Former Minn. legislator advocates regional control of oil tax revenue
A model put in place years ago by leaders in Minnesota’s mining-heavy Iron Range was pitched as a way to give more regional control of oil tax revenue to energy-impacted communities in western North Dakota.
The mechanism could be used to solve challenges facing municipalities and counties struggling to keep pace with historic growth related to the Bakken oil and natural gas boom, said former Minnesota House Majority Leader Tony Sertich.
Sertich, now commissioner of the Iron Range Resources and Rehabilitation Board, spoke Wednesday at a Vision West ND roundtable meeting with local, state and federal leaders in Dickinson. He said funds gained through extraction taxes in the Iron Range largely stay in northeastern Minnesota.
“If I leave you with anything,” Sertich said to a room of several dozen, “it’s that when folks try to raid our fund, local people in our rural towns in northern Minnesota say, ‘That ain’t right and somebody should do something to fix that.’”
Though money generated from mining Minnesota’s taconite-rich areas pales in comparison to the wealth being produced in the Bakken for North Dakota, the principle of more local control is much different from the system in place in the Peace Garden State, which, contrary to nearly every other U.S. state, is enjoying a large budget surplus.
Largely because of safeguards put in place years ago, Sertich said, the IRRRB controls 63 percent of what Minnesota receives from its Iron Range mining production tax, with the remaining 37 percent going to the state.
“In real time, we’re trying to figure out how to protect this fund,” said Sertich, who was appointed to his current post by Democratic Gov. Mark Dayton. “Iron Rangers don’t think it’s alright when people try to take that money, which is why we’re just thankful they’re not taking the money.
“We’re actually at a time, politically, where we have legislators in key positions to help us insulate that fund so it will always be for its intended purpose for the people of northeastern Minnesota.”
In August, state numbers showed that North Dakota’s oil-aided Legacy Fund — which, by law, cannot be tapped into until at least 2017 — had grown to more than $1.3 billion. For the 2011-13 North Dakota biennium, 30 percent of oil taxes collected by the state were earmarked for the Legacy Fund, with the remaining funds tagged for a variety of uses, including schools, property tax relief, various other investments and a number of additional avenues.
With the Legacy Fund and other funds being put away — such as nearly $600 million tucked away in a rainy day fund for general interests — oil-producing communities have continued to struggle with issues related to housing, transportation, water infrastructure, child care and emergency services, all of which were topics highlighted during the roundtable.
Sertich said he couldn’t give advice to other states — adding that his state is, in many ways, “jealous” of North Dakota’s robust economy and surplus — but offered that the IRRRB formula has worked well for Iron Range communities.
“In Minnesota, we believe strongly that the folks that are most impacted by the extraction of these minerals, and what is left behind, should benefit most from those resources,” Sertich said. “What is left behind is a mix of challenges and opportunities. Being more self-reliant as a region has been helpful for our region to progress forward and to know best what’s happening on the ground and to respond to it in real time.”
Jasper Schneider, director of the U.S. Department of Agriculture North Dakota’s Rural Development office, said the state’s challenges are those that come with prosperity.
“As I travel across the state, what I see is an incredibly exciting time to be involved with development,” Schneider said. “Frankly, it’s also just an exciting time to be a North Dakotan with all the good things that are happening in the state. As I talk to my counterparts across the country, their challenges are drastically different than what we face here. A lot of the focus elsewhere is on trying to spur economic activity while we’re on the other end of the spectrum.
“Our challenges are those associated with rapid growth,” Schneider said. “We’re facing shortages in housing, shortages in day care and access to capital. It’s important that we get this right.”
Also presenting at Wednesday’s roundtable were Rick Garcia, U.S. Department of Housing and Urban Development representative and former Denver city councilman; Cynthia Cody of the Environmental Protection Agency; and planner Karalea Cox of Boise, Idaho-based Building Communities, the group that facilitates Vision West meetings.
Dickinson City Administrator Shawn Kessel said he welcomes any opportunity for federal representatives to visit western North Dakota to see the region’s growth firsthand.
“For them to respond, they need to know what’s going on,” Kessel said. “To be here and to listen to what’s happening from people that are being impacted, that’s wonderful. For us as a city, we have a comprehensive plan and we have documentation of where we want to go.
“We know we’re probably going to grow west faster than any other area, and we’re looking at developing a sub-plan for that area, so I think we’re moving in the right direction in terms of planning. What we heard today was ‘plan, plan, plan,’ and we’re certainly doing that.”
Kessel said he would welcome a regional approach to tackling growth-related challenges, calling Dickinson a “regional city” in the footprint of southwest North Dakota.
After planning for more than a year, the Vision West Consortium is nearly ready to produce its regional plan. It is scheduled to be available as a framework for local leaders and legislators by January, though the full plan is not slated to be finished for at least another year.