Since I was responsible for the administration of the taconite production tax for 30 years with the Minnesota Department of Revenue, I still have some understanding of how the tax works. With the coronavirus problem severely damaging the national, state and local economy, residents of both school districts should consider how the decline in mining and production tax revenues will affect the IRRRB’s ability to fund the promised 40 percent.
The amounts allocated to IRRRB go up or down faster than the amounts allocated to other recipients. If they could not fund the 40 percent, the local share would increase from 20 percent to 60 percent. This assumes the state will be able to fund their promised 40 percent.
News stories have stated that the entire surplus has been depleted by the virus problem. State aid to schools was reduced during the 1980s when tax revenue fell.
School districts, counties, cities and townships within the taconite relief area all receive significant payments from taconite production taxes. A portion of taconite school aids is subtracted from local school property tax levies. This amount is shown on your individual tax statement from the county auditor.
Both Giants Ridge and the Discovery Center in Chisholm usually require subsidies from IRRRB. If production was to stay low for more than one year, the IRRRB could be faced with insufficient revenue to fund their 40 percent. Since Eveleth-Gilbert taxes will be higher if we consolidate now, it might be wise for Eveleth-Gilbert citizens to vote no and delay the decision on consolidation to a later date.