Mining tax amendment would extend status quo
May 31, 2013
Lawmakers are finalizing a 49-page amendment to Senate Bill 400 that's designed to ensure governments don't lose money if voters OK eliminating mining's constitutional protections.
"We have to have this bill if SJR15 passes," said Finance Chairwoman Debbie Smith, D-Sparks.
The amendment was presented to a joint session of the Senate Finance and Assembly Ways and Means committees early Thursday. Legislative Counsel Bureau staffer Kevin Powers told committee members that it protects the existing revenue streams to both the state general fund and local governments, many of which rely heavily on money from the net proceeds of mines tax.
"This bill does not change or increase any revenues," Powers said.
Instead, the bill changes the tax from the property tax to an excise tax.
"The amount each mining operation is paying now under the net proceeds tax, they will continue to pay under the excise tax," Powers said.
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The same will happen, he said, with the portion of the revenue stream that goes to local governments. Also, the same formulas that now apportion the property tax will be used to decide how much goes to those local governments. Also the same, Powers said, will be the deductions mining companies currently enjoy.
He said the plan is intended to maintain the status quo as it relates to the amount of taxes collected and distributed.
In addition, to protect small exploration companies, the measure ensures that those non-patented claims continue to be exempted from the net proceeds tax.
Several local and Taxation Department officials said they were neutral on the plan, as Eureka County Recorder Mike Rebaleati put it, "because we really don't understand it."
Terry Rubald of Taxation said his department needs to work through some technical changes to ensure that the amended bill works as intended.
Sen. Pete Goicoechea, R-Eureka, said he, too, was concerned about the technical details needed to make sure local governments are held harmless.
The concern was that, without legislation such as SB400, passage of the constitutional amendment would dramatically reduce the amount of taxes mining companies must pay to the state.
The state's statutory property tax cap is $3.64 per $100 of assessed valuation. The current net proceeds of mines tax is paid at a $5 per $100 rate.
The bill must be processed as soon as possible, Smith said.