Nevada's budget deficit: The numbers speak for themselves

Just as all the yapping about the federal budget deficit can’t be taken too seriously without a frank and open discussion about our military adventures in Iraq and Afghanistan - enriching our military-industrial complex - neither can our Nevada budgetary woes be solved without being honest about how much the mining industry doesn’t pay up. Then we’ll talk about gaming.

This much must be understood. The mining interests - which are mostly foreign owned (Canadian) - aren’t about to pack up and leave for South Africa anytime soon. The gold they’re getting out of the Carlin Trend has paid off very handsomely. The Carlin Trend is America’s most productive gold field, and gold stock touts on the internet say there could be many millions more ounces of the pretty stuff to be had. Then there’s the Battle Mountain-Eureka Trend, the Rabbit Creek Trend and on and on.

According to geologist friends, who are knowledgeable about gold in Nevada, the end of profitable production is still decades away, depending on many factors such as the price of gold.

Here’s a ClifNotes version that you can take to the bank.  It’s been culled from Nevada Department of Taxation data by the LasVegasGleaner:

From 2000 through 2007, the mining industry in Nevada extracted and sold gold
worth $25.5 billion, and paid taxes to the state general fund totaling $125.3
million, an effective gross state tax rate of one-half of one percent.  
 
—Mine owners are allowed to write off expenses as deductions. Over the last
eight years, the Nevada mining industry has deducted 79 percent of the value of
gold production, and paid taxes only on the value of the remaining 21 percent.
 
In any given year from 2000 through 2007, one-third to one-half of all the
mines operating in the state produced gold worth hundreds of millions of dollars
but reported zero taxable proceeds.
 
Nevada’s two largest gold mines, the Barrick Goldstrike mine and Newmont’s
Carlin Trend project, have reported zero taxable values during years when the
mines have produced gold worth a half billion dollars or more.
 
While the 5 percent Net Proceeds of Minerals (NPOM) tax rate is written in the
Nevada Constitution and would take years to change, the deductions by which the
mining industry avoids so much taxation are written in state statutes (NRS
362.120) and can be eliminated through legislation, raising tens and possibly
hundreds of millions of dollars for the state budget as early as the next biennium.

Click here to see more facts and figures on mining revenues and taxes in Nevada.

Now, that’s a fair deal, right? Knowing this, you’d still be happy to let the new Governor further cut education, right? And social services? As long as it isn’t you or yours that are coming up on the short end?

I’m not suggesting that the mining industry be held hostage to Nevada budgets, but … but they’ve gotten off far too lightly for far too many years. Yes, they employ a lot of fine Nevadans. Many are friends of mine.

All I’m saying is that Nevada Regulatory Statutes  (NRS 362.120) vis a vis the mining industry need to be revisited with a ‘come to jesus’ moment. It’s like this - the mining companies will gladly walk away with whatever we allow them too. If we are willing to allow them to walk away with all the chips … then that’s our fault. We’re the fools. Unfortunately, our children and the economic future of Nevada will pay the dearly. Not Barrick. Not Newmont.

At the end of the day, just how much of the quality of life in Nevada are you willing to sacrifice to mining?

-maven