A slump in gold prices is creating a hole in Nevada’s state coffers.
Revenue from the net proceeds tax is about $70 million short of projections made a year ago, state officials said.
Gov. Brian Sandoval’s office said while that’s a sizeable chunk, the shortfall is a relatively small part of the overall $6.6 billion general fund budget.
Mining companies pay a net proceeds tax on minerals they take out of the ground. It’s in addition to payroll, property and sales taxes.
The budget approved by lawmakers last year assumed Nevada would get $93 million in net proceeds from mining. Instead, it took in only $20 million.
“Gov. Sandoval is working to address the shortfall from the net proceeds, and has directed the Budget Office to work with the (Legislature’s) Fiscal Division to formulate options,” Sandoval spokesman Mac Bybee told the Las Vegas Review-Journal.
He noted the deficit is a result of the tax revenue falling short of projections for this fiscal year from the Economic Forum, an independent panel of fiscal experts. The forum projects how much money Nevada will take in from various tax sources, and its forecast is used to create the state budget.
“It is important to note that this reduction will not affect the state’s ability to meet its day-to-day obligations,” Bybee said. “Legislative leadership has been notified and will continue to be a part of the discussions as we move forward.”
Tim Crowley, president of the Nevada Mining Association, attributed the revenue drop to declines in gold prices and higher production costs.
Gold prices have fallen from around $1,700 an ounce in January 2013 to about $1,300 today.
Economic Forum members will get an update on tax revenue streams when they meet June 3. They will gather late this year to make preliminary projections before the governor presents his budget to the 2015 Legislature, which convenes in February.