Mining industry needs to help dig Nevada out of economic hole

Irving Rudd was a pint-sized press agent who was quick with a quip and able to hype a boxing match like no other. I think of him whenever a big fight comes to town.

Irving wisecracks in the hereafter these days, but I was reminded of one of his favorite lines recently as I listened to the new head of the Nevada Mining Association make polite excuses for the industry's laughable tax history.

While talking about a wealthy but cheap sports team owner, Irving said, "God bless him. Deep pockets, short arms."

That, in a fortune cookie, is the tax history of Nevada mining. Very deep pockets, very short arms. We're talking barbed wire pockets, and alligator arms.

Essentially, it's poor Tim Crowley's duty as the new president of the Nevada Mining Association to say it ain't necessarily so. I call him poor because Crowley seems like a fine fellow. He's the son of Joseph Crowley, the former University of Nevada, Reno president, and I could tell during a meeting that Tim was raised right and does his best to avoid the pitfalls of prevarication. That kind of upbringing promises to make his new duty very challenging as mining positions itself before a Nevada Legislature hungry for new revenue.

Crowley's problem is simple: In attempting to correct misperceptions that big mining pays a pittance and spread the word it's a responsible corporate citizen, he's compelled to admit something: Times are awfully good for the state's gold mines. That's awfully good, as in enormously profitable on a worldwide scale. The state produced 6 million ounces of gold worth $4.2 billion in 2007 and paid just $75.7 million in net-proceeds taxes, along with another $123 million in all other taxes. Grand total: $199.5 million, or veritable chump change compared to what the gaming industry contributes. Only $38.2 million of the net-proceeds tax ends up in the state's general fund.

"We're proud of our tax contribution to the state," Crowley says. "We are also open to the discussion if they want to do more taxes; we're willing to entertain those conversations. The thing that we want to have is equity, parity, and broad-based, have it apply to all businesses uniformly. That could be anything from any one of those tax sources or coming up with something new."

Crowley's familiar with a pile of credible studies that illustrate Nevada's lopsided tax structure. While it's true there's no perfect balance, some pay far more than others in the Silver State.

"We're trying to get the word out that we're willing to help fix the problems," Crowley says. "If they determine that new revenues are needed, we're willing to be a part of that conversation."

So far, legislators appear to be dreaming small. Assembly Speaker Barbara Buckley has talked about reducing the number of deductions mining can take before tallying its net proceeds. That will amount to crumbs at big mining's table.

Is it too much to ask that the mining and gaming industries present to the Legislature a broad-based tax plan?

Crowley has been delivering mining's message to legislators since December. As of last week, the one group he hadn't communicated with was the Gibbons administration. (During Gov. Jim Gibbons' State of the State speech, he comically defended mining and dared not mention gold was at near-record highs.)

Then Crowley delivered a remark that's sure to dampen the libertarian spirits of the governor and Carson City's anti-tax crowd. The industry can afford to pay more; it just doesn't want to be singled out.

"It's a dangerous thing to say that we can adapt, but we can adapt," Crowley said. "Because we've been a boom-and-bust industry forever, we've learned to manage and maintain our profits at a constant level."

In brief, big mining outfits extract lower-grade ore when the prices are high and remove available high-grade ore when prices slip. In that way, they're able to stabilize current profits and project future profits.

But it also makes the boom-and-bust nature of mining a misnomer, at least as it pertains to the state's gargantuan gold operations.

The match has been made. This bout is sure to receive grandiose promotion.

My man Irving would have been right at home hyping this fight of the century for the future of Nevada's troubled soul.

John L. Smith's column appears Sunday, Tuesday, Wednesday and Friday. E-mail him at or call (702) 383-0295. He also blogs at