A gold dore bar produced at one of the Barrick mines. The bars can weigh upwards of 900 ounces and at today's prices, can sell for more than $1 million.
Jared Boyd

Nevada's Golden Child

Is the state's hardrock mining industry losing its grip?

  • A gold dore bar produced at one of the Barrick mines. The bars can weigh upwards of 900 ounces and at today's prices, can sell for more than $1 million.

    Jared Boyd
  • The terraced walls of the Pipeline Mine pit near Elko, Nevada, part of the Cortez complex of three mines where Barrick expects to produce as much as 1.12 million ounces of gold.

    Jared Boyd
  • A miner is dwarfed by a truck used to haul rock from the Barrick pits.

    Jared Boyd
  • Barrick gold dore bars.

    Courtesy Barrick
 

Page 5

Faced with the impermanence of natural resources, other state governments have opted to collect and save taxes from their limited resources while they still can. Wyoming has a Permanent Mineral Trust Fund in which it socks away a small portion of the 4 to 7 percent average tax oil, gas and coal producers pay on the gross value of the resources they sever from the ground. California Assembly Member Alberto Torrico has introduced a bill to fund higher education with a 12.5 percent gross tax on oil and gas production.

Indeed, these days progressive Reno Assemblywoman Sheila Leslie has begun to echo Sarah Palin, who in her half-term as Alaska governor managed to raise the windfall profits tax on the oil and gas industry to 25 percent of net profits, raking in $6 billion for the state in 2008. (Alaska has $27 billion stored in its permanent fund.) She succeeded by pointing out, again and again, that one true thing: You can't put the oil back in once you've taken it out.

"They're taking a non-renewable resource out of the ground and not paying for it," Leslie says of the state's hard-rock miners. And when the gold is gone, gambling will be all Nevada has left.
Leslie believes Nevadans have finally begun to see the mining industry as a possible balancing force during economic downturns, and voters are therefore increasingly willing to adjust the state Constitution accordingly. "I don't need a poll to know whether there's public support for a higher mining tax," adds Leslie. "I just need a trip to the grocery store. I have people approaching me all the time asking, 'Why aren't we taxing mining?' She has even heard suggestions that lawmakers replace the familiar billboard slogan, "Mining -- It works for Nevada," with a new one: "Nevada -- It works for mining."

In the pre-dawn hours of Monday, March 1, the Nevada State Senate and Assembly emerged from the six-day special session with a balanced budget. They cut an even 10 percent across state agencies, put government employees on a four-day work week, and reduced state education spending by 6.9 percent. They also managed to raise nearly $200 million in new revenues without technically raising taxes. Part of that includes more money from mining, as the high price of gold added an unforeseen $58 million to the industry's tax bill. Also -- beginning on June 30, 2011, when the current biennial budget runs out -- mining companies have agreed to pay a new fee based on the size and holdings of each company, bringing another $25.7 million to the state over the course of the following two years.

"We weren't gleeful about it," the Nevada Mining Association's Tim Crowley says, adding that legislators initially asked for $100 million from the mining industry. "We accepted it begrudgingly, because this is crisis time. Everyone's feeling hurt."

For a change, gaming lobbyists stood their ground, declining to pay the $32 million it takes to run the Gaming Control Board. "This time, for the first time, we just can't help," Billy Vassiliadis, a lobbyist, told legislators.

No one seems certain how sound that budget is. Some economists have predicted Nevada will find itself in dire circumstances next year. State budget director Andrew Clinger has gone on record estimating that the shortfall could balloon to $2.5 billion.

"What's not really even known is how much more has to be cut," Jan Gilbert says. Gilbert always seems to be on the verge of a punchline, no matter what she's talking about. She describes handing out flags in the Legislature as "a way to have fun in dismal circumstances." But her laughter fades when she starts talking about the future. When the Legislature counted its revenues this year, it included funds from the federal government's Temporary Assistance for Needy Families (TANF) and Medicaid subsidies, "federal dollars that haven't been committed yet," Gilbert says. "Our caseloads are skyrocketing in health and human services because people are increasingly living in poverty."

The mining tax initiative won't help anytime soon, either: Even if voters approve it this fall, they will have to approve it a second time, in 2012, in order to amend the Constitution. But Gilbert says the effort is worth it. "If we don't do something, nothing will ever change."

In February, the Nevada Mining Association filed a lawsuit to block PLAN's mining tax initiative on the grounds that it violates Nevada's Constitution by singling out one industry for special treatment. District Court Judge James Wilson struck down the complaint, but also forced the activists to re-word their initiative. That means throwing out the 12,000 signatures they've already collected and starting over, no easy task.

But perhaps it's a sign of the ballot initiative's potential success that the mining association has appealed to the State Supreme Court. The court has expedited the case, and its judges expect to render a decision before June.

All those lawyers and legal fees have got to cost them a lot of money," Gilbert says. "But when you think about it," she adds, "that's just another expense they can write off. You can bet their net profits will be lower than ever this year."

Judith Lewis is a High Country News contributing editor. She writes from Venice, California.

Editor's note: PLAN State Director Bob Fulkerson is an HCN board member.

This coverage is supported by contributors to the High Country News Enterprise Journalism Fund.

For more information, please visit:

Nevada Taxpayers Association on the state's net proceeds of minerals tax

Barrick's Cortez Hills Mine

Progressive Leadership Alliance of Nevada's Fair Mining Tax campaign

The Nevada Mining Association

EARTHWORKS on the 1872 Mining Law

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