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Sam Morris / Las Vegas Sun
Senate Majority Leader Steven Horsford speaks during the first day of the 2011 legislative session Monday, February 7, 2011 in Carson City.
By Anjeanette Damon (contact) 
Friday, May 27, 2011 | 4:17 p.m.
KSNV: Sun's Anjeanette Damon on state budget cuts
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The Las Vegas Sun's Anjeanette Damon speaks with KSNV about the state budget, one day after the state supreme court ruled the state government could not take $62 million in user fees from the Clark County Clean Water Coalition for a scuttled water project. The precedent-setting decision blows a $656 million hole in Gov. Brian Sandoval's budget plan, which his advisers said Thursday night might be plugged by extending 2009 tax increases set to expire. KSNV: May 27, 4 p.m.
Sun Coverage
Senate Majority Leader Steven Horsford, D-North Las Vegas, made clear today that Democrats still plan to go to the ballot with their scuttled proposal to create a margin tax on businesses.
As lawmakers enter final negotiations over how to solve a potential $656 million shortfall in Gov. Brian Sandoval’s proposed budget, Horsford said he is not backing away from his priority to permanently reform the state’s tax structure.
As part of that reform, Horsford has demanded changes to the way the mining industry takes its deductions and has pushed for a broad-based business tax to replace the current payroll tax assessed on businesses.
Horsford’s proposal to “close the tax loopholes” on mining is still in play and being considered by the governor. But Democrats had to abandon their proposals to create a 1 percent tax on services and a 0.8 percent margin tax on adjusted gross business revenue.
Horsford said he plans to keep the idea of a margin tax ballot measure alive in the final negotiations with Republicans and the governor.
“I believe voters deserve to have a say in whether this state has a broad-based, more stable and equitable tax structure,” Horsford said.
Democrats need only a simple majority to pass a measure to put the margin tax on the ballot.
Earlier this week, Democrats gave up their effort to pass new taxes and focused their effort on convincing Republicans to back an extension of the 2009 tax increases to offset the cuts proposed by Sandoval.
Sandoval opposed lifting the sunset on those taxes until a Nevada Supreme Court decision Thursday threw into question whether he can take $656 million in local government revenue to balance his budget.
Sandoval is now considering lifting the sunset on a portion of the 2009 taxes.
Democrats dont get it!
Businesses only squeeze out a 5-10 percent profit. 1% of the gross margin equates to 10-20% of that profit. And that is for the profitable ones. For the ones hanging on not making any profit, it is not very nice to tell a business owner that not only is he not allowed to make a profit, but now he must make less that Zero.
I will give them credit for being sly about it with the 1% thinggy, but 1% is 10% of a profitable business, and it is 100% of an unprofitable one as they will surely throw in the towel.
I can make zero at home, but that doesn't seem fair to the 50 families that count on me!
Enact a margin tax in this economic climate and I will shrug!
We have already seen in recent days businesses testifying in support of extending the sunsets on certain taxes. The Las Vegas Chamber of Commerce has come out in support of a broad based business tax that is linked to education reform. However, there is still an area that needs to be addressed. The Constitutional protection for the mining industry and the state laws that allow huge deductions need to undergo changes. I am not advocating the Alaska solution of a 25% royalty on oil companies, although based on recent earnings reports, that doesn't seem to have had a negative effect on their profits.
The issue was highlighted in a recent power point presentation at the Barrick Mining annual meeting. One of the mines highlighted in the power point was the Cortez Hills Mine in Northern Nevada. According to the power point, in 2010, the mine produced 114,000,000 ounces of gold (over 35 TONS) at a production cost of $312 per ounce. During the first quarter of 2011, the mine produced 366,000 ounces (over 11 TONS) of gold at a production cost of $220 per ounce. If you project a sale price of $1000 over cost of production,that results in a profit of over $1,500,000,000. Based on what the mining industry paid in taxes in 2009, the tax payment to the state of Nevada will probably be less than 50,000,000. The power point goes on to point out that the projected production from Cortez Hills for 2011 will be between 1.30 to 1.45 MILLION ounces (40-45 TONS)at a production cost of $235-245 per ounce. This is natural resource that should provide significant benefits to the citizens of Nevada. Unless the Legislature acts quickly, another two years will pass without any significant action to change the tax structure of the state.