ELKO, Nev. — In late January, snow dusts the open land as the backs of cattle grazing peek out of the scrubland that surrounds the section of Interstate 80 crossing Nevada.
The road is straight and flat, cars traveling to Salt Lake City, Utah, or West to the Sierra Nevadas speed by at 85 or 90 miles per hour while the big rigs that dominate the highway keep at a more respectable 80 — the official speed limit.
This region of basins and ranges, of pinyon juniper forests perilously clinging to mountain passes, is defined by a sense of emptiness, sameness.
People stop in the towns lining I-80 to fill up their gas tank, eat a quick bite, and then keep driving.
In this city of roughly 20,000 people at 5,000-foot elevation, locals would prefer you keep on driving. Unlike Las Vegas or Reno, tourism is not the biggest industry in town, and that’s fine by the people of Elko — where gold mining rules the economy.
Although the state as a whole has been hit especially hard by the economic fallout of the pandemic, in Elko people are still working, restaurants are bustling, and aside from the rules mandated by Democratic Gov. Steve Sisolak, life is normal — a state of reality that can be disorienting for those arriving from harder hit regions.
As of December 2020, Nevada still had an unemployment rate of 9.2%. In a report on permanent business closures released in September, Yelp determined that Las Vegas was one of the hardest hit cities in the United States.
With the rest of Nevada’s economy cratering, a long simmering battle over a tax system some say unfairly favors mining has resurfaced. Democrats in the state have tried for decades to amend the 157-year-old constitutional cap on mining taxes, and the pandemic may have provided a window of opportunity. But the move has also unleashed tensions between the two regions of the state — rural communities that say a tax hike against mining will cost them jobs and urban areas where the economic blow of the pandemic means further cuts to education and health care are looming.
A state judge in late January ruled against four rural counties and Nevada Gold Mines that sued to stop legislators from moving forward with three proposed constitutional amendments to increase taxes on mining.
“It will have a devastating impact and and it will hurt rural Nevada,” says state Assemblyman John Ellison, a Republican representing Elko, Eureka, White Pine, and part of Lincoln County. “I’m thinking about Elko, Eureka, Winnemucca, these places where (mining companies) help build schools from the ground up outside of the money that they pay in taxes.”
On the other side, proponents of the tax increase say it’s a necessary measure to avoid devastating tax cuts.
“So much of our general budget comes from gaming. And that’s not coming back anytime soon,” Ian Bigley, the mining justice organizer at the Progressive Leadership Alliance, says. “We really have to think long term in Nevada about diversifying our revenue, and part of that comes from mining.”
The state of Nevada accounts for 80% of gold produced in the United States, and is one of the top gold producing regions in the world. Most of that gold comes from northern Nevada.
But people in Elko are worried that could change.
A company town
On a Tuesday afternoon, the Dreez diner, on the corner of Silver Street in downtown Elko, is bustling. I met the owner of Dreez (an abbreviation of his wife’s childhood nickname “Dreezer”), Jon Karr, who is also the owner of the bowling alley across the street and an Elko County commissioner. Karr wears a black shirt with an American flag outlined on the back and light blue jeans, his blond hair and goatee are kept trim.
He’s been inviting Nevada legislators to come to Elko to see just how important mining is to the community. “They see the north as a kind of annoyance. They don’t want to deal with us, and that’s the problem. Come see our town before you decide to just implode our economy.”
None of the lawmakers, who are meeting 300 miles away in Carson City considering proposals to amend the mining tax, has yet to take him up on his offer.
The edges of town may look a little run-down — the three exit ramps have the requisite Port of Subs, fast food restaurants and motels that exist on every stop along I-80. But drive around for a few minutes and the wealth and charm of Elko is apparent — brand new trucks, high-end restaurants, art galleries, and an “Arts and Gears” museum.
From Karr’s diner, the red and white signage of the Pioneer Hotel, a three-story brick building that usually hosts the annual National Cowboy Poetry Gathering, is visible.
The town even has a “jai alai court” — a handball game traditionally played in Europe’s Basque country (in the late 1800s, Basque sheepherders migrated to Elko).
Waitresses at the Star Hotel, where grilled chicken costs $20 and lamb chops go for about $40, say business has been a little slower, but not terrible. On a Tuesday night, the bar is full.
