Judge advances effort to increase tax on mining

By Cy Ryan

Friday, March 19, 2010 | 5:02 p.m.

CARSON CITY – A district judge on Friday said an initiative petition to change the Nevada Constitution for an increase in the mining tax can continue to be circulated.

But the ruling of District Judge James Wilson knocked off the 12,000 to 15,000 signatures the proponents of the tax increase have already gathered. They will have to start from scratch.

Wilson rejected the argument of the Nevada Mining Association that the initiative was invalid because it contained more than one subject.

The judge said he wasn't expressing an opinion on the merits of the petition, but every effort must be made to preserve the right of voters to amend the constitution.

Bradley Schrager, attorney for the mining association, said the petition seeks to change the net proceeds tax on minerals to a gross tax. The constitution now says the tax shall not be more than 5 percent. The initiative says it must not be less than 5 percent.

He argued that was two separate issues and should be placed in separate petitions.

Donald Springmeyer, attorney for the Progressive Leadership Alliance of Nevada, which backs the tax increase, said the change in the net to gross and the rate of taxation complies with the single subject. “They are related and germane to each other,” he argued.

The Legislative Counsel Bureau has estimated that the mining industry, which paid $91 million in net proceeds of minerals in 2008, would have paid $284.4 million in taxes if the constitutional amendment had been in effect, which is a 300 percent increase. But Springmeyer argued that 300 percent wouldn't be the increase every year with fluctuations in the mining industry.

Proponents of the constitutional amendment must gather 97,002 signatures by June 15 to qualify it to appear on the November ballot. It would have to be approved both in 2010 and 2012 and then become effective in 2013-2014.

While Judge Wilson agreed that the initiative was legal, he disagreed with the “Description of Effect” that must accompany the petition seeking the signatures of voters.

After a two-hour hearing, Wilson said the description proposed by the leadership alliance did “not inform the voters of the consequences” and more information is needed in the 200-word statement.

Wilson and lawyers from both sides hammered out the “Description of Effect.” He agreed with the mining association that the 300-percent increase must be included in the description and also information that geothermal steam would be subject to the increase.

Tim Crowley, president of the Nevada Mining Association, said he doubted an appeal would be taken to the Nevada Supreme Court, but he would talk with his lawyers before a final decision is made. Crowley said the association wanted to make sure voters know what they are casting ballots on.

The change in the wording of the “Description of Effect” does that, he said.

Bob Fulkerson, head of the progressive alliance, said the mining industry in 2008 grossed $5 billion and paid only $90 million in net proceeds to state and local governments.

The mining industry, however, argues it also pays other taxes, such as sales and property taxes.