Minnesota's taconite plants will get a smaller tax rebate than they were expecting after the Iron Range Resources and Rehabilitation Board decided to spend the money on public works projects instead.
The board voted Thursday to chop a taconite production tax reimbursement nearly in half. The decision means the five plants will get $4.95 million instead of the $9.67 million tax refund they expected this year. The $4.72 million saved will go to pay for public works projects on the Range.
Rep. Tom Anzelc, D-Balsam Township, originally proposed completely eliminating the IRRRB's Taconite Economic Development Fund, the channel through which the reimbursement flows. He said it was inappropriate to offer a tax break to mine operators when they are enjoying healthy profits thanks to strong global demand for steel.
"It's corporate welfare," Anzelc said.
Anzelc noted that the mines are exempt from property taxes because they pay production taxes of $2.30 per ton instead. Refunding that tax comes at the expense of all other property taxpayers at a time when real estate taxes are increasing, he said.
The tax break, which dates from the early 1990s when times were tough on the Range, was meant to stimulate reinvestment in mining facilities.
Rep. Dave Dill, D-Crane Lake, said he would have preferred to pay the full reimbursement to the mines, but he offered the compromise partial cut as an amendment to Anzelc's original motion. Dill's proposal passed 9-4.
Sen. Tom Bakk, D-Cook, said he had wanted to re-examine the issue for some time. He said there should be a mechanism so that when taconite companies are doing well in good times, they should finance their own projects, but get funding under the program when times turn tough.
The reinvestment program has worked well at times, Bakk said, such as when the Minntac plant was able to use those funds to help leverage more corporate dollars into a $350 million investment. On the other hand, he said, funds given to the LTV taconite plant, which closed in 2001 with the loss of 1,400 jobs, "was money down a hole."
Craig Pagel, president of the Iron Mining Association of Minnesota, said afterward that his members had little notice about the proposal. He said financing will have to be re-examined for plant improvement projects, many of which were suggested by joint management-union committees.
The IRRRB is a state agency that focuses on regional economic development for the Range. Its board is comprised of five state senators, five state representatives and three appointed citizen members.
(Copyright 2011 by The Associated Press. All Rights Reserved.)