Reforming the IRRRB is tricky business

irrrb service area

reforming the irrrb

Reforming the IRRRB is necessary but no easy task; stripping away local power isn’t fair to Iron Range communities.

For decades, reforming the Iron Range Resources and Rehabilitation Board (IRRRB) has been the intermittent goal of “good government” advocates, gadfly Iron Rangers, and frustrated partisans ascending to or descending from power. Reforming the IRRRB has also been a political football bandied about at the legislature by both parties at different times for different reasons.

The concept of “reforming the IRRRB” is popular because it’s a little like the concept of “buying a new truck.” Buying a new truck is fun. That is, until you drop off a Chevy person at the Ford dealership. Or when the payments come due. But the right truck is worth it, if you shop well.

Last month, the Office of the Legislative Auditor released a harsh finding that the IRRRB has had serious problems with monitoring of loans, finances at Giant’s Ridge, and with vulnerabilities to a constitutional challenge against its board structure.

The report also showed the persistent gaps in the Iron Range economy, where steady job losses in mining over four decades have left the region’s workforce gasping for relief. The IRRRB is charged with pursuing goals to sustain and diversify this economy. In this, the agency has had mixed results at best.

This week, Minnesota House Republicans introduced a bill authored by State Rep. Tom Hackbarth (R-Cedar) that would dramatically alter the makeup of the IRRRB and impose significant changes to how the agency would be able to spend money. As one might imagine, the committee hearing on the bill was a donnybrook between Republicans and DFLers, especially those from the Iron Range.

In the rest of this post I’ll talk about the Republican proposal, compare ideas for reforming the IRRRB, and close with my take on how we might actually create political reform that works.

Before we continue about reforming the IRRRB, something I generally agree with, here’s this VERY IMPORTANT STATEMENT:

The budget of the IRRRB is chiefly comprised of “taxpayer dollars,” not state general fund dollars*. The money that passes through the IRRRB comes from taconite production taxes which mines pay in lieu of local property taxes. Iron mines are the highest revenue businesses on the Iron Range and control, by many orders, the most privately held land. They pay no property taxes to local governments. The money raised from production taxes is dedicated to several purposes, all of which directly serve communities and schools in the service area of the IRRRB. There is no governance structure like this anywhere else in the country. The flexibility of the production tax system is credited with saving Minnesota’s mining industry in the 1960s and allowing the taconite industry to weather booms and busts. The system is, at a minimum, a tax relief for mining companies, so these funds are even more important for the local communities affected by mining and the mining economy.

Now, let’s talk about Hackbarth’s bill. The GOP proposal would first change the nine-member IRRRB, currently comprised of legislators with priority given those whose districts are in the IRRRB service area. It would replace them with six legislators appointed by the legislature without any requirement that they be from the service area. It would also add three citizen members, also appointed by the legislature.

Hackbarth’s bill would require IRRRB spending be ratified by the state legislature. It would reduce the size of the agency’s staff and transfer Giant’s Ridge to the Department of Natural Resources. There are more nuggets in this bill, but those are some of the highlights.

To be clear, the Hackbarth bill is purely punitive in nature. There is no structural advantage to running the agency this way, other than it takes power from the Iron Range lawmakers and puts the agency at the will of the entire state legislature. The current legislature is the same body that can’t reliably act on unemployment for miners, ratify negotiated labor contract agreements, or pass a tax or transportation bill, or perhaps even a bonding bill.

The point is, you can tell the Republican plan is strictly punitive because it somehow adds layers of bureaucratic delay to the economic development arm of the Iron Range, which is something 21st Century Republicans tend only do when they’re trying to passive-aggressively kill something.

This Hackbarth bill is like something that you would see implemented by fiat had the Iron Range lost a bloody land war with a suburban army. It’s all about power and control; having little understanding of or relation to what the agency does and who it serves.

But wait a minute, Lefty McGee! Aren’t you the guy who always talks about reforming the IRRRB? Why are you criticizing this reform? Aren’t you just fronting for the Range DFL?

I hear you. So let’s look at ideas for reforming the IRRRB. I’ll list several, some of which I’ve heard before, some that came from the Legislative Auditor, and some that I pose simply for discussion.