Like many young people that grew up in Elko, Karr got his start in the gold mining industry working as a metallurgical engineer. After a decade of long hours that often kept him away from his family, he decided to go into the restaurant business, and eventually open a bowling alley.
Nevertheless, he is adamant about mining’s importance to his community.
“There’s still a little bit of gaming and definitely some ranching. But Elko is hugely dominated by gold mining,” he says.
And it’s been a good year for the gold industry — times of uncertainty (like recessions or a pandemic) spur investment in the precious metal.
In July 2019, gold was at $1,420 per ounce, by July 2020, it was up to $1,800 and remained in the range the first week in February.
In Nevada, the world’s two largest gold companies — Barrick Gold Corp. and the Newmont Corp. (headquartered in Toronto, Canada, and Denver, Colorado, respectively) — have a joint operating agreement under Nevada Gold Mines. While there are a few other mining companies in the area, Nevada Gold Mines dominates.
Prior to the joint operating agreement, Barrick and Newmont would compete in their attempts to win the goodwill of northern Nevadans through financial contributions like a college scholarship fund for children of employees. In the wake of COVID-19, Nevada Gold Mines launched an “I-80 Fund” that provided low-interest loans for small businesses in the region, the Elko Daily reported.
“If mining wasn’t here, Elko wouldn’t exist,” says Cheili Jackson, a 17-year-old high school student. She hopes to get her degree in biology and work with animals, but she says many of her classmates plan to work in the gold mines after graduating.
They’re the best paying jobs in town, where locals say 18 year olds can make $25 to $30 an hour.
Mining for gold hasn’t benefited everyone, though.
“If you live in gold country, homes and everything go up,” Larson Bill, a member of the Shoshone Tribe, says. “They think everybody works in the mines.”
According to Zillow, the average home costs $272,912 — over $100,000 more than homes in other I-80 towns like Lovelock. In Winnemucca, another gold mining hub, houses go for around $250,000.
Beyond rising real estate values, there are ongoing concerns ranging from groundwater pumping that keep pits below the water table dry to the cyanide leaching process used to extract gold. The Western Shoshone tribes have also battled for years with the mining companies over expansion on sacred sites.
“I could go make more money at the mines but you don’t have a life,” said John Wright, a rancher and owner of J.M. Capriola’s, a store that sells handmade saddles, bits and spurs and other ranching supplies. He’s the third generation to run the store and his 15-year-old son, Charlie, is already helping out in the store when he’s not attending high school or rodeos on the weekend.
But like many people in the area, Wright finds the benefits of mining outweigh the costs, and he is against the tax increase proposal.
Long-standing tax break
“Mining and ranching are as old as dirt,” says Jan Petersen, an Elko resident whose great grandparents moved here in the 1800s to work on the railroad.
The town was founded in 1868, and after the construction of Western Pacific Railroad, the population boomed — turning Elko into an economic hub in the otherwise remote region.
Mining is deeply entrenched in Nevada’s state history, and that’s part of what has made the battle over how to tax the industry so difficult. Nevada’s nickname, “The Silver State,” came from the rush of people that followed the Comstock lode in Virginia City discovery in 1859.
The state Constitution was passed in 1864 with a stipulation that the net proceeds of mining could not be taxed above 5%. Raising taxes on the industry would require a constitutional amendment, an arduous process that involves ratification by voters in a general election.
Over the summer, Nevada’s governor convened a special legislative session to deal with the coronavirus and the economic fallout.
Progressives seized the moment to get the Legislature to pass three resolutions that would increase taxes on mining.
“This is about funding our schools and funding our health care services,” says Bigley at the at the Progressive Leadership Alliance. Education and health care have been underfunded for decades, he explains, and that has been the main impetus for attempts to raise mining taxes in the past. “The difference is now, it’s no longer a desire to do so, it’s a necessity.”
As the pandemic hammered tax revenues from the state’s normally robust tourism industry, Sisolak has called for a $130 million budget cut in education spending, the Reno Gazette Journal reported.
Bigley and other progressives argue that any one of the resolutions passed would modernize Nevada’s tax system and align the mining taxes to look more like those levied in other Western states.
“Mining has made a great comeback,” Michael Green, a history professor at the University of Nevada, Las Vegas said. “Mining is mostly in rural Nevada, though there are corporate offices in the (state’s) bigger cities. And rural Nevada does not have legislative clout to speak of in terms of numbers.”
