State hires two auditors to watchdog mining companies

CARSON CITY - While complaining that the Nevada Department of Taxation is not filling existing staff vacancies, legislators on Tuesday approved the hiring of two new auditors to review whether mining companies are paying their required taxes.

Interim Finance Committee members approved spending about $150,000 to hire the auditors, although Senate Majority Leader Steven Horsford, D-Las Vegas, noted the agency has 27 existing vacancies and cannot fill two current auditor vacancies.

"Why are we funding more auditors when we can't fill the job we already have?" asked Assemblywoman Debbie Smith, D-Sparks.

But members then agreed to the expenditure, paid for from savings in nonsalary portions of the Taxation Department's budget. Opposition vanished after Assembly Minority Leader Pete Goicoechea, R-Eureka, said the primary reason for the auditors was "$1,600 gold."

Gold was selling for $1,642 per ounce Tuesday, down from its $1,800 peak in March but still at historically high levels. With gold so high, Goicoechea suggested auditors might find companies owe additional state net proceeds of minerals taxes.

Taxation Director William Chisel said the rule of thumb has been each auditor finds $600,000 in additional revenue annually.

"That would mean $1.2 million in revenue with the two auditors," he said, adding that these auditors will concentrate on mining audits, freeing existing auditors temporarily doing mining work to return to general auditing.

The move to add mining auditors comes in the backdrop of a scandal last year when then-Taxation Director Dino DiCianno told legislators that his staff lacked auditors capable of auditing mining companies and that no audits had been performed on them for two years.

DiCianno, who "retired" the day after his revelation, also had closed his department's Elko office as a cost-saving measure in July 2010 despite the booming gold mining industry.

Chisel said that he is trying to fill the 27 vacancies in his department, but local governments also are looking for auditors, and some of his auditors are retiring.

"Our goal is to fill the vacancies as quickly as possible," Chisel said. "We are hoping to have them all filed. It is a slow process finding auditors."

A legislative audit in January found the percentage of state businesses being audited in the past fiscal year was about half of the rate in 2006-07. Chisel said then that 55 auditors worked for his agency, down from 71 in 2009.

He told legislators Tuesday that only 45 auditors are working in his department.