A bill that would impose a production tax on silica sand moved ahead in the Legislature Wednesday evening.
Producers would pay $1 per ton to mine the sand, and processors would pay 3 percent of the market value of the sand produced. Counties can already levy 15 cents per ton, and the bill would allow counties to double that to 30 cents.
Executives from several existing or proposed silica sand operations say the tax would make them uncompetitive, because other states have much lower taxes. The sand is used in hydraulic fracturing to produce oil and gas.
Jordan Sands CEO Scott Sustacek said other states charge much lower taxes.
"The tax portion of this bill on silica sand is something that will create a significant competitive disadvantage for any business trying to operate in Minnesota in silica sand, and I think will harm jobs and ultimately won't produce the tax revenue they're looking for because of that," Sustacek said.
The money would be used to help the state and local governments deal with permitting, monitoring, damage to roads and other public costs.
The measure is part of a broader tax bill. Details are still being worked out between sand mining companies and local governments, said bill sponsor Rep. Rick Hansen, DFL-South St. Paul.
"We're at midpoint in the session and I think we're at midpoint in the discussion on how do we pay for those public costs -- reclamation, air quality, transportation, mitigation of the mining activity," Hansen said.