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November 20, 2014

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Politics:

Steven Horsford tries to convince mining that he’s not their enemy

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Sam Morris / Las Vegas Sun

Senate Majority Leader Steven Horsford talks to the media after a meeting of the Senate Revenue Committee on the second day of the 2011 legislative session Tuesday, February 8, 2011 in Carson City.

Steven Horsford quickly put the mining industry in his sights last legislative session. As a Democratic state senator from Las Vegas adamant about finding more money for education and realistic about the chances a tax increase would make it through the Legislature, the state’s prosperous mines provided a way to pay for it.

So for four months, he worked to close tax loopholes exploited by the mining industry, argued for regulators to change the way they allow tax deductions for the industry, eliminated some deductions from state law and started the ball rolling on an initiative to eliminate the industry’s tax protections enshrined in the state constitution.

The effort netted more money for the state budget, but won him few friends in the industry.

At the time, Horsford couldn’t have known he’d find himself campaigning for Congress in a district that includes half the state’s rural counties. But that’s how the court drew Nevada’s newest congressional district, which stretches from Horsford’s neighborhood in Las Vegas to the south end of Lyon County.

In Las Vegas, Horsford is a hero among progressives who have long thought the mining industry doesn’t pay its fair share.

As he begins campaigning for Congress, Horsford is having to work to convince rural voters and the big mining companies that help fund congressional campaigns that he would be an advocate for the industry in Washington.

In Lyon, Nye and White Pine counties — where the economy is heavily dependent on mining — Horsford’s crusade last session seemed aimed at the heart of their livelihood.

“As more people become aware of his legislative history, he is going to be taken to task,” said Lyon County Commissioner Virgil Arellano, whose district includes Nevada Copper’s pending Pumpkin Hollow project, a mine slated to bring 2,500 jobs to the Yerington area.

“I would say there is a lot of concern for Sen. Horsford’s positions,” Arellano said.

Pumpkin Hollow is heavily dependent on a federal land transfer that must be approved by Congress. Its financial viability is based on existing Nevada tax rates, Arellano said.

Removing the net proceeds tax from the state constitution so lawmakers could adjust it, as Horsford wants, would threaten the project, he said.

“Nevada Copper has invested so much time and energy and money into this. And to be held hostage on something like that… That’s the way I look at it. It’s extortion,” Arellano said.

The sentiment on mining taxes is largely the same in Nye County, home to Round Mountain, a company town completely dependent on the gold mine there owned by Barrick and Kinross Gold.

“Compare mining to any other business and they pay their fair share and then some,” said Nye County Commissioner Lorinda Wichman. “This is our golden goose. When you have problems with the budget, you don’t whip the golden goose.”

In the Legislature, the mining industry and its battalion of lobbyists for Barrick and Newmont fought Horsford at nearly every turn, arguing lawmakers should keep their hands off the industry’s deductions on the net proceeds tax. It earned him a reputation as an opponent of the industry.

But Horsford is challenging that premise. “I am a proponent of the mining industry who believes in fairness, equitability and transparency on that industry just like any other industry, like big banks or big oil,” he said.

Horsford has campaigned in Ely and was at the ribbon cutting for Pumpkin Hollow. He said he supports the land transfer legislation now making its way through Congress.

But he hasn’t had much success convincing Barrick or Newmont to back his campaign.

“He’s trying to talk to them and they’ve been very reluctant to have any discussions about material support,” said one mining lobbyist.

Another lobbyist, however, said the companies likely will be pragmatic with their donations.

The new district has a strong Democratic voter registration advantage, meaning it will be difficult for the eventual Republican nominee to prevail. State Sen. Barbara Cegavske, businessman Danny Tarkanian and businessman Dan Schwartz are vying in the Republican primary.

“Horsford is probably going to win that race,” said another mining lobbyist. “I would think the mining companies would take that into account. And corporations don’t tend to hold grudges.”

Cegavske, however, has already collected checks from Barrick’s political action committee. She also has Arellano’s endorsement.

But Horsford does have fans in the industry.

Last session, he helped repeal a mining claim tax that lawmakers had passed in the 2010 special session with the support of big mining companies. The mining claim fee, however, was opposed by mining exploration companies, who hold a high number of claims that aren’t yet productive mines.

Midway Gold, which led the fight to repeal the claims fee and has operations in White Pine County, is now one of Horsford’s biggest financial backers. The company’s executives and lobbyists have contributed $8,500 to Horsford’s campaign, finance reports show. Ken Brunk, Midway Gold’s president, held a fundraiser for Horsford last year.

Horsford said it’s ironic that the work he did during the session helped the smaller mining operators and exploration companies that are active in the district he now seeks to represent.

“We had no idea in the end how those congressional lines were going to be drawn,” Horsford said. “I had no idea that … the district I live in would include White Pine County and southern Lyon County and everything in between.”

Horsford said the mining issues at the federal level are different than those at the state level. In Congress, he won’t be responsible for funding a state budget or ensuring that the state’s industries pay their share of it.

