IRRRB to cut budget 35% for fiscal 2012

The brief but dramatic drop in taconite production in 2009, with the accompanying drop in state taconite tax revenues, means less money will be available in the next year for Iron Range development projects.

According to the Duluth News Tribune, the Iron Range Resources and Rehabilitation Board will cut its budget 35 percent for 2012 — about $6.5 million — because it received less revenue from the per-ton tax on taconite that’s produced at the six operating plants.

When the global economic recession brought down the steel and then taconite iron ore business, production dropped from 38 million tons in 2008 to just 17 million in 2009. All six of the plants were shut down for part of the year.

Taconite production rebounded in 2010 faster than ever before. But because the board’s funding is based on a rolling, three-year average of tax revenues and 2009 is now in the equation, the agency’s overall budget is down more than one-third.

IRRRB board members are expected to approve a $27.3 million budget Thursday for fiscal 2012 -- which began July 1 -- down from about $33.7 million for the past year.

The budget cut means less money is available for Iron Range projects in 2012. The budget cuts don’t affect projects funded by the Douglas J. Johnson Economic Protection Trust Fund, which is separate from the IRRRB’s annual budget.

IRRRB Commissioner Tony Sertich said the agency will cut its subsidy to Giants Ridge Golf and Ski Resort as well as the agency’s day-to-day operations costs.

The problem will be short-lived. Thanks to the taconite rebound of 2010, which has held into 2011, board revenues should gradually improve until the blip of 2009 is out of the tax equation. Taconite production rebounded to 37.5 million tons in 2010 and is expected to be about that level in 2011 and 2012.