Nevada mining to pay new claims fee to help shore up state budget shortfall
The Nevada Legislature has voted to secure another $25.7 million from Nevada miners via a new, temporary claim fee.
Posted: Monday , 01 Mar 2010
RENO, NV -
As a special session of the Nevada Legislature ended in the early hours of this morning, Nevada miners agreed to a new fee on mining claims that will raise an additional $25.7 million for the state budget .
The good news for Nevada gold miners is that they will not be asked to make a pre-payment to help ease an $888 million budget shortfall. Thanks to record gold prices, Nevada mines will pay $58 million in unexpected net proceeds of mine tax revenue.
Nevada Mining Association CEO Tim Crowley told Mineweb the new tax on mining claims is based on a four-tier system ranging from $0 to $195 per claim, depending on the amount of claims held by a mining or exploration company in the Silver State. The new fee is scheduled to sunset in June 30, 2011, which is when the current biennial state budget ends.
Several lawmakers insisted upon guarantees that the new claims fees will not hurt small miners. Meanwhile, 16 Nevada legislators will be leaving the legislature due to term limits.
Ironically, Nevada mining was one of the few sectors that voluntarily agreed to pay more to help close the gap in the state budget. Nevada gaming may be spared from additional fees in the budget bill which was scheduled to be voted upon early Monday morning.
Nevada lawmakers approved a $6.9 billion, two-year budget in June. However, the global recession hit Nevada's tourism and gaming sectors hard, substantially reducing sales tax and gaming tax revenues that comprise the majority of state funds.
In a special legislative session called by the governor, state lawmakers were forced to cut state agency reserve accounts, and implement a four-day, 10-hour work week for state agencies.
Gov. Jim Gibbons, a geologist and mining attorney by profession, engaged in several days of closed door sessions with Assembly and Senate leadership. On Saturday they announced they had reached a final agreement to close the budget gap.
Under the agreement, state education spending will be cut by 6.9% while other state agencies would have cut their budgets by 10%. Most state offices will be closed on Fridays.
Higher education funding will be cut by $46 million instead of $76 million, while state spending for K-12 by $116.8 million instead of the $211 million initially proposed by the governor.
Unallocated state agency funds, estimated at $197 million will be shifted to the state general fund to pay for health, education and public safety. Critical services for children, the disabled, the elderly and mentally ill will be maintained.
No further cuts will be made to state worker salaries, who already were hit with an 11% pay cut in the 2009 legislative session.
However, this is not the end of pressuring Nevada miners to pay more taxes.
Senate Majority Leader Steven Horsford, a former mining industry lobbyist, had sought $100 million from the industry.
The Nevada State Education Association is now running a television advertising campaign urging the public to support a ballot initiative that would remove caps on net proceeds of mines taxation. Bob Fulkerson, executive director of the Progressive Leadership Alliance, which is backing the petition, contends the constitutional amendment is still required to remove the mining industry's "sweetheart deal that's enshrined in the constitution."
Mining lobbyist Jim Wadhams has told the media the petition "is designed to shut mining down." Miners have sued to stop the petition from qualifying for the state ballot.