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Horsford says Sandoval's plan for mining industry violates no-new-taxes pledge
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Jessica Ebelhar/Las Vegas Review-Journal
Senate Majority Leader Steven Horsford speaks during a meeting Tuesday of the upper house's Revenue Committee at the Legislative Building in Carson City. The Las Vegas Democrat criticized Gov. Brian Sandoval for proposing what he called a tax increase on the mining industry. » Buy this photo
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LAS VEGAS REVIEW-JOURNAL CAPITAL BUREAU
Updated: Feb. 9, 2011 | 8:13 a.m.
CARSON CITY -- Senate Majority Leader Steven Horsford fired the first salvo Tuesday in what has been dubbed the "tax or ax" session when he accused Gov. Brian Sandoval of violating his no-new-taxes pledge.
Horsford said the governor wants the mining industry to make a $60 million tax payment in 2012, pointing out that the industry was not supposed to make this payment and that by requiring it now he is increasing a tax.
The mining industry agreed during the 2009 legislative session to make an advance payment of taxes to help the state through a revenue shortfall. In exchange, legislators said the industry would not have to pay the taxes in 2012, a step that in effect allowed the state to pay back mining for its earlier advance tax payment.
In his proposed budget now before the Legislature, Sandoval pushes that payment to 2014.
"Doesn't it increase taxes on mining?" Horsford, D-Las Vegas, said during a hearing of the Senate Revenue Committee, a group formerly called the Senate Taxation Committee. "To me it is a tax increase."
The Sandoval administration saw things differently.
"It's definitely not a new tax or an increase," said Dale Erquiaga, Sandoval's senior adviser. "Prepayment of tax liabilities has been used in prior budgets, and that's all this is."
Horsford said he always has opposed prepayment of taxes because it leaves future legislatures short of what they need to pay bills.
"It is a very obvious example of choosing certain revenue for whatever political reason and not considering others," Horsford said after the hearing on Sandoval's mining tax plan.
In his opening day speech, Horsford contended Sandoval's spending plan is about $2 billion below what is needed to properly fund education and other agencies. Sandoval proposes general fund spending of $5.8 billion over the next two years, or $402 million less than current spending. State agencies requested $8.3 billion.
With gold selling for more than $1,300 an ounce, the mining industry once again is being eyed by the Progressive Leadership Alliance of Nevada and others as a source of additional revenue for the state.
PLAN unsuccessfully tried to persuade legislators two years ago to increase mining taxes by $141 million a year by reducing deductions the industry can make before calculating the net proceeds of minerals tax. Numerous Nevadans during public hearings also urged the Legislature to increase taxes on the mining industry.
Jan Gilbert, PLAN's lobbyist, asked the Revenue Committee on Tuesday to increase mining and other taxes, but not taxes that would have a regressive effect and hurt the poor.
Horsford also said he cannot choose "revenue solutions" until the Senate Finance Committee reviews all state budgets and legislators determine exactly how much money is needed.
But he expressed dismay that Sandoval wants to provide a tax cut for all businesses, regardless of their profitability.
During the 2009 session, legislators voted to nearly double the modified business or payroll tax, increasing the rate to 1.17 percent of employees' wages, up from 0.63 percent.
But in passing that increase, lawmakers put a lower 0.5 percent tax on the first $250,000 of wages of all companies. The net effect of this reduction was to help small companies, generally those with six or fewer employees.
The payroll tax changes are set to expire on June 30. After that, the tax rate will be 0.63 percent, including on the first $250,000 of income paid by companies.
Sandoval, however, wants to leave the 0.5 percent rate on the initial $250,000 of income paid by all companies.
Horsford pointed out that Sandoval's plan will help not only small companies but larger companies that are making good profits.
"For big businesses that are profitable, it is a tax cut," he said.
But Russell Guindon, a legislative fiscal analyst, responded that "every business would benefit from the cut to 0.5 percent."
In an interview, Horsford said lawmakers need to shape the legislation so that highly profitable companies do not get a tax break.
Contact Capital Bureau Chief Ed Vogel at evogel@reviewjournal.com or 775-687-3901.
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Horsford, please tell me you are not this stupid. A prepayment of a future tax liability is not an increase in taxes--it is a prepayment on a future liability. WOW.
Next time you might want to consult with someone prior to opening your mouth--could save you some embarassment.
Mining puts massive unfunded mandates on the communities it is around and on the state....having been assigned on cases in mining towns I have seen the State, County and city roads literally destroyed by the heavy vehicles and the mud caked sidewalks etc....the mining crowd brings in money but the law enforcement cost is horrendous... the mines are not generally near or in towns so they do not pay property taxes to the town....they pay the county who then socks it away....the miners pay for many things using their salaries BUT the mine owners take BILLIONS out they pay less than a penny on the dollar for what they take out of Nevada...when they are done they leave and we have a hole in the ground and a devastated community that is a new ghost town.....
Sandoval proposes general fund spending of $5.8 billion over the next two years, or $402 million less than current spending.
Taxes carrying over to the next biennium are expected to generate ~$4.2B. Sandoval and the other Republicrats want to borrow and trust raid another ~$1.6B to maintain spending. Keep in mind that our current excessive spending includes Obama's porkulus funds. Whatever pork that money is buying, Sandoval wants to keep it going.
If we had small government in this state the biennial budget could be as low as $160M. *Existing* mining taxes plus ~1m of sales taxes would cover everything.
All this amounts to is the State borrowing $60 million from the mining industry. That's all it is!
Horsford who never met a tax he wouldn't increase or establish is being disigenuous. After an apparent agreement with the mining industry in 2009 where they would advance the state the $60 million he is saying that an agreement made before Sandoval took office is violating his no-new taxes pledge. Horsford of all people who can't even avoid parking in a handicapped spot should look within before casting stones...
@??????,
"...develope (sic) out (sic) natural wealth..."
We're not developing anything, we're giving it away. Your hyperbolic hypothetical on what the Democratic leadership would do makes me wonder how you were able to take time away from watching for black helicopters in order to write your posts. And by the way, "cowtow" is spelled with a "k"...your "fun with Phonetics" program only gets you so far in the world. Also, there's a difference between a personal pronoun and an adverb. Learn it and maybe someday someone will take you seriously.
@Markey...Good thing we at least have a leader who lets us develope out natural wealth. If obama or dingy hairy jr. were governor...there would be a moratorium on mining while they cowtowed at the altar of the environmental wackos and lined their pockets with cash, while allowing madam nancy to send california's garbage to northern nevada to dump on those who do not become sycophants to their anti-American progressive agenda.
@ Afromerrepublican...show me where spending more money increases student achievement. Does the majority of the money go to students...or to the pockets of the union teachers or administrators and from their to their union bosses.
Oh the irony..."Sen. wants to raise taxes" complaining that "Gov. no new taxes" is violating his pledge, resulting in more tax dollars coming in. Maybe to make things right, "Sen. wants to raise taxes" should cut another $60 million from somewhere.
Instead of our elected leaders acting like adults, we have them pointing fingers and acting like children. It's going to be a long 120 days.
"Any state that literally gives it's natural wealth away for free is just downright stupid.
Mining pays NOTHING in relation to the wealth they pull out of this state.
$8 billion in gold sales profit. Costs maybe $2.5 billion to get it. Nevada gets $150 million. Third world countries negotiate better deals!" ------------------ There it is..