Mining royalties in Elko and Lander could solve rural problems

Nevada News

By John Patrick Rice

Rural state representatives have sounded the alarm for funding for both K-12 and higher education across Nevada’s frontier. They are right to do so. The geo-political pendulum has now swung to urban Nevada. Unfortunately, rather than work to create equity across the state, urban centers seem to be capitalizing on their power, just as the powerful leaders of the last generation who resided in the North and in the rurals did. Part of me understands this. It is difficult to be marginalized for so long. However, looking at the financial audit statements of two rural counties, it is evident they may know what I know. Rural Nevada has the means to help itself.

Nevada’s Battle Born motto is rooted in our mining industry. One-hundred fifty years ago mining was centered in the Comstock of Western Nevada. Today it is centered in Eureka and Lander counties. Those two counties enjoy the huge tax royalties paid by the mining industry headquartered in Elko County. However, Eureka and Lander counties have very small populations, together fewer than 8,000. Neither have an incorporated city and thus very little infrastructure to develop and maintain. As a result, their revenues far exceed their expenses. They are able to enjoy millions of dollars in surplus revenue every year.

An examination of the Financial Audit Statements dated June 30, 2018 for Eureka and Lander counties lays it out clearly. The documents show Eureka County has total net assets exceeding $118 million, with an ending fund balance of more than $24 million. Lander County has total net assets exceeding more than $278 million, with an ending fund balance of $44 million. Those numbers reflect relatively liquid assets. Looking a little further, unrestricted net assets for Eureka County approach $100 million. For Lander: just over $93 million. (For comparison, the latest financial audit statements available on the Elko County website (dated June 30, 2016) show total net assets of $68 million, with an ending fund balance of just under $12 million. Elko County’s unrestricted net assets show a negative balance of more than $25 million. No need for too much alarm at that figure. Elko County is paying for capital assets and services for the 52,000 residents residing here.)

Rural legislative and county leaders from Eureka and Lander counties have always guarded their assets dearly, as they should. However, the royalty formulas were developed in the 19th century to enable remote, centralized mining communities to manage busts in the mining economy. Twenty-first century mining practices and economics, along with the migration of thousands of workers in the mining industry to the economic hub of Elko have created an imbalance in the royalty formula.

State Sen. Pete Goicochea (R-Eureka) stated in a recent interview with the Elko Daily Free Press that the result of this year’s legislative session is a “disaster” for rural Nevada. But disaster can be avoided if Eureka and Lander counties use their largess to support the entire region. Or, as stated in their financial statements, use their unrestricted net assets to “…meet… ongoing obligations to citizens”.

Government fiscal matters are complicated. There are plenty of variables to consider in the analysis of a financial statement. However, these statements certainly show both counties to be in a comfortable fiscal position.

As good citizens, we have an obligation to one another. Unfortunately, Nevadans seem unable to overcome the long-standing geo-political divide between North, South and rural. We are practically “nationalists”, interested only in our own communities. That being our reality, rural Nevada needs to take on the responsibility of considering itself a regional entity, not as individual counties. As good citizens of rural Nevada, we have an obligation to one another. Eureka and Lander counties can, if they so choose, help K-12 and higher education in all of rural Nevada overcome their serious fiscal challenges. After all, both the Elko County School District and Great Basin College are educating and training the citizens who work in the mines whose royalty payments allow sparsely populated Eureka and Lander counties to enjoy their luxurious fiscal situations.

As taxpayers, the mining industry must surely desire the taxes they pay in royalty to those counties be put to the highest and best use, and for the greater good, especially in the fiscal crisis we now face. The mining industry is philanthropically very generous to their host communities. However, as a donor myself, I want an organization to use my gifts to advance its work, not fund operations that ought to be covered with available tax revenues.

If rural Nevada does not do this for itself, it can count on urban Nevada doing it for them. Tax royalties are a constitutional matter in Nevada. Changing the Constitution is not easy, but when it comes to finding more dollars to fund the needs of urban Nevada, mining proceeds are definitely on the table. It is most likely the urban Nevada electorate will prevail.

John Patrick Rice, Ph.D., is a former member of the Elko City Council, 2007-2018, and a professor of Fine Arts and Humanities, Great Basin College.

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