Given last week’s announcement in the News-Herald regarding the $350,000 grant from the Iron Range Resources and Rehabilitation Board (IRRRB) for the planned 16-unit Lutsen housing development, I thought the timing fitting to take a look at the history of the IRRRB, which stretches back more than three-quarters of a century.
Tony Sertich, former IRRRB commissioner, speaking at a Feb. 28, 2012 briefing, related, “The Arrowhead region of northern Minnesota has a long and rich history of natural resource use, from historic iron ore pits and underground mines in the 1800s, to the cutting of old growth white pine starting in the 1880s. Immigrants from 43 countries dotted the landscape with hundreds of old iron ore pits… [However,] the Great Depression created a huge ‘bust’ when iron ore production fell from 33 million tons to 2 million tons in the early 1930s.”
Following these hard times, in April of 1941, Republican Gov. Harold Stassen signed legislation creating the Department of Iron Range Resources. The newly formed department was funded with a portion of the state’s tax on iron ore shipments and tasked with addressing economic misfortune and unemployment in the region.
A quarter of a century later, in 1976, the IRRRB went through a metamorphosis as the result of a meeting among regional political and business leaders, which included former long-standing state Sen. Doug Johnson, DFL-Tower. Iron Range legislators Jeno Paulucci—the so-called “king of frozen foods” whose father, Ettore, was himself an iron miner— and Rudy Perpich—who was serving as the state’s lieutenant governor at the time—met to discuss possible ways to improve the impact of IRRRB on the region. “That’s where the idea really originated to have an increase in the tax, have it indexed, and establish an economic developed fund for the Iron Range,” recalled Johnson.
The timing for change was right in January of 1977 as Hibbing native Rudy Perpich became governor— the first Iron Range resident to hold the office. Rudy’s father, Anton Prpic, like Paulucci’s father, was also employed as a miner, having emigrated from Croatia to Minnesota’s Mesabi Iron Range.
The group crafted a new agency with more money and undertook to fund both economic and community development in northeastern Minnesota.
Bob Kelleher, a Minnesota Public Radio reporter—now an award-winning keynote speaker—writing in a December 1999 article entitled, “Troubles at the IRRRB,” suggested: “IRRRB’s supporters can point to the 1980s as a perfect example why the state needs an agency geared to the benefit of northeastern Minnesota’s iron-mining region. Gary Lamppa was commissioner of the IRRRB for much of the turbulent 1980s . . . Perpich’s choice to head the IRRRB.”
Lamppa [who served as Perpich’s campaign coordinator and later his chief of staff] recalls: “It was a whole different time economically, I mean things were really bad…all the mines were closed; and…we lost 20 percent of the population up there in those years.”
In the early 1980s, the United States was plunged into recession. By late 1982, steel production was half what it had been just 18 months before, freezing demand for Minnesota taconite. By 1983, half of the 14,000 Minnesotans employed in the taconite industry had lost their jobs.
Lamppa: “My boss [Perpich] ran on jobs, jobs, jobs. And so there was a lot of pressure to start, to begin, to diversify—to really diversify— the economy of northeast Minnesota.”
Present IRRRB Commissioner Mark Phillips, appointed by Gov. Mark Dayton in January 2015, commented in a guest column published in the Mesabi Daily News a month after taking office, “My experience has been that successful economic development requires as much art as science.
With a staff of 57, our mission is to promote and invest in business, community and workforce development for the betterment of northeastern Minnesota.”
IRRRB programs and operations are funded by a portion of taconite production taxes, paid by mining companies in lieu of local property taxes on each ton of iron ore products produced. (In 2016 this amounted to $2.659 per ton.)
Iron ore pellet production in Minnesota averages 40 million tons per year, which is well more than 80 percent of the U.S. domestic demand.”
As noted on their website, “IRRRB provides vital funding, including low or no interest loans, grants and loan guarantees for businesses relocating or expanding in the region. Additionally, a variety of grants are available to local units of government, education institutions, and nonprofits that promote workforce development and sustainable communities.”
Care to guess how much Cook County institutions have received in grant monies from IRRRB in the last 40 years? It’s not in the hundreds of thousands; it’s in the millions! The recent $350,000 grant to the Lutsen housing project pushed the figure over the $10 million mark by $237,217— according to the Iron Range Resources Grant Report – which, by the way, is not to be “removed from Elsie’s office, Thanks!”
So what does 10 million translate to over 40 years? It averages out to a solid quarter of a million dollars a year!
Last year alone, 2016, Cook County businesses and organizations nearly tripled that amount with $709,768 being awarded in grants. Another way to fully appreciate this is to consider the impact this amount of money would have had on the 2016 county levy, had taxpayers been asked to come up with the money to fund these requests. It would have added 10 percent to a levy that ended up at 8.5 percent. The same is true for the recent $350,000. Had this come from taxpayers’ pockets, as opposed to taconite tax revenues, the 2017 levy would have been ratcheted up another 4.49 points, bringing the levy to 15.7 percent.
In addition to the grant dollars that come directly from the IRRRB, Cook County, Grand Marais, townships and the school receive monies from the taconite production tax, which in 2016 amounted to $1.8 million. ISD166 received $420,894 for operations and another $462,000 went to make the final payment on a school bond, which over the past 20 years amounts to $11,004,000.
Tally all these taconite tax dollars together to total a tidy two million a year over the past 20 years.
Time to be grateful!
“Cultivate the habit of being grateful for every good thing that comes to you, and to give thanks continuously.”
Ralph Waldo Emerson
Former Cook County Commissioner Garry Gamble is writing this ongoing column about the various ways government works.
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