District Judge James Wilson ruled from the bench after a 45-minute hearing. He dismissed arguments by the Nevada Mining Association that the petition’s description of effect was misleading.
“The court concludes it is not clearly invalid,” Wilson said.
Mining association lawyer Bradley Schrager argued that the industry group wasn’t seeking to block the initiative from the ballot, but that its description of effect should be reworded.
He submitted alternative language saying if passed, the measure would allow for a property tax on net proceeds of minerals at a different and higher rate than other property taxes in the state. The industry also wanted wording telling voters that mines last year paid $163 million in net proceeds taxes, and that the initiative would authorize a tax increase of up to $294 million.
Maggie McLetchie, representing initiative sponsor Monte Miller, countered that the measure as filed with the secretary of state’s office met legal standards.
“It is succinct, straightforward. There is no political rhetoric,” she said.
After the hearing, Schrager said the mining association would consider its options on whether to appeal.
Miller’s initiative group, Nevadans United for Fair Mining Taxes, wants to raise the tax cap to 9 percent of net proceeds, up from the current 5 percent.
The association’s lawsuit argued the initiative fails to inform voters of potential consequences should it be adopted. It claimed the measure would set up a “constitutional collision” with other property tax protections.
But McLetchie countered that the constitution already allows net proceeds on minerals to be taxed differently than other property taxes. Mining companies pay a net proceeds tax on minerals, an amount that is calculated after extraction and other business costs are deducted.
She said the measure as proposed changes one number — 5 percent to 9 percent — in existing law.
Supporters would need to gather more than 72,000 signatures by June 19 to qualify for the November ballot. Voters would have to approve it again in 2014 for it to take effect.
The mining industry is a frequent target for new revenue when Nevada’s economy sputters. It came under scrutiny during the 2011 legislative session as gold prices soared in the wake of the recession and the state faced big budget cuts. The industry agreed to give up some tax deductions and a new oversight panel was created.
Besides the mining tax initiative, Miller is also backing a separate initiative to raise the top tier of gambling taxes paid by Nevada’s largest casinos. A court hearing on a legal challenged filed by the Nevada Resort Association to that proposal is scheduled April 11.