As the Nevada legislature struggles to keep funds flowing to higher education, Barrick has stepped forward and supported a broad range of revenue-generating options.
BLOG / NEWSLETTER:
By Michael Brown, Vice President of Corporate and External Affairs, Barrick North America
The Great Recession has had far-reaching impacts on public institutions in the United States, including higher education. No state has been spared, including Nevada.
The “Silver State” leads the nation in unemployment and home foreclosures, and has confronted one of the largest budget deficits of the 50 states. The Nevada System of Higher Education (NSHE), the umbrella organization for the state’s public universities and colleges, has been hit hard by the downturn, and Barrick has sought to sustain its historic support for the organization.
n most state budgets the largest share of spending is reserved for primary and secondary school education, public safety and social services. These areas account for upwards of 70 percent of a state budget, meaning higher education faces the brunt of budget cuts during tough economic times. NSHE is coping with substantial budget challenges at a time when it faces rising enrollment levels as many casualties of the recession enter colleges to acquire new job skills.
On an indirect basis, we support all NSHE universities and colleges through the payment of taxes. We rank as one of the largest taxpayers in a state where few companies pay taxes based on their income. In early 2011, Barrick paid $101 million as a prepayment of the estimated 2011 net proceeds of minerals taxes. In August, the company paid an additional $21 million due to the rising price of gold. All told, Barrick prepaid over $122 million for estimated net proceeds of minerals taxes — a record for Nevada. To help the state’s cash flow, we prepay the mining tax a year in advance of generating the income. On top of that, in 2010 the company paid $52 million in sales and use taxes.
It needs to be understood that Nevada is one of only seven states without a personal income tax, one of only five without a corporate income tax, and one of only three that does not assess either tax. Hence, the state is dependent on industry-specific taxes on gaming, banking, mining and insurance. Sales taxes are the second largest source of revenue, supplemented by a one-of-a-kind payroll tax. Those are all volatile revenue streams in a recession, especially with the collapse of the real estate and construction markets in Las Vegas. Given these limited revenue options, it is remarkably difficult to fund a state budget and sustain a university system.
As the legislature struggles to keep funds flowing to higher education, Barrick has stepped forward and supported a broad range of revenue-generating options. We have supported increases in the Modified Business Tax and other proposed broad-based revenue measures. We supported extending temporary taxes, prepayment of the mining tax and the termination of some deductions to the net proceeds of minerals tax. Together with the state’s gaming industry, we also sought to address the need for fiscal reform through public commissions and private initiatives.
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Barrick Gold Corporation