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Last Updated: 10/26/2015

Distributions to Cities and Towns

Cities and towns within the Taconite Assistance Area (or Taconite Tax Relief Area as noted) receive several types of aid from the Production Tax.

Cities and Towns Where Mining is Located (“Mining and Concentrating”)

Cities and towns with mining facilities that are mining or producing concentrate receive 4.5 cents per taxable ton. Fifty percent of the amount is distributed to cities and towns where mining is conducted; the remaining 50 percent is distributed to cities and towns in which concentrate is produced. The distributions are determined on a mine-by-mine basis.

If mining and concentrating take place in a single city or town, the entire 4.5 cents per taxable ton is distributed to that municipality. If a mining facility is mining in more than one city or town, the 50 percent portion is split based on either a percentage of taconite reserves or a four-year production average. Most mines are mining in two or more areas.

If a mining facility produces concentrate in more than one city or town, the 50 percent portion is split based on hours worked in each area.

Cities and Towns Affected by Mining (“Mining Effects”)

Cities and organized towns receive 4 cents per taxable ton if their boundaries are within three miles of a taconite mine pit that was actively mined in at least one of the prior three years. If a city or town is located near more than one qualifying mine, it receives aid from only the mine producing the largest taxable tonnage.  When more than one city or town qualifies for aid based on one facility’s production, the aid is apportioned among the municipalities in proportion to their populations. The money must be used for infrastructure improvement projects. 

Taconite Municipal Aid Account

The Taconite Municipal Aid Account receives 12.5 cents per taxable ton, which is distributed to cities and towns (12.2 cents per taxable ton) and to the Range Association of Municipalities and Schools (RAMS) (0.3 cents per taxable ton).

Cities and towns first receive the amount they were entitled to receive in 1975 from the Occupation Tax, reduced according to the percentage aid guarantee. The remainder of the aid is then distributed by a formula using levies, valuations, population and fiscal need factors.

Special City/Township Fund.  Additional aid from the Taconite Municipal Aid Account is distributed to a city or town if more than 75 percent of the city’s assessed valuation consisted of iron ore on Jan. 2, 1980, or if more than 75 percent of the town’s assessed valuation consisted of iron ore on Jan. 2, 1982. This special aid is calculated based on certified levies, net tax capacities and population. Currently, only the City of Kinney and White Township qualify.

Township Fund

The Township Fund receives 3 cents per taxable ton, escalated in the same proportion as the Gross Domestic Product Implicit Price Deflator (GDPIPD). The money is distributed to towns located entirely within the Taconite Tax Relief Area on a per capita basis. The maximum amount a town can receive is $50,000. If a town would receive more than $50,000, the portion that exceeds $50,000 is redistributed among the towns receiving less than $50,000.

Taconite Railroad Aid for Cities and Towns

Cities and Towns receive a set amount of aid equal to what they received in 1977 from the Taconite Railroad Gross Earnings Tax, which was repealed starting in 1989.

 

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