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Minnesota’s per-ton tax on taconite iron ore produced in the state will increase a dime this year, and the extra money will be dedicated to help rebuild and retool Iron Range schools.
The taconite provision was included in the 2013 Legislature’s final omnibus tax bill, which Gov. Mark Dayton signed into law Thursday.
The per-ton tax on taconite will increase to $2.56. Half the increase is part of an annual inflationary increase — this year, about 5.3 cents per ton produced. But there’s also an additional increase of a nickel per ton.
“We’re capturing that 10.3 cents to build and rebuild facilities for schools within the taconite tax relief area,” said state Rep. Tom Anzelc, DFL-Balsam Township, who served on the House Tax Committee and helped craft the taconite tax changes. “It’s something that’s long overdue and the school districts simply can’t handle on their own.”
That money will be made available for school construction and improvement projects through bonds issued by the Iron Range Resources and Rehabilitation Board. The extra money for school construction projects won’t affect other recipients of taconite tax revenue, such as homeowners, counties, towns and city governments and the Iron Range Resources and Rehabilitation Board. They all should get about the same amount as last year out of the taconite tax pool.
While lawmakers have allowed the inflationary escalator to go up in some years, freezing it in others, it’s the first time since 1992 that they have increased the base tax, Minnesota House research analysts said.
That’s not exactly what mining companies want as they look to cut production costs. But it’s also not expected to cause major hardships, said Craig Pagel, president of the Iron Mining Association of Minnesota industry group.
“No one, and no business, likes to have their taxes raised,” Pagel said. He added, however, that Iron Range lawmakers helped avert other, more onerous costs to mines, such as increased electricity costs from a new solar mandate that mines were exempted from.
“The Iron Range delegation worked very hard for their constituents, and the mines benefited from that,” Pagel said.
Companies can get rebate
Of the $2.56 total tax, mining companies can apply for a rebate of up to 32 cents per ton to pay for any new capital improvements that add to the productivity or longevity of their Iron Range plants, such as pollution-control equipment, upgrades or new technology.
“The rebate brings the effective tax down to about $2.24 per ton,” Anzelc said. “We obviously think that’s a fair level at this point.”
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