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Nevada Tax chief quits after statement on mining
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Mike Johnson/Las Vegas Review-Journal
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CARSON CITY -- State Taxation Director Dino DiCianno "retired" abruptly Friday, less than 24 hours after he told legislators that his staff for the past two years has not audited mining companies to determine if they are properly paying state taxes.
And Gov. Brian Sandoval ordered an audit of mining operators' books to ensure they are paying their required state net proceeds of minerals taxes.
The governor and legislators did not say Friday they suspect mining companies have not paid all due taxes, but Senate Majority Leader Steven Horsford, D-Las Vegas, said: "The numbers justify investigation."
"There was an increase in mining profits and a decrease in revenue. It is ridiculous that we have no experts available to explain whether or not that is legitimate, especially now," he said.
News that mining companies have gone unaudited comes at a time when Democrats are complaining that Sandoval's proposed $5.8 billion two-year budget is $2 billion to $2.5 billion short of the state's real needs.
Sandoval did not say DiCianno had been fired, but that the taxation director had "informed" him Friday that he was retiring.
"I appreciate Dino's many years of service to the state of Nevada and I wish him well in his retirement. He has been a loyal and dedicated public servant for three decades," Sandoval stated.
He appointed Deputy Taxation Director Chris Nielsen to succeed DiCianno until a permanent successor is named. Nielsen will develop a strategy to resume audits quickly and Taxation Department auditors will be assisted by State Internal Audit Division staff members, according to a statement issued by the governor.
DiCianno shocked members of the Senate Revenue Committee on Thursday when he admitted that for the past two years his office had no auditors skilled in handling the state's mining tax laws and capable of auditing mining companies.
He also said he never told Sandoval about his staffing problems.
MINING PROFITS GROWING
Mining companies have been reaping bigger profits because of the skyrocketing price of gold, now selling for $1,417 an ounce. About 80 percent of the nation's gold is extracted in Nevada.
The mining industry now pays about $85 million a year in net proceeds of mineral taxes to the state and a similar amount to rural counties.
The Taxation Department released a report Thursday that showed those revenues have been increasing in recent years. Sandoval even announced Thursday that due to high gold prices the state would receive $10 million more in net proceeds taxes than expected.
DiCianno's statement that he lacked trained auditors so rattled Horsford on Thursday that he said he might "start taking blood pressure medicine."
"While I appreciate Mr. DiCianno's recognition of his error, a changing of the guard is not good enough," said Horsford on Friday. "We are being asked to cut millions from education and essential social services. If our state is losing money because tax reports are being rubber-stamped, we need to fix that. We need to audit our auditors."
During the Thursday hearing, Terry Rubald, chief of the Taxation Department's assessment division, said mining largely "operates under a self-reporting tax system."
For years legislators have talked about but failed to pass any legislation to require higher taxes from mining companies. Horsford said Thursday that mining should not be singled out any more than other industries for special taxes.
Senate Revenue Chairwoman Sheila Leslie, D-Reno, would not conjecture Friday whether mining companies are properly paying their net proceeds tax.
"Who knows?" she said. "I am not accusing them of doing anything illegal. I do know that multibillion-dollar corporations have a whole lot more attorneys than we have auditors."
MINING DEFENDS ITSELF
Tim Crowley, president of the Nevada Mining Association, said companies have "excellent procedures" for computing and paying their taxes, and he doubts auditors will find anything unusual.
Newmont Mining Corp. lobbyist Jim Wadhams said he was surprised at DiCianno's announcement that mining companies have not been audited.
"I have dealt with five or six (Taxation Department) people over the years. They are supposed to examine company records and verify the calculations are correct. Do I think they now will find any major discrepancies? I don't think so."
Barrick Gold of North America, the state's largest producer, issued a statement in which Greg Lang, its North America region president, said "we certainly pay our taxes." He said Barrick has invested more than $2 billion in Nevada in the last five years and paid $101 million in net proceeds taxes March 1 to the state and counties.
The Progressive Leadership Alliance of Nevada has been the sole organization in recent years trying to induce legislators to increase mining taxes. The liberal-leaning group that represents unions failed last year to secure enough signatures on petitions to put a mining tax before voters.
PLAN legislative lobbyist Jan Gilbert also did not accuse mining companies of cheating on their taxes, but she did criticize mining tax rules.
"I think the way regulations are written, we basically are allowing them to deduct anything except toilet paper, and they may even deduct that," she said Friday. "We have set it up so mining gets off the hook."
Mining companies pay a 5 percent net proceeds of mineral tax that is calculated after they deduct legally allowed expenses, such as the costs of extraction, transportation , marketing, depreciation and employee benefits.
In the Thursday hearing, PLAN President Bob Fulkerson said some companies are deducting far more than others and reporting different deduction costs to shareholders than they do to the state.
However, Crowley said because the price of gold is so high some companies are taking gold from older mines and their extraction costs are much higher than gold produced at new mines.