“A lot of federal agencies have interaction with the mining industry,” Horsford said. “I will be a strong advocate to make sure the mining industry and their interests are protected and that we have a fair and equitable regulatory system in place.”

But some rural voters have their doubts based on Horsford’s performance last session.

“I don’t think leopards change their spots,” Arellano said.

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  1. So how's that taxation/state revenue study going?

  2. Unfortunately state senator Horsford has a long history to change. While I admire his tenacity and his vision, each time I've read an article about the state government wanting to tax someone his name invariably shows up as one of the principal orchestrators. At some point, state government needs to realize they can't keep passing the buck to the tax payers and make the painful cuts that need to happen. While arguably the mining industry ought to pay for its fair share, I think the first stop would be to close many of the tax loopholes that the mining industry currently enjoys.

  3. To the left, everything is a "tax loophole to be exploited" when it comes to their favorite "whipping boy," business! Yet, it's the Legislature, not corporations, that enact the rules by which we live and pay our "fair share." And, just who has "ruled" the roost in Carson City for years? Gee, what a surprise, Dumbocrats! Yep, we've been fortunate to have some "real" Republicrats at the helm to put the brakes on the "Tax & Spend Party," but Dumbocrats have been the majority in both the House & Senate for years. If they had learned even an iota of fiscal responsibilty, we wouldn't be hearing the need for tax increases on a regular basis and we wouldn't see them bashing businesses as some kind of evil monsters who only make a profit by "exploiting tax loopholes." Give it a rest, Dumbocrats!

  4. But he is the enemy. No action, despite years of opportunity, to DO SOMETHING ABOUT K-12 lack of performance. 51st in results yet about average in funding, counting all sources. Overpaid part-time teachers making up to $96K a year and early retirements with large cash buy outs??? Administrators all over the place but no one to talk to the kids, to focus on the students and student needs. Horsford is spend, spend, spend. No time to look at what he's mis-spent, just keep spending. Tax and spend.

  5. Is there anything to preclude a Governor's executive order to void deductions when calculating net proceeds or minerals and/or removing special-interest, industry-specific exemptions and deductions regarding Sales and Use Tax? This would be an immediate and effective way to "level the playing field." Why are we giving exceptions, from tax, to installation labor, vehicle trade ins, mining advertising,..... If its not statute, but is regulation, "passed" by an unelected tax commission, there must be a way to overturn the regulations that are giving away the farm. We could, and should, immediately broaden our tax base and enhance revenues from those who can afford to pay.

  6. "The takers are sharpening their knives"....

    How darned thought provoking.

    Taxes are INEVITABLE.
    Even for ultra-right-wing-nut-jobs who drive on our public roadways, are protected by our police & firefighters, go to the library(?), see by streetlights, have proper working sewers & storm drains, are protected by our mighty National Defense, and on and on and ON...

    Here in Nevader, we have this big group of ANTI-EVERYTHING-TAX RELATED. They think that, as a society, we don't NEED the things that our tax money goes for...

    They have NO IDEAR in the WORLD about cause & effect...how not doing ANYTHING as a society that costs money...actually COSTS MO' MONEY!

    Well, sure...you won't pay it in TAXES. But oh, yes...make no mistake; you DO PAY.

    The Mining Industry has, for a century and a half, made FOOLS of these 'ANTI-EVERYTHING-TAX RELATED folks. I mean, they must have a PARTY every quarter and celebrate the abject STUPIDITY of the ANTI-EVERYTHING-TAX RELATED bunch.

    Yuk, yuk, yuk...

  7. happyleper: MANY SUT deductions are NOT STATUTE but merely regulations called Nevada Administrative Code which is promulgated by the Nevada Tax Commission. Sure, some address and expand statutes but many do not. And, why can't we roll back the overly-generous exemptions and deductions? An executive order can be signed tomorrow without political posturing by all the noise makers.

  8. You can't serve 2 masters, Senator Horsford. Facts by commenter Cognastics: "The mining companies manage to pay even less than the outdated 5% they managed to get written into the Nevada State Constitution in 1864. 1864!!! That's 150 years ago.

    How much effect has inflation had on the Nevada mining tax in 150 years? None. Zero. Nada. The mining tax has never been increased in 150 years. If anyone can provide examples of other industries that pay the same tax rate they paid 150 years ago many people would be happy to know about them.

    Why hasn't the Nevada mining tax never increased? By getting special mining deductions authorized by politicians. Who are the leading political contributors? I'll let you guess.
    Extracts of the constitution are provided for convenience bcz the fact that the mining provisions haven't been amended in 150 years is unfathomable. People need to see it for themselves to believe it.

    Nevada Constitution
    Article 10. Section 1. Uniform and equal rate of assessment and taxation; exceptions and exemptions; inheritance and income taxes prohibited.

    1. The Legislature shall provide by law for a uniform and equal rate of assessment and taxation, and shall prescribe such regulations as shall secure a just valuation for taxation of all property, real, personal and possessory, except mines and mining claims, which shall be assessed and taxed only as provided in Section 5 of this Article.
    2. Sec. 5. Tax on proceeds of minerals; appropriation to counties; apportionment; assessment and taxation of mines.

