise and they are not sold on the idea.

For their part, those from rural districts see it as an economic threat.

"I think it would be detrimental to the smaller operators," says Republican Assemblyman Tom Grady of Yerington, who adds it could slow the development of new mines planned in his district.

Others echo the reaction of Democrats. It offers no immediate help to schools since the tax first needs to be taken out of the state constitution and that can't happen until next year.

"Anything that was talked about in that alternative to the margins tax isn’t going to happen until the ‘15 session," says Assembly Minority Leader Pat Hickey. "We’re here now. We’ve got a job to do."

The proposal also caught the industry's critics off guard. While applauding the idea of a bigger tax hike for mining, they don't like it competing with the teachers' initiative.

"If this is a way to kill the margin tax by having a competing margin tax on the ballot it’s a cynical idea," says Bob Fulerson of the Progressive Leadership Alliance of Nevada, "and it's actually going to set revenue back for the state and it’s going to set education back."

At this point it seems a long shot to make the 2014 ballot. Even if passed by the legislature, a reading of Nevada law indicates the govenor has to sign off on it and he was also caught off guard by the announcement and is on record as not supporting any new taxes.

The senators' proposal does indicate the once powerful influence of the industry in Carson City may be waning as the state becomes more urbanized.

And it's got people talking once again about the need for a broader based business tax, a solution the lawmakers have been unable to achieve through decades of discussion.