House passes bill that would restructure IRRRB

The Legislature would have final approval over the loans and grants distributed by the Iron Range Resources and Rehabilitation Board under a bill passed by the House 74-52 Thursday.

Sponsored by Rep. Tom Hackbarth (R-Cedar), HF3925 would strip the IRRRB of control over the millions of dollars raised each year through the Taconite Production Tax. The agency uses that money to provide loans and grants to businesses, municipalities and nonprofit organizations on the Iron Range with the goal of creating economic diversity in the region.

Rep. Tom Hackbarth

Instead, the bill – which now travels to the Senate, where it has no sponsor – would give authority over those expenditures to the Legislature. It would also eliminate the board and replace it with an advisory commission that need not be comprised of Iron Range legislators.

“This is the only state agency with no legislative oversight,” Hackbarth said. “We want to do the right thing for people on the Iron Range.”

As things currently stand, lawmakers representing the Taconite Assistance Area – the six-county region in northeast Minnesota that’s targeted by the IRRRB for help – sit on the nine-member board.

A Legislative Auditor’s review of the IRRRB in 2015 found the agency’s oversight and evaluation of its loans and grants “inadequate” and that there was “limited evidence” those expenditures met their objectives. The review also found the structure of the IRRRB vulnerable to constitutional challenge because board members have “substantive power” over what is an executive branch agency.

“All this bill does is address the constitutional issue of legislators sitting on the board and in this body both,” Hackbarth said.

However, Rep. Jason Metsa (DFL-Virginia) said that if bill sponsors were truly concerned about making the changes recommended by the auditor they would have tried to work with board members and the people of the region.

“[HF3925] seems political to me because we’ve got bills on those issues we’d gladly work with you on,” Metsa said. “This bill blows up our local communities’ access to their property tax dollars. We’re working on a bill that goes way above and beyond what’s needed.”

Some key provisions of HF3925

The commission formed by HF3925 would have three House members, three senators and three members of the public. Unlike the current makeup, there would be no requirement that members of the commission be from the Iron Range.

The legislative auditor’s report recommended the IRRRB do more to ensure loans will create jobs, more consistently examine how well grants meet stated objectives and regularly analyze the impact of loans and grants on the area the IRRRB serves. Several new requirements for grants and loans set forth in the bill are based on these recommendations.

The bill would also require Minnesota Management & Budget to study the future of Giants Ridge Recreation Area near Biwabik, which the IRRRB currently owns. MMB would be directed to look at a sale of the property or transferring it to the Department of Natural Resources.

The report showed that from 2006 to 2014, Giants Ridge operating losses increased by more than 500 percent and that the IRRRB subsidized those losses by an average of $1.9 million yearly.

Amendments adopted

The House voted to adopt two amendments to the bill.

The first, offered by Hackbarth, would allow the Legislature to make changes to the recommendations made by the newly created commission before voting on whether to approve them.

The second, offered by Rep. Tony Albright (R-Prior Lake), would specify that IRRRB loans and grants could only be made within, or for the benefit of, the Taconite Assistance Area.