MARQUETTE - Gov. Rick Snyder said he believes any creation of a mining severance tax should be the result of "a broad-based discussion" conducted "in a thoughtful way," considering several key components, including the tax revenue concerns of local governments.
Snyder made the comments while on a visit to Marquette Friday morning.
"There are local resources being used and that needs to be a part of the dialogue and discussion," Snyder said. "There should also be some element to say what happens when that mine finally is finishing up or not as productive, are there resources to continue having jobs and economic development in that area too."
The severance tax, being contemplated as new legislation by state Rep. Matt Huuki, R-Atlantic Mine, would delay taxing developers of non-ferrous mining projects to help smaller mining companies remove the barrier of high initial costs.
Huuki said if he introduces a bill creating the levy, the severance tax would have to provide the same amount of tax revenue now expected for local taxing units from such projects, most notably the Kennecott Eagle Minerals Co. nickel and copper mine on the Yellow Dog Plains.
Many locals fear the new tax could result in tens of millions of dollars in tax revenue being siphoned to state coffers at the expense of locals schools, townships and counties.
"The concept of having a severance tax is something that makes sense because again it is a resource that's being depleted out of our state," Snyder said. "What I would say is, we need to do it in a thoughtful way because we need to appropriately address the local piece of it. We need to look at what happens when the mine or that environment is eventually gone, are the resources for economic development and then we need to be fair for the whole state. So I don't have a fixed answer at this point other than saying it should be a broad-based discussion doing it thoughtfully, not just a quick answer.
Snyder cast a comparison with revenue generated from state oil and gas resources for state recreation projects and land acquisitions.
"We've had it for natural gas for a long time and in that particular case, that goes to the (Michigan) Natural Resources Trust Fund and it has been successful," Snyder said.
Snyder said he believes there are a number of good developing mining opportunities in the Upper Peninsula's future.
"Kennecott is one that people are talking about on a regular basis, but there's actually a half-dozen or more active projects out there in some phase, and we want to be supportive of that," Snyder said. "Again, Michigan put in the toughest regulations in the country and if people can comply with that and still be economical -and we can make sure we follow them and make sure they are complying and being environmentally sound-we want to be supportive of those efforts."
Snyder said his administration has tried to work toward that support by creating kind of a "mining task force" to result in state components involved working together.
"We can give them more one-stop shopping from a state level - say if it's this issue or that issue - we can do it in a coordinated fashion" Snyder said. "Instead of being a barrier, hopefully, we can help facilitate it. Again, as long as they're making sure they're doing the right things."
In his interview with The Mining Journal, Snyder also discussed unfunded state mandates, which have been a particular concern for local governments for decades. This past year, counties have banded together, asking lawmakers to address the issue or face a potential lawsuit.
Snyder said his administration has pushed for some reforms on the issue beginning last April with his local government reform message.
"I included a request to the Legislature to do some legislation that would say here's a fiscal note on the cost to jurisdictions and we actually brought up the concept that if that wasn't being complied with, it would suspend whatever piece of legislation had been put in place," Snyder said. "I want to be productive on that because, again, it's tough environments already and we need to be thoughtful about partnering with local jurisdictions."
Snyder said jobs in the U.P. will be a continued part of his efforts moving forward.
"It starts with jobs and it's how we can get great practices going. I'm excited about some of the micro-tropolis stuff that is being talked about in Marquette, about a real focus in working on that," Snyder said. "But there are also some good economic development opportunities that we need to be promoting and incorporating."
Snyder said he plans to keep consistent funding for Pure Michigan going to help aid the tourism industry, and agricultural, mining and timber industries will continue to be important to the region.
"We continue to have great export opportunities," Snyder said. "That's only going to continue to grow."
John Pepin can be reached at 906-228-2500, ext. 206. His email address is jpepin@miningjournal.net.