    1. The legislature shall provide by law for a tax upon the net proceeds of all minerals, including oil, gas and other hydrocarbons, extracted in this state, at a rate not to exceed 5 percent of the net proceeds. No other tax may be imposed upon a mineral or its proceeds until the identity of the proceeds as such is lost.

    3. Each patented mine or mining claim must be assessed and taxed as other real property is assessed and taxed, except that no value may be attributed to any mineral known or believed to underlie it, and no value may be attributed to the surface of a mine or claim if one hundred dollars' worth of labor has been actually performed on the mine or claim during the year preceding the assessment."

    Pt.1
    Blessings and Peace,
    Star

  9. Part 2 and Continuing: Facts by commenter Cognastics:
    "It is so hard to believe, it has to be said twice: Extracts of the constitution are provided for convenience bcz the fact that the mining provisions haven't been amended in 150 years is unfathomable. People need to see it for themselves to believe it. Not only do mining companies only pay 5%, they only pay it on the net profits, not gross profits, or gross revenues like the same mining companies can afford to do in other jurisdictions and still remain in business. Sweet. Real Sweet.

    If you look at para. 3, mining companies get a sweetheart deal on their property taxes, too. Spend $100 to send someone out to kick a couple rocks around every year and they don't even have to pay property taxes. How sweet is that?"

    Also, Tanker1975 states more startling facts for consideration: "In 2009, the mining industry had gross revenue of 5,800,000,000. After deductions, including some that may have not complied with state law, the net profit was 1,800,000,000. The tax paid to the state of Nevada was 48,600,000. For comparison, in 2010 gaming had the same gross revenue and paid over 425,000,000 in taxes to the state.

    The state of Alaska collects a royalty of 25% on oil. Alaska currently has a 3 BILLION surplus in the state budget, and Exxon just reported record 1st quarter profits of over 10 BILLION, so the royalty payment doesn't seem to be causing the oil companies financial problems.

    The Barrack annual report has just been published, and shows record profits and dividends above the record levels of 2009. This is a link to the report, you may want to look closely at pages 2, 3, and 4. http://media.lasvegassun.com/media/pdfs/..................

    Net earnings and profits have jumped dramatically between 2009 and 2010. Shareholders return on investment jumped from 12% in 2009 to 19% in 2010. To put that in terms that are easy to understand, an investor in 2009 got a $12 dividend for every $100 invested. In 2010, that number jumped to $19 per $100. So for the two year period, the investor made $31 on each $100. Not bad for a down economy.

    In 2010, the Cortez Hill mine in Nevada produced 1.14 MILLION ounces (31.6 TONS) of gold at a cost of $312 per ounce. In the first quarter of 2011, the mine produced 366000 ounces (11.4 TONS) at a cost of $220 per ounce.

    Nevada is one of the largest producers of gold in the world. Assuming a profit of $1000 per ounce, that amounts to a profit from one mine of $366,000,000 for one quarter. That amounts to a profit of $1,464,000,000 if production for each quarter remains the same. Of that profit, Nevada will see between $10,000,000 and $20,000,000 based on current rates. Of course, the mining industry is fairly taxed, NOT!!!!!!"

    Thanks for reminding us, Cognastics and Tanker1975!

    Blessings and Peace,
    Star

  10. Walking down Memory Lane with Senator Horsford, Part 3
    The interests of the People of Nevada have long been thrown under the political bus. We can look to the many career politicians Senator Horsford has worked with (or grooming him) for many years, as well as those who have occupied Nevada State Offices the past 30-50 years or so, you know, those who are so esteemed and venerable, even "honored" for their contributions in governing Nevada (I won't mention names). They have been an actively part of the problem. Both MINING and the GAMING/RESORT industries have supported these Nevada LAWMAKERS for eons, and thanks to an economic crash, the People of Nevada are waking up to reality!

    Will anything change? I can hear the collective moans in responding to that question. For a short period during the 2011 Nevada State Legislative Session, Senator Horsford appeared to be reaching out to his constituents, including education, and was interacting with them. But that doesn't pay the bills because they don't have the money nor influence. And the influence of Mining and the Gaming/Resort industry's money buys you a whole bunch of campaign support and financial love.

    Can a tiger change his stripes or a leopard change its spots? Once a person touches corporate money, they are hooked, like a junkie on heroin.

    The indulable memory of Senator Horsford was at the ending hour of the 2011 State of Nevada Legislative Session, when sticking it to the Nevada Taxpayer to pay for NV Energy's little Billion Dollar transmission bill, was christened with the pop of champagne and a mad dash out the door. "Fool me once, shame on you, and fool me twice, shame on me!" Senator Horsford's party is over. It will take an act of God and Congress to persuade the little guy citizen of Nevada that he is truly in their court fighting for them.

    Blessings and Peace,
    Star