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Other view: Raid on Iron Range jobs fund was wrong

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Other view: Raid on Iron Range jobs fund was wrong
Duluth Minnesota 424 W. First St. 55802

Strictly and legally speaking, the Republican legislative majorities' raid on an Iron Range development endowment fund isn't "theft," though outraged DFL legislators from Northeastern Minnesota volubly decry it as such.


The Iron Range Resources and Rehabilitation Board is a multicounty creature of state government, much like the Metropolitan Council.

That makes the proposed GOP grab of about a third (Senate version, which includes a promise of a payback in three years) to half (House version, which includes no such promise) of the Douglas J. Johnson Economic Protection Fund more akin to a parent's "appropriation" of a child's savings account.

That would be an account accumulated through the child's own labor, without any contribution from the parent, and which the child had been planning to use to pay for college tuition.

In other words, what the Republicans propose to do is legal. But it's wrong. Here's why:

  • The GOP move would put in state coffers money that was raised regionally over many decades for the purpose of diversifying an economy that cannot rely on minerals forever.

    The Johnson Fund is an endowment whose corpus was built with taconite production taxes, which mining companies pay in lieu of local property taxes.

    The endowment was created in 1977, and since 2002 it has borne the name of longtime DFL Sen. Doug Johnson of Cook. Simply put, this isn't the state's money.

  • Raiding the IRRRB-managed fund isn't the only GOP financial assault on parts of the state that traditionally vote for DFLers.

    But it may be the most blatant such move (though the House's phaseout of local government aid for Minneapolis, St. Paul and Duluth gives it close competition).

    Seventy percent of the budget-balancing adjustments in both chambers' economic development funding bills come from the Johnson fund raid.

    Minnesota has thrived for 40 years with state policies that spring from the notion that this is one state, not several rival regions.

    Republican legislators are reigniting old intrastate rivalries this year with ham-handed attempts to shield the regions they represent from budget cuts.

    In so doing, they risk building resentments that someday will lead to political retaliation, and that won't be good for Republican constituents or this state.

  • Tapping one-time funds to correct a state budget that has been repeatedly in deficit for 10 years is no longer acceptable.

    That's what this move is -- and it's not the only one. Republican-crafted funding bills for state agencies are replete with seizures of surpluses in fee-based special funds. Together they total tens of millions of dollars.

    Taking those special-purpose funds only delays the forging of a budget correction that lasts. Minnesota has seen enough of these temporary patches to the leaky ship of state.

  • Republicans say they are opting for this and other budget tactics in order to avoid a tax increase, which would stifle job creation. But shrinking the IRRRB produces the very result they seek to avoid.

    IRRRB Commissioner Tony Sertich said that at a business conference in Duluth last week, he heard from current and potential Iron Range business investors concerned about the loss of the Johnson Fund's loans and grants to small businesses and assistance with work force training.

    "It was the first comment and the first question on people's minds," he said.

    Sertich said Johnson Fund loans and grants to small companies created more than 200 jobs in more than 50 companies in the last two years, despite the recession.

    The IRRRB's official report to the Legislature for 2009-10 tells of contributing to the creation of 1,900 construction jobs and 715 permanent jobs from 2009 through 2011.

    Draining the Johnson fund is a bad idea.

    The Legislature's Republicans should hear from the Iron Range business community that there are worse ways to balance the budget than raising taxes, and that the GOP has found one of them.

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