Current Structure:
Nine lawmakers selected by House and Senate leaders with mandatory priority given to lawmakers who represent IRRRB service area. Lawmakers vote on loans, grants and agency budget. Governor appoints commissioner to oversee agency and recommend spending.
Pros: Lawmakers are locally elected and aware of constituent needs. Citizens can hold lawmakers to account in legislative elections.
Cons: Constitutional conflict of interest with state lawmakers managing “local” funds. Lawmakers always serve district first, before region. Difficult to hold board accountable for bad policy when they hold pursestrings for so many local projects. Regional lobbyists end up forming symbiotic relationship with boardPartisan and parochial politics unavoidable and typically unhelpful.

Advisory Board:
BOARD: Same as above, only the governor would be given final approval over spending. This is the reform model being proposed by current Range DFLers in response to the OLA Audit.
Pros: Eliminates constitutional challenge. Governor has oversight. Would make IRRRB an advisory board, which was one of the Legislative Auditor’s four possible options.
Cons: Probably does not eliminate all conflicts of interest. Represents the least ambitious of the Auditor’s suggestions.
Note: Will be interesting to see how that goes when majority of board and governor are from different party. That’s how the current structure was created.

GOP/Hackbarth Bill:
BOARD: Nine members, including six lawmakers and three citizens selected by House and Senate leaders. Lawmakers vote on loans, grants and agency budget, but state legislature must give approval. Agency stripped to bare bones with expectation of reduced function.
Pros: The rest of the state would get to know what the agency is doing.
Cons: The rest of the state would prevent the agency from doing anything but the most benign projects. The agency would be paralyzed by politics, ultimately creating an argument for its elimination.

Now we move into other ideas advanced in the OLA report:

Executive Agency:
BOARD: No Board. Why do we need a board? DEED, the DNR and others spend money without a board. The governor appoints a commissioner who works with local communities to develop a spending agenda that the governor would approve. Processes implemented by legislature to handle loans and grants dispassionately like any other agency. Don’t like it? Demand a new commissioner from a vote-conscious governor or vote for a new governor next chance you get.
Pros: Eliminates conflicts of interest with board members. Gives commissioner true executive power in a job that is often miserably paralyzed by sniping and politics. Though still somewhat partisan, would eliminate some parochialism.
Cons: Hope you like the governor. Also, transitions between administrations could be harsh and disruptive to agency projects.

Appointed Board:
BOARD: Nine members appointed by the governor. Perhaps all at once, or perhaps staggered by terms or party-balanced (the way the Public Utilities Commission is governed) to allow some continuity and balance.
Pros: Again, without legislators serving in two roles, you eliminate constitutional challenge. Governor would have opportunity to select candidates based on business and community acumen.
Cons: Still at the whim of a governor, though appointing board members for three-year terms would allow for some balance to carry over term to term.

Elected Board:
BOARD: The IRRRB service area, aka Taconite Assistance Area (see map at top of post), is divided into equal districts by the legislature. Every 2-4 years voters in each district would elect a board representative who is not a legislator, essentially a local election. The agency would operate the same way, only at the discretion of a locally-elected board.
Pros: Eliminates conflicts of interest, as members would only be able to serve in one office at a time. Nonpartisan elections would allow new, less partisan voices into the discussion of IRRRB planning and spending.
Cons: Another election to run, which would cost money. Like any elected body, members would not necessarily be competent just because people voted for them.

Here are a couple other ideas I’ve seen floated.

Local Powers:
BOARD: Some configuration of local city councilors, school board members and county commissioners. Representatives of government units affected by IRRRB would share power and set spending and loan priorities.
Pros: Would maintain local control with less legislative influence. Could inspire more ideas generated at local level. Legislators would be partners in IRRRB projects, rather than controlling which ones are funded.
Cons: Arguably less partisan, but certainly more parochial. Larger cities would want more power than smaller ones, government units would be overseeing things that don’t apply to their purpose.

