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HF 5092

Minerals taxes; production tax distribution modified.

2025-2026 Regular Session Introduced by Greg Davids and 4 co-sponsors

The bill changes how taconite tax revenues are distributed to Minnesota school districts, creating district-specific maintenance funds and reallocating per-ton payments to support

Author added Zeleznikar
#minesandmining #taxation
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WeVote Research Nonpartisan
Bill Summary · HF 5092

Summary of HF 5092 (2025-2026) – Minnesota Minerals Taxes; Production Tax Distribution Modified

Note: This summary describes the bill as introduced (HF 5092), including its main purpose, key provisions, affected parties, and timeline considerations. It reflects a modification to the production tax distribution mechanism for taconite and related minerals in Minnesota.

1) Purpose and Intent

  • The bill seeks to modify how production tax revenues from taconite and related mineral operations are distributed, particularly to school districts and certain special funds.
  • The changes aim to adjust the allocation of tax proceeds to qualifying school districts and to create or modify dedicated deposits (e.g., building maintenance/repairs funds) and targeted programs (early childhood, environmental protections) tied to those revenues.
  • The general framework remains anchored in Minnesota’s mineral proceeds distribution system, but introduces revised dollar-per-ton allocations and specific district-by-district distributions.

2) Key Provisions and Changes

The bill amends Minnesota Statutes 2024, section 298.28, subdivision 4, with the following notable elements:

A. Allocation to Qualifying School Districts (Subsection 4(a)–(b))

  • The baseline allocation to school districts remains tied to a per-ton metric, with specific per-ton figures preserved or adjusted:
    • A base of 32.15 cents per taxable ton, plus any increase from later amendments, less the amount that would have been computed under a 2008 tax standard.
    • A targeted distribution of 3.43 cents per taxable ton to school districts where the lands (from which taconite was mined or quarried) or the concentrate was produced, based on an apportionment formula in subdivision 2.
  • A separate distribution of 4.00 cents per taxable ton from each taconite facility is dedicated to building maintenance and repairs in affected school districts. This includes explicit district-by-district allocations:
    • Keewatin Taconite (or successor) to Independent SD Nos. 316, Coleraine, 319 (Nashwauk-Keewatin), or successors.
    • Hibbing Taconite Company (or successor) to Independent SD Nos. 695 (Chisholm) and 701 (Hibbing), or successors.
    • Mittal Steel Company and Minntac (or successors) to Independent SD Nos. 712 (Mountain Iron-Buhl), 706 (Virginia), 2711 (Mesabi East), and 2154 (Eveleth-Gilbert), or successors.
    • Northshore Mining Company (or successor) to Independent SD Nos. 2142 (St. Louis County) and 381 (Lake Superior), or successors.
    • United Taconite (or successor) to Independent SD Nos. 2142 (St. Louis County) and 2154 (Eveleth-Gilbert), or successors.
    • Mesabi Metallics (or successor) to Independent SD Nos. 316 (Greenway) and 319 (NashwauK-eewatin), or successors.
  • Revenue for these district-specific building-maintenance funds is allocated per district and then apportioned among districts based on pupil units enrolled in the second previous year (consistent with existing pupil-based distribution rules).

B. General Distribution to Tax-Relief/Relief-Eligible Districts (Subsection 4(c))

  • 24.72 cents per taxable ton (less any amount distributed under paragraph (e)) is distributed to a group of districts that qualify as tax-relief areas under Minnesota Statutes (273.134), or where a qualifying municipality exists, proportionate to each district’s pupil-unit-based index (adjusted using per-pupil tax capacity measures).
  • An additional mechanism ensures districts that already receive distributions under other mineral tax-related provisions (e.g., 298.018; 298.24; 298.25 to 298.28) receive supplementary support if their levy reductions are less than those prior-year reductions. Shortfalls are addressed by:
    • Providing the difference to the district, funded by reducing the clause (i) distribution among other districts, and
    • If shortfalls remain, transferring money from the taconite property tax relief account (subdivision 6) to cover the gap.

C. Additional Provisions for Certain Districts (Subsection 4(d))

  • For districts described in paragraph (c) that had levy increases authorized by referendum for taxes payable in 2001 under a specific statute, a separate distribution is defined (21.3 cents per ton) plus an amount per pupil unit that incorporates 175 dollars times pupil units (or the 1983-1984 benchmark), minus an adjustment for the district’s net tax capacity growth. Where funds are insufficient, the 175 per-pupil entitlement may be reduced proportionally.
  • A further provision awards districts qualifying under this subsection an additional annual taconite aid equal to 22.5% of the amount resulting from the specified calculation (after adjustments for 2011 net tax capacity and the referendum revenue allowance for FY 2013).
  • Any shortfall or balance in this section is to be used to fund Iron Range environmental protection and J. J. Douglas Johnson Economic Protection Trust funds.
  • The participating district must reserve the lesser of the amount received under this subsection or $25 per pupil unit, which may be used for early childhood programs.
  • If funds are insufficient to meet all payments, remaining amounts go to the Iron Range resources and rehabilitation agency for related environmental/economic protections.

D. Retained Provisions (Subsection 4(e)–(f))

  • A fixed distribution amount equal to what districts were entitled to receive under section 298.32 in 1975 is maintained.
  • An allocation of four cents per taxable ton to qualifying districts per paragraph (b) and 11 cents per taxable ton per paragraph (c) remains, with these amounts not subject to section 126C.48, subdivision 8.

E. Effective Date

  • The act would take effect the day after final enactment.

3) Who Would Be Affected

  • Minnesota school districts within or adjacent to taconite-producing regions (e.g., Mesabi Iron Range area) that receive mineral tax distributions.
  • Districts designated as building-maintenance/repair recipients based on specific taconite facilities and their successor entities.
  • Districts eligible for tax relief-related distributions and those receiving supplementary aid under the “tax relief area” criteria.
  • State agencies involved in Iron Range resources and environmental/economic protection funds (e.g., Iron Range Resources and Rehabilitation, Environmental Protection Fund, J. J. Johnson Economic Protection Trust Fund).
  • Mineral producers and facilities producing taconite, as their per-ton distributions feed the school district funds and related programs.

4) Procedural and Timeline Considerations

  • The bill revises distributions that are calculated and allocated on recurring annual cycles tied to per-ton volumes and pupil-unit metrics, with adjustments based on prior-year enrollment data and tax capacity indices.
  • It relies on certifications by the commissioner of revenue for base distributions, apportionments, and district eligibility.
  • If shortfalls arise due to insufficient tax proceeds, mechanisms are in place to transfer funds from the taconite property tax relief account to cover missing amounts.
  • Some allocations reference historical benchmarks (e.g., 1975 entitlement, 1983-1984 pupil unit comparisons) and older levy-reduction contexts (2001 referendum) to determine eligibility and amounts.
  • Effective date is immediate upon final enactment; thus, the updated distribution framework would begin in the following fiscal year unless otherwise specified.

5) Notes for Observers

  • The bill maintains a strong focus on ensuring taconite-derived tax proceeds support local education and district operations, while also creating dedicated maintenance-repair funds and linking certain distributions to environmental and economic protection initiatives.
  • The exact dollar amounts and per-ton figures are subject to change with subsequent legislative amendments or fiscal factors (e.g., enacted per-ton rates, pupil-unit counts, and district indices).

If you’d like, I can provide a concise one-page briefing for policymakers or a district-specific impact snapshot using hypothetical or actual district data.

Compiled from official sources — confirm details with the bill’s official record.

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