Mining’s prosperity has spread south

Let’s smash a myth that perfectly plays into Nevada’s parochial politics: Mining is not a rural, Northern Nevada industry. It’s a Nevada industry with increasing ties to Clark County.

On Sunday, the Review-Journal published Jennifer Robison’s special report on the growth of Nevada’s gold trade. The price of gold has shot up 517.4 percent since 2000, to nearly $1,800 per ounce, as a result of the devalued dollar. This decade-long run on gold futures has brought an economic boom to mineral-rich Northern Nevada.

Nevada is the world’s third-largest producer of gold, with some 5.5 million ounces coming out of state mines in 2011, Ms. Robison reports. Gold made up 90 percent of the gross proceeds of mined Nevada commodities in 2011, about $8 billion worth. Gaming’s impact, by comparison, was $10.7 billion.

The Silver State? Can we make a motion to rename Nevada the Gold State?

The Great Recession has taken a terrible toll on the state’s population centers, sending property tax collections plummeting as mining revenues have exploded. But Northern Nevada’s need for resources, equipment and labor have created opportunities for Southern Nevadans hurt by the evaporation of construction jobs.

The population of Elko, more than 400 miles north of Las Vegas, has grown to about 40,000, making it “a hive of economic activity for Las Vegas business operators looking for work,” Ms. Robison reports. Construction workers, electricians, plumbers and other tradesmen are busy. Bus companies run dozens of shuttles to move workers around the state.

Mike Pack, president and chief operating officer of Cashman Equipment Co., has doubled his office space and equipment yard in Elko and now does 500 percent more business there than he does in Southern Nevada. “We wouldn’t be here today if it weren’t for mining,” Mr. Pack said. “Construction crashed that badly.”

Don Ahern, president and chief executive officer of Las Vegas-based Ahern Rentals, is building an office park in the Elko area and has increased his staff there from five to 25 in just two years. “Elko is providing jobs for people in Las Vegas who would otherwise be out of work,” he said.

Not to mention a lot of tax revenue. Remember the great tax debate of the 2003 Legislature? Back then, the state collected about $30 million per year in net proceeds taxes. Last year and this year, however, that figure will top $250 million, with tens of millions of those dollars flowing to Clark County.

“As much as we like to think that what happens in Clark County affects the balance of the state, the same thing can be true of rural areas,” said Jeremy Aguero, a principal in the Las Vegas consulting firm Applied Analysis.

As expected, however, Nevada’s small army of education and welfare advocates see Big Mining as a big target for more tax revenue. The Progressive Leadership Alliance of Nevada supports a resolution that would remove the constitutional caps on mining taxes and allow the Legislature to set the rates. “Mining companies, because of their sweetheart deals in the constitution, are exporting all they money they dig out of Nevada and sending it to Canada, South Africa or other states,” PLAN Executive Director Bob Fulkerson said. “They’re not using it to build schools in Nevada, and that’s just wrong.”

That’s just not true. National and international companies provide more than 10,000 of the state’s highest-paying jobs – people who pay taxes – and directly support many thousands of jobs at retailers, restaurants and other businesses that pay taxes. They’ve invested billions of dollars in research, construction and permitting over many years to extract minerals from our soil.

Arguments for higher taxes on a volatile industry remind us of last decade’s campaign to smack gaming with ever-higher levies. Those demands were based on the belief that Nevada operations were subsidizing the expansion of gaming into other states and countries with higher tax rates, depriving the state of revenue. Gaming’s growth outside Nevada helped the state’s casinos keep their doors open on the Strip when the U.S. economy tanked in 2008 and 2009.

If Southern Nevada lawmakers decide to vote as a bloc to single out mining for punishment during the 2013 Legislature, it would have direct consequences on Southern Nevada businesses and residents as well. However the Legislature goes about balancing the state’s budget, it must be a statewide solution, not one based on a parochial myth.