Tax Aids and Credits

Aids - State Taconite Aid

Statewide Outcome(s):

State Taconite Aid supports the following statewide outcome(s).

A thriving economy that encourages business growth and employment opportunities.

Context:

Sudden, significant changes to tax base can lead to financial strain for local units of government. Taconite production decreased 30 percent in 2001 primarily due to the closure of the LTV Steel Mining Company plant in Hoyt Lakes. This decrease had a significant impact on the local tax base.

Funding Source: State General Fund.

Strategies:

Provide additional revenue to compensate for reduced taconite production occurring in 2001.

Beginning in 2001, state aid was provided to the production tax fund to be distributed as if the aid were production tax revenues. Production tax revenues are distributed to various local governments, development agencies and for property tax relief to taxpayers within the taconite assistance area.

The state taconite aid contribution was equal to 33 cents per taxable ton of iron ore concentrates for production year 2001, and 22 cents per taxable ton of iron ore concentrates for production years 2002 and thereafter.

Results:

The potential fiscal impacts of the 2001 decrease in taconite production are reduced for the local governments.

Performance Measures Notes:

After dropping 30 percent between 2000 and 2001, taconite production is more than halfway back to pre-2001 levels.

The state taconite aid contribution accounted for 8.5 percent of total production tax distributions in 2011.

Base year 2000 production is for the calendar year.

Taconite production percentage compares calendar year 2001 (previous) to calendar year 2011 (current).