With a little more than 48 hours left before the session must end, lawmakers are introducing a bill that would implement a new tax on the mining industry and a host of other provisions that are part of an apparent session-ending deal expected to prevent proposed constitutional amendments on mining from heading to the ballot.
The bill, AB495, was introduced late Saturday in the Assembly, marking the work product of days of furious, behind-the-scenes negotiations between Democratic legislative leadership, Gov. Steve Sisolak and representatives from the mining industry, teacher’s unions and other powerful political players. It’s been scheduled for a hearing on Sunday.
Introduction of the bill was met with praise, sometimes guarded, by progressive groups, the state mining association and the Clark County Education Association. The measure faces a somewhat perilous path to passage given that it requires a two-thirds majority vote with only two days left in the legislative session.
In an interview late Saturday, Assembly Speaker Jason Frierson (D-Las Vegas) said he estimated that the bill would raise about $170 million in new tax revenue over the two years of the budget cycle, which along with other included tax changes would allocate more than $300 million to public education by the next biennium. Frierson said passage of the mining tax deal would mean “we don't have ballot measures” on the 2022 ballot modifying the constitutional cap on mining taxes.
“I think this will reflect a compromise that hopefully everyone can live with,” he said.
The measure would create a new excise tax on the gross proceeds of profitable gold or silver mining companies that report gross revenue greater than $20 million annually, at a rate of 0.75 percent on any revenue reported between $20 million and $150 million, and at a 1.1 percent rate at any revenue above $150 million. The bill sets forth a formula on gross revenue computation and deductions that can be counted against the revenue figure in the bill.
Revenue from the new mining excise tax will be temporarily deposited in the state’s general fund and begin to be deposited in the state education fund beginning in July 2023. It sends the state portion of the existing net proceeds of minerals tax into the state education fund instead of the general fund.
In a statement, Nevada Mining Association President Tyre Gray gave a tentative blessing to the proposal, noting the bill would represent a 100 percent increase in “mining’s contributions to the state,” but marked a compromise that only arrived “after deliberative conversation between Governor Sisolak, legislative leadership, and mining.”
“Unlike other recent revenue sources, these dollars will go entirely to education, while also ensuring that Nevadans remain employed, rural counties remain funded, and mining operations remain viable,” he said.
The bill also includes a grab bag of other provisions. It sends $200 million from the state’s allocation of federal COVID-19 relief funds to the Nevada Department of Education for grants that could support programs to compensate for learning loss during the pandemic in a matching funds-style arrangement.
“You leverage some of the school funds that are being allocated directly to the district with these funds to go to Read by Three and things like that,” said Assemblyman Tom Roberts (R-Las Vegas).
Roberts and Frierson both said they expected that proposed ballot measures proffered by the Clark County Education Association that would raise the sales and gaming tax would be dropped — Frierson said he expected that a separate bill granting the teacher’s union explicit permission to withdraw the ballot initiatives would be introduced in the coming days.
Roberts said the new mining revenue would go to raise base per-pupil funding.
“It's a move in the right direction. It starts to get us to where we can climb up the ladder on national average for education funding,” Roberts said. “This is all dedicated to the base. And so I think we'll see some positive results.”
The bill calls on the Commission on School Funding, which has helped guide the implementation of a new education funding formula, to investigate possible sources of revenue for public schools and to submit it to the governor and Legislature by 2023.
The bill lays the groundwork for Medicaid recipients to directly receive reimbursements for personal care services. Sen. James Settelmeyer (R-Minden) has long championed that concept to supplement the rate Medicaid already pays for such services.
And in a likely olive branch to Republicans, the bill authorizes the extension of $4.745 million in tax credits for the state’s Opportunity Scholarship program — which offers students from low-income households scholarships to attend private schools. Roberts said he expected subsequent legislation would authorize more spending for the program.
The bill also removes language from 2019 that largely blocked new students from enrolling in the scholarship program by limiting it to students who were already enrolled and for whom there was enough money expected to be available to support the student until they graduated.
The measure will also appropriate $600,000 per fiscal year for the Silver State Opportunity Grant, a state-supported needs-based financial aid program for higher education institutions. The bill as written appropriates $6 million per year, but that number will be revised down.
Progressive advocates have long described mining’s tax structure as a sweetheart deal that falls short of the industry paying its fair share. During a special session over the summer, lawmakers introduced three proposed constitutional amendments tinkering with the tax structure, but so far this session, there has been no action on those measures.
But the Progressive Leadership Alliance of Nevada, one of the most prominent voices for changing the tax on mining and a major proponent of one of the resolutions, AJR1**, called the compromise in the bill "a strong start to addressing the privileged position mining has held in Nevada’s tax code until now."
"While we will continue to push for what Nevadans truly deserve, this proposal will address the needs of the people in a meaningful way and allow our state the funding needed to maintain and build on critical public services immediately," said Laura Martin, the group's executive director.
The Nevada State Education Association teacher’s union called the proposed tax “a small down payment on our longstanding request,” but said much more was needed to reach a school funding level they would consider adequate.
“Even counting additional funding, significant new revenue sources will need to be developed to meet the [Commission on School Funding’s] recommendations moving forward,” the group said in a statement. “We hoped more progress would take place during this session.”