Eliminate the IRRRB:
BOARD: None. Close the agency. Rebate all production taxes based on formula to the cities, townships and school districts. Allow elected local governments to determine spending.
Pros: What constitutional problem? Cities and schools could be more independent-minded and less dependent on asking for money. Voters in cities far more likely to hold local officials accountable for bad spending than partisan legislators they may support for different reasons. Could lead to unique city-specific ideas.
Cons: For decades, Iron Range cities and school boards have lagged in generating ideas, partly because of the symbiotic relationship they have had with the IRRRB. Myriad mistakes could occur, especially at first. Also, cities could rush to create economic development wings that would each replicate what the IRRRB already does, burning funds on redundant spending. Lobbyists and consultants would travel town to town harvesting funds like Sylvester McMonkey McBean. (Even more than they do now).

All of these ideas require ongoing reforms inside the IRRRB agency, including better management and compliance checks for loans and grants. Decisions must be made about Giants Ridge and its viability as a part of the IRRRB mission. Any changes to the board must be accompanied by these changes to the agency as well.

So what do I think about reforming the IRRRB?

The GOP bill is mean and unworkable. The proposed DFL reforms are probably inadequate in the long run. I lean toward a solution that would make the IRRRB less partisan and more professional. An appointed board or turning the IRRRB into an executive agency might accomplish this goal. An elected board could be interesting, but perhaps too interesting.

One thing is certain. No reform should pass the legislature and be signed by the governor without consulting local governments, businesses and citizens about the important role the IRRRB plays here. Seek first to understand. Most everyone involved wants a better future for the Range. We might disagree about how to get there, but that’s no reason for disrespect or a political war.

Reforming the IRRRB is not about about serving the current IRRRB. Reforming the IRRRB is not about serving a legislative whim. Reforming the IRRRB must be about serving the people of the Iron Range. It is truly their money and their future at stake.

* UPDATE: A friend of the blog reminded me that there are instances where state general fund dollars go into taconite tax relief and the IRRRB. It’s a tiny percentage of the overall amount, triggered by situations where taconite tax revenue is low — such as during a downturn. A small matter, but now corrected in my post.


  1. Aaron-

    In your Local Powers model, would the IRRRB remain a state agency, or would it be created under another form of local government? I like the model, but if the funds are still collected and essentially controlled by the legislature, it will always be a political dangling piece in St. Paul. I think a model that eliminates it as a state agency, and establishes say St. Louis County as the collecting agent, is a viable long term solution. You could then use your Local Power board to run the board/agency.

  2. Aaron
    You use a lot of words to ultimately state – “I lean toward a solution that would make the IRRRB less partisan and more professional.” In other words, you’re suggesting exactly what I’ve proposed many times on your site on this issue. We’re in violent agreement!

    The governor appoints the commissioner as it is currently and the commissioner hires professionals to get the job done. End of story. All these bureaucratic sounding alternatives are just muddying the waters. It’s not that complicated.

    p.s. Here’s stating the obvious based on the track record of the IRRRB. We both know not one Range DFL politician would be retained (assuming they’d even get hired) if they were held accountable in fulfilling the IRRRB mission….via annual performance appraisals.

  3. Part of me isn’t completely opposed to R47s commissioner / professionals idea. However, in my opinion, the IRRRB currently has far too broad a mission for the funding they have. When the mission doesn’t match the funding, I don’t know if it matters how the board is constructed or the decisions get made. All the IRRRB and board can do is throw money at this and throw money at that and try to split it appropriately between the various stakeholders. Some of it does a decent amount of good. Some of it does little to no good. None of it is really part of a comprehensive plan. None of the municipalities really know what they should be spending on money vs. what they should be expecting the IRRRB to be spending money on.

    Until the funding matches the mission (either by narrowing the mission, or supplementing the funding), I don’t really like it, but I’d have to vote for the “Eliminate the IRRRB” option from Aaron’s list. It at least would give the larger communities a better chance to control their own destiny towards remaining economically viable beyond when the taconite funds run out.

  4. In looking at the issues, having the IRRRB remain a state entity is an issue. Appointed by the governor or legislature still means that it is people outside the range that are making the decisions. You could have issues where the appointing parties do not see this area as a priority and neglect their duties or their priorities do not match the area’s priorities. You see the same issue with the Met Council in the Twin Cities area. Best thing would be to have either a joint powers board or elections, make sure that it stays local to Iron Range needs.

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