Commentary - Drew Johnson: As Treasurer, I’ll Use Nevada’s Mining Boom to Eliminate the State Gas Tax

Commentary

Nevada was built on booms—and scarred by busts. Gold and silver created fortunes, fueled growth, and built communities across our state. But when the ore ran out, prosperity often vanished, leaving ghost towns as reminders of how quickly a boom can fade.

Now lithium and a new generation of critical-mineral projects give us a chance to do something different: ensure this boom continues helping Nevadans long after the mines stop producing.

Thacker Pass, now under construction in Humboldt County, is poised to become the centerpiece of America’s domestic lithium industry. Lithium Americas has outlined expansion potential to 160,000 tons of annual lithium carbonate production.

And Thacker Pass may only be the beginning. If other proposed lithium and critical-mineral projects move forward, Nevada could be at the start of a mining boom unlike anything the state has seen in decades.

That’s on top of the hundreds of millions Nevada has collected from taxpayers in recent years beyond what the state needs to fund government.

So what should Nevada do with the money?

If I’m elected Nevada State Treasurer, I’ll propose creating a Permanent Fund using a share of the new revenue generated by Nevada’s mineral boom, along with half of the surplus revenues collected in good years. My plan would eliminate the state’s 23-cent-per-gallon gas tax while keeping our roads fully funded.

Alaska, North Dakota, Wyoming, and New Mexico have all used natural-resource revenue to build permanent investment funds. Nevada should do the same.

The gas tax was designed for a different time. Cars are more fuel efficient, more people work from home, and electric vehicles use the roads without paying fuel taxes. Revenues from Nevada’s gas tax are beginning to decline while the cost of building and maintaining roads keeps rising.

We should overhaul how we fund our roads before we’re forced to choose between higher taxes and crumbling infrastructure.

The Nevadans hit hardest by the gas tax are those who have no choice but to drive—the construction worker heading to a job site, the casino employee commuting across town, or the family that can’t afford a newer car.

This policy would eliminate the full 23-cent state gas tax, saving a typical family about $230 a year. The federal gas tax and other county fuel taxes are not part of the proposal.

And the Permanent Fund would be built responsibly.

Half of future state budget surpluses would go into the fund—but only after maintaining mandatory reserves and making required Rainy Day Fund transfers.

My plan also would not raise Nevada’s mining tax. The Nevada Constitution caps taxes on net mineral proceeds at 5 percent, and my proposal leaves that rate unchanged. Existing commitments to local governments and education would be protected.

The fund would receive roughly 45% of new mining-tax revenue generated by future lithium and critical-mineral development, along with half of future state budget surpluses.

We would also honor Nevada’s existing highway debt. Some highway bonds are written to rely on fuel-tax revenue, so we would pay off, refinance, or restructure any affected bonds before the tax disappears.

At current revenue levels, replacing the full state gas tax means replacing roughly $270 million a year for state and local roads.

The goal is to build roughly $6 billion in Permanent Fund and reserve assets—enough, at a 5 percent annual returns, to replace that revenue while maintaining a cushion for lean years.

That won’t happen overnight. If Nevada continues producing substantial budget surpluses, planned mineral projects come online, and long-term investments perform as expected, building the fund will take about 10 to 12 years.

Then the gas tax goes away.

The result would be a permanent tax cut for Nevada drivers and a more reliable way to fund our roads and highways.

As Treasurer, I will safeguard Nevada’s money, manage investments responsibly, return unclaimed property faster, save our nearly bankrupt Millennium Scholarship program, and serve as a watchdog for taxpayers.

But I will also fight to do something government almost never does: turn a temporary windfall into a permanent benefit.

The minerals will eventually run out.

But the benefits they create for Nevada don’t have to.

Drew Johnson is a fiscal policy expert and government watchdog who is the Republican nominee for Nevada State Treasurer. To learn more about Drew’s plan to eliminate the Nevada gas tax, visit DrewforNevada.com.