Monday, March 21, 2011 By Aaron Brown
It's very easy to look at this trust fund and think of it as an extravagance that other regions don't have, one that should be gobbled up. But for anyone not familiar with the Iron Range mining tax structure, mines don't pay property tax -- haven't in more than half a century. They instead pay production tax which is administered by the Iron Range Resources and Rehabilitation Board (IRRRB) in lieu of local property taxes. The IRRRB is a state agency, but performs local tasks with local tax revenue. Some time back this trust fund was created to generate an annual pool of funding for economic development projects on the Range.
Now, you can criticize the agency's decisions or those of its governing board (I often do), but this isn't an outrageous use of the money considering the lack of consistency in mining tax revenue. A one-time raid will be a drop in the bucket for the state, but would be a once-in-a-lifetime robbery for the people of the Iron Range.
Taking this money would be like the state placing a tax on any suburban city council's spending for job creation or economic development. Such a tax would be rightfully called crazy anywhere else, but because the Range represents a constant political target, our representatives must do an elaborate bee dance to explain taconite taxation every two years.
Melin and Rep. David Dill (DFL-Crane Lake) will have the first crack at this defensive operation in the Jobs and Economic Development Committee tomorrow.
MELIN BLASTS DOUGLAS E. JOHNSON FUND RAID BY GOP
(ST. PAUL) – State Representative Carly Melin (DFL – Hibbing) responded today to a Republican plan that aims to take $60 million from the Douglas J. Johnson Economic Protection Trust Fund at the IRRRB.
“The Douglas J. Johnson Economic Protection Trust Fund is dedicated to local economic development,” explained Melin. “Responsible management and use of the Fund protects the local economy and ensures our region stays strong.”
Revenue for the Fund comes from mining companies on the Iron Range who pay a production tax in lieu of a property tax. The Republican proposal would take $60 million from the Fund. “Jobs and Economic Development Chairman Bob Gunther reassured my Hibbing constituents just two weeks ago that the Fund would remain protected. He recognized that it is essentially local property tax money and that he would not raid it.”
Representative Melin noted that there is a long history of attempts to raid the funds for non-dedicated purposes. “Having spent my entire life on the Range, I have seen repeated attempts to steal our economic development money and use it to plug budget holes that legislators in St. Paul have created,” said Melin. “I won’t stand for it. This proposal continues the Republican agenda of robbing Peter to pay Paul. I guess when Republicans preach shared sacrifice in balancing Minnesota’s budget, what they actually mean is taking $60 million of our regional money to protect tax breaks for Minnesota’s wealthiest 5%.”
Melin noted that IRRRB Commissioner Tony Sertich will testify in the House Jobs and Economic Development committee on Tuesday, March 22 on the proposal. “Legislators need to respect what the Economic Protection Trust Fund means for my region of the state. This is local money that we invest locally.” said Melin. “Every few years when a proposal like this appears, the Range delegation has to do some teaching. I look forward to working with Commissioner Sertich on reeducating my House colleagues.”