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DULUTH — A proposal to expand the region that benefits from millions of dollars in taconite production tax payouts has riled Iron Range lawmakers intent on preserving that money for the communities that generate it.

Minnesota state Sen. Jason Rarick, R-Pine City, introduced a bill in the Senate recently that would bring the cities of Moose Lake, Cromwell and Willow River into the Taconite Assistance Area, a northeastern Minnesota region defined by school district boundaries that includes Aitkin, Cook, Crow Wing, Itasca, Lake and St. Louis counties. Rarick intends to also add the city of Barnum to the bill.

With Talon Metals holding mineral leases inside the boundaries of those cities' school districts, Rarick said he was approached by school leaders about inclusion and is planning for future mining.

But Rep. David Lislegard, DFL-Aurora, likened the bill to a "robber baron" proposal and said he wouldn't support it.

"The less you have, the more it means to you and the more you're going to protect it," Lislegard said of the Iron Range.

State law requires mining companies in Minnesota to pay a production tax instead of property taxes. That tax has been a major source of revenue to the counties, cities, townships and school districts within the boundaries of the assistance area for more than 80 years. A large portion is shared with the state Department of Iron Range Resources and Rehabilitation (IRRR), which distributes its slice to businesses, communities and school districts via grants and loans.

The latest total production tax produced in 2022 for 2023 distribution was more than $110 million, which includes a state contribution. Of that total, $19 million went directly to school districts. What each district receives is based on a formula.

An Aitkin County school district was included in the assistance area last year, as Talon Metals undergoes environmental review for high-grade nickel mining in nearby Tamarack. About 10% of Talon's minerals package lies in Carlton County, where the proposed districts are located, but Talon isn't exploring that area and it isn't part of the environmental review, said Todd Malan, chief external affairs officer for the company.

Rarick said he doesn't intend for the districts to collect unless mining revenue is generated within their boundaries, similar to the Aitkin County addition. Sen. Grant Hauschild, DFL-Hermantown, who represents a large portion of the Arrowhead, said the bill as written would allow those Carlton County school districts to collect mining tax revenue if Talon begins operations in Aitkin County. They border its McGregor school district, which is set to benefit from the Talon operation.

Moose Lake schools Superintendent Billie Jo Steen said many small, northeastern Minnesota school districts struggle to gain voter support for operating levies to cover spending that state funding doesn't. Between the city's large seasonal population and the prison and other state entities that don't pay property taxes, "we just don't have the commercial property tax base that other communities have." Steen said.

She said any operating levy for the district's 600 students would lean too heavily on homeowners.

"We're not interested in taking something away from somebody else," Steen said. But she said that if land is mined in Moose Lake, the district wants to benefit.

IRRR Commissioner Ida Rukavina said in a statement that the bill was premature. She said it would harm her department and the communities and school districts that now receive taconite revenue.

Sen. Rob Farnsworth, R-Hibbing, said in a statement that he didn't support the bill, also calling it premature.

"However, expanding the [Tax Assistance Area,] like we did for portions of Aitkin County last year, is a discussion we need to have because ultimately, the expansion of mining in Minnesota is a good thing," he said.

Hauschild said it's critical that Iron Rangers know there are efforts afoot to expand the Taconite Assistance Area for political and monetary reasons.

Expanding it is "watering down" the funding for a region that needs it to diversify its economy, he said, and it's a "direct threat" to the Iron Range.