Critical Revenues: How Might Mining for Critical Minerals Contribute to Local Government Budgets in the United States?

Policymakers in the United States are interested in boosting domestic supply chains for critical minerals used in the defense, technology, and energy sectors. If successful, this effort to increase mining and processing activities will have a range of environmental, social, and economic consequences for host communities. In this analysis, we examine whether and how tax revenues from the extraction of certain minerals benefit host communities. We examine existing policies, mineral production data, and state and local tax data in Arizona, Arkansas, California, Nevada, and Utah. We find that mining contributes to local revenues in all states, but that this contribution varies widely, from roughly 0.5 to 5 percent of the value of extracted minerals. Existing policy structures do little to mitigate against the risk of revenue volatility, creating the potential for boom-and-bust revenue cycles for host communities. We note that large gaps in the availability of data limit transparency surrounding mining revenues and also make it difficult to understand the scale and scope of this issue nationally.