EVELETH — The Iron Range Resources and Rehabilitation Board has approved a $41.87 million Fiscal Year 2020 budget that draws $6 million from the agency’s corpus.
In addition, there’s a nearly $3 million carry forward surplus.
The corpus money will be used for public works ($2 million), regional trails ($2.5 million) and Giants Ridge Recreation Area capital ($1.5 million).
Interest from the corpus in the Douglas J. Johnson Trust Fund is traditionally used to help finance development projects to fulfill the agency’s mission of economic development to diversify the Iron Range economy.
Accounting director Bob Scuffy said the corpus withdrawal will not be directly paid back. However, the corpus is still projected to see a $7 million gain in 2020 through regular taconite payments.
Production taxes paid to the agency are expected to end the year at $14.8 million. The production tax revenues, calculated on a three-year average, are dollars paid in lieu of property taxes by mining companies.
That will close the books on a “tough three years” (2016, 2017, 2018) for the agency, Scuffy said.
But that will change for the agency in Fiscal Year 2020, which begins July 1, when production tax receipts will be $18.7 million. And they are projected to increase to $26 million in 2021 and $28 million in 2022, Scuffy said.
Commissioner Mark Phillips said the agency has been operating “very frugal to manage our way through some tough times.” Phillips said he doesn’t want to “erode the DJJ.”
Board member Sen. Tom Back, DFL-Cook, said taking money from the corpus “is a tough issue.”
“There could be some lean times coming. We don’t know. We must get our arms around spending,” he said.
But board member Sen. David Tomassoni, DFL-Chisholm, said he wasn’t “afraid to use from the DJJ. That’s what it’s there for. I’m fine with the budget.”
Board member Rep. Sandy Layman, R-Grand Rapids, looked confidently past the rough last few years.
“As an agency, we need to be flexible and quick on our feet. I’m glad next year we won’t see $6 million going out of the corpus,” said the former commissioner under Gov. Tim Pawlenty.
The board also focused on financial concerns with the Giants Ridge Recreation Area, which fell $1.4 million shy of budgeted revenues for Fiscal Year 2019.
The 2020 Giants Ridge budget is $11 million, which includes $1.5 million from the DJJ corpus.
The skiing revenues held up, but the two golf courses did not. Winter kill was a problem on golf courses statewide, and the Legend and Quarry did not escape its effects.
Layman, however, spoke of another problem with a more long-range impact that could be affecting Giants Ridge.
“There’s been a significant drop in the number of golfers in the state,” she said.
Phillips said it’s important to “drive the economic impact” of the Ridge, which he said is considerable.
“I’m optimistic about Giants Ridge,” he said, adding that revenues look good so far this year.
And board member Rep. David Lislegard, DFL-Aurora, pointed out how important Giants Ridge has been to the economically-challenged east Range.
“We are truly blessed to have Giants Ridge,” he said.
Business North Contributor Bill Hanna, who has been a writer and editor in the newspaper business for more than 40 years, was a reporter and executive editor at the Mesabi Daily News on the Iron Range from 1985 to 2016. He has won more than 50 state and national awards. He currently writes Sunday columns for the MDN Op/Ed section.