Leslie said DiCianno, who did not return a call seeking comment, does not deserve all the blame for the improper oversight of mining companies.
"I am sympathetic to the state agencies for the pressure we are placing on them to meet all their requirements with fewer resources," she said. "I don't think Dino bears all the blame. A lot of things aren't getting done in state government now."
Gilbert agreed.
"I think it is really uncalled for," she said. "He is firing a long-term public servant who probably didn't request the audits because the governor's budget is so tight. All the budgets have been drastically cut."
Contact Capital Bureau Chief Ed Vogel at evogel@reviewjournal.com or 775-687-3901.
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Mining in NV gets special treatment. Have a valid timely complaint for safety-health-electrical code-cab-fire in a moving 200 ton haul truck-false record keeping. . .violations? Don't worry MSHA-NV Mine Safety Training Section will cover it up and make sure there is never an investigation. I know as I have tried to to have a timely valid formal complaint investigated at Round Mountain Gold Mine, owned by Kinross and Barrick Gold. Why do we pay salaries and benefits to mine safety regulators here in NV? Their real job is to protect the safety of Corporate Miners NOT a working shift miner. NV dept of Taxation Chief Terry Rubald needs to go as well as Dino. Terry Rubald was shown the door in Wyoming's Taxation Dept. for monkey business in that state. Gee,does anyone really believe these on-going lapses are a one time only or by accident? Mining gets a free ride in NV all the way around! Kinross-Barrick-Newmont CEO'S receive more in salary, stocks, and compensation yearly than any mining taxes paid yearly to Nevada. . . Governor Sandoval is the NEW Nevada Corporate Mining Gate Keeper! PRupp B125SP NV 89047
Some pf you people just don't get it, do you? This is NOT a left vs right issue. This is not the D's vs the R's. DiCianno INTENTIONALLY avoided his duties, and in return received cash money under the table from mining moguls. DiCianno might have shared a portion of his ill-gotten gains with other office holders, who in turn would keep their mouths shut. Anyone who believes that government officials have your best interests in mind has been duped beyond hope. They're in government to pad their own pockets, period!
Note to "Slam Dunk"; Again its the Nevada State Assembly that decides what the funding level is, yes the governor has great input but does not control the purse strings.. Ther former governor of our state was a mining engineer. The Minority Leader from last session (a Republican recently retired) was from Northern Nevada and his vote would be required in order to overide a veto or to pass a budget. Democrat and Republican members from the north routinely bury the hatchet and vote together for the interests of Northern Nevada. Hence no taxes on mining last session nor will any pass in this session. Northern Nevada wins again! Mean time the fools we send to Carson City from the south from both parties sit on their hands and loose all the time. The only way to raise taxes on mining is to change the state constitution which requires a lot of signatures from the north, something that will never happen. The system is corrupt.
Instead of Nevaduh being broke every US CITIZEN that is a resident of Nevaduh should be getting a check every year from the foreign-owned gold mines just like the residents of Alaska do from the oil companies...
mar100, You forgot the most important part of your thought process. The funding levels are determined by the Governor. No new taxes. Sandoval says,"I will veto any tax increase." In fact let's cut everything. Funding for state services and amount of workers are at the lowest levels in the country. The Republican Governors of the last few years have the ultimate power. The Democrats in the Legislature do not have the votes to override the Governors Corporate Plans. It is Sandoval and Gibbons who determine the whole show. Just Veto Baby. Don't pass off that responsibility now. It is the Governor who dropped the ball here. Small government. Big problems. This is the real story now Mar100. Hard to accept the truth that your "peeps" blew it again. Attorney General Cortez-Mastro, Investigate the Fiscal Irresponsibility Now. Nevada revenues were short changed. Sandoval, you better start getting a new budget ready.
The Nevada State Leglislature sets the staffing levels and funding for all state offices. This is the same group of folks you voters elected. Why no auditors, lets ask the Assembly Committee responsible for this agency! The Governor is just setting up this agency for one of his pals to run, political payback. The real answers should come from the legislature about why no audits of mining.. Let this poor guy retire in peace....
Alvinjh wrote,"Harry will protect the mining interests..." Not for long. Alvin, you are the leader of the recall for Harry Reid. You said that this could be done in six months. That would be enough time before the legislature is out of session. With Harry gone because of you and the chipmunks, who is going to protect mining? The same guy who is doing it now, Republican Corporate Governor Sandoval. Nice try Alvin to shift the responsibility away from Brian. That Governor's Ball funded by Barrick Gold did not help. Governor Gibbons taught Sandoval well.
Harry will protect the mining interests...
"Corporate welfare," fumes Bruce Babbitt, who as secretary of the Interior in the Clinton administration was forced to approve the sale of more than 9,000 acres of public land to miners. Those sales, called patents, included more than 1,900 acres in Nevada containing gold he estimated to be worth more than $10 billion. A Canadian company, Barrick Gold, paid the government less than $10,000.
Whats to audit? They don't pay us but nickels and dimes.