In the past, it has been tough to get movement on mining tax changes, however. “There is unity in numbers. But there’s also unity in unity. And rural Nevada is overwhelmingly Republican. And the Republican Party has been overwhelmingly anti-tax. The Democratic Party has not wanted to be vocal about raising taxes because of the political fallout,” Green explained.
But with sales taxes collected from the hospitality industry plummeting because of the pandemic-induced decline in tourism, the state budget is clearly in dire straits, and that unity may no longer be enough. Without a clear sign to a real economic recovery in sight, Nevada may be out of other options.
Of the three resolutions that passed the Democratically controlled Legislature during the summer’s special session, two would impose a 7.75% tax on mining companies’ gross, not net, proceeds and let state lawmakers raise the tax rate by a simple majority vote, while keeping the two-thirds supermajority threshold to reduce the rate in the future. The third, described as an “olive branch” solution, according to the Nevada Current, would raise the net proceeds tax to 12% and set a minimum rate based on property taxes.
In their lawsuit against the state Legislature, Lander, Pershing, White Pine and Elko counties, Nevada Gold Mines, and the Elko County Commission, argued that not only would the resolutions hurt rural counties, but that the special session should have been reserved to bills and topics related to the pandemic, The Associated Press reported.
But state Judge James Wilson ruled Jan. 28 that the legislative branch can do what it wants while in session. “Serious separation-of-powers issues ... would arise if the courts were to intervene prematurely in the multistep legislative process for proposing state constitutional amendments before all the legislative steps have been exhausted,” Wilson wrote.
So the resolutions are going forward in the 2021 general session, where they need to pass again by a two-thirds majority before they can be placed on the 2022 ballot for ratification by Nevada voters.
It’s not clear whether the counties or Nevada Gold Mines will appeal to the state Supreme Court.
Elko has matured
Karr offers to show me the entrance to the mining complex where he used to work.
We drive west toward Carlin, but before getting back on I-80, Karr pulls over on the side of the road, gets out of his cherry red Dodge Ram pickup truck and points to a warehouse complex surrounded by heavy machinery. It’s the new Komatsu Equipment Center — a company that provides machinery needed by mining companies.
In Karr’s eyes, the center is an example of one of the many ways gold mining contributes to Elko’s economy — it has meant new jobs in businesses serving the mining industry and sales taxes collected on million-dollar pieces of equipment.
It’s cold outside and there’s nowhere to hide from the wind. We get back in our cars and keep driving, eventually turning off in Carlin and heading down Newmont Road. We turn up the road to the mine, hidden from the vantage of the parking lot and security station, but we only stay a few minutes — long enough to look at the refractory ore treatment plant, “the roaster” that processes the gold. The plant sends gray plumes into the sky.
It’s a familiar place for Karr. He enjoyed the drive out to the mine early in the morning, cup of coffee in hand.
Back on I-80, the mountains and sagebrush are blanketed in snow. It’s easy to fall into a trance trying to look out into the horizon.
In 30 minutes, the turnoff for Elko appears.
In the 1980s, “It was very much a partying, drinking, brothels, type of place.” And while Elko still has three brothels, Karr says “we’ve now matured.”
“We really have people that live here, and care about it.”
Elko’s a gold mining town, but as Karr himself noted, they’d grown up a little.
It’s unlikely the gold mining industry will dissipate or disappear if taxes are raised on the companies that remove and process the precious metal.
Assemblyman Ellison’s concerns over the resolutions echo the concerns of progressives — the change would be written into the constitution. What happens if the price of gold goes down?
When asked for comment, Nevada Gold Mines provided a statement that while it did not comment on active litigation it is “committed to working with the governor and both houses of the legislature to reach a solution that secures the mining industry’s ability to continue to support the rural counties and the state as a whole for the long term.”
According to Nevada Mining Association President Tyre Gray, an increased tax on the mining industry could mean a contraction of the industry by 30%, which could mean upwards of 10,000 people losing their jobs.
While proponents argue that there are only so many places Barrick and Newmont can mine for gold — people like Ellison and Karr say that’s not the case.
The discovery of gold feels like the discovery of oil. Price and markets will dictate whether or not mining is viable, and Gray said it’s not uncommon for mines to go into a holding pattern if the price of the commodity goes down.
But for a region littered with ghost towns, with stories of booms inevitably followed by busts, it’s hard to imagine the not-so-small town disappearing.