The Daily Globe - Serving Gogebic, Iron and Ontonagon Counties

 
 

Mining committee receives primer on state's revenue rules

 

Cortney Ofstad/Daily Globe

Leslie Kolesar, a member of the Iron County Mining Impact Committee, asks a question during a meeting with officials from the Wisconsin Department of Revenue Monday in Hurley.

HURLEY — The Iron County Mining Impact Committee met with employees from the Wisconsin Department of Revenue Monday.

Jennifer Western, executive assistant for the department, and Dana Erlandsen, chief counsel in the office on general counsel and legal services, described the Department of Revenue’s role in disbursement of funds, and how local and joint committees play a part.

According to Western, revenues received by the mining investment and local impact fund include notice of intent fees, construction fees and a net proceeds tax. For the notice of intent, up to three installments of $75,000 are received and the construction fee is equal to a one-time payment of $100,000 for each locality containing at least 15 percent of the mineable ore body.

With the net proceeds tax, 60 percent goes to the investment and local impact fund, while 40 percent goes to the state general fund.

Mandatory disbursements are also decided through the department, and include notice of intent distribution, a construction period payment, first dollar payments, a county additional payment, a project reserve fund and funds to the Wisconsin Department of Natural Resources for long-term care of mining waste sites.

The notice of intent distribution goes to localities, tribes or local impact committees for the cost of negotiating a local agreement with a mining company, and the construction period payment goes to each locality containing at least 15 percent of the mineable ore body.

First dollar payments go to localities where metalliferous minerals are extracted, and municipalities receive the payments, minus the construction period payments they have already received. Municipalities with at least 15 percent of the ore deposit will receive full payment, and counties will receive a first dollar payment proportionate to the ore extracted in the county.

Tribes may also receive a first dollar payment if they have tribal land within a municipality qualified to receive a first dollar payment.

With the county’s additional payment, 20 percent of the net proceeds tax collected annually for mining-related purposes will be given to each county where minerals are extracted.

For the project reserve fund, 10 percent of the net proceed tax is collected, and after both the 30 percent is removed from the county additional payment and project reserve fund, the remaining percentage is split 60-40 percent between the local groups and state.

According to Western, there is $285,000 available for discretionary grants, and to disburse those funds, in 2014 a revenue board will have to establish a grant ceiling by June 1, have an application deadline by July 31, make resolutions in support of disbursing funds by Aug. 31 and make final decisions by Oct. 15.

School districts can receive grants based on increased costs because of higher enrollments resulting from the mine.

According to Western, localities can also apply for grant funds by order of preference, with localities where mining occurred within the last four years or where a mining permit has been issued coming first, followed by localities adjacent to localities where mining has or is occurring and finally to localities not adjacent to localities where mining occurred.

Funds can be used for a variety of things, including private sector economic projects and studies, police and fire service for operation and construction of the mine, highway repairs, environmental monitoring, educational services, community services and facilities, and expenses related to closing the mine.

The revenue board must follow fiscal guidelines, including creating grant agreements with the recipient, segregating accounts required for funds, possibly requiring a financial audit or recouping or withholding payments because of possible non-compliance.

Western also discussed local impact and joint committees and roles they play.

A large part is negotiating a local agreement with a mining company that can provide a legal description of the land, duration of the agreement, what uses are permitted on the land, what the conditions and restrictions are to protect public health, safety and welfare, what obligations need to be taken by the locality to enable the mine to proceed and the applicable local laws and ordinances.

The revenue board and local impact fund board cannot grant operating funds to more than one local impact committee, unless a joint committee has been established, according to law.

After Western and Erlandsen spoke, committee chair Leslie Kolesar thanked them for coming and explaining the process.

Other business

Two people spoke about the impartiality of the committee when dealing with Gogebic Taconite.

Eileen Potter, of Montreal, questioned the fact that two board members worked on the mine site for companies hired by G-Tac.

Committee member Ross Peterson’s company, Ross Peterson Construction, worked on silt screens and other landscaping, while committee member Mitch Koski worked as an employee for Wayne Nasi Construction on the site, according to Potter.

According to Kolesar, corporate counsel had been asked to look into the matter, and according to the lawyers, Koski was working as Nasi’s employee, so there was no issue, and there was no issue with Peterson because of work being “scarce.”

Potter also questioned how fair the agreement with G-Tac would be between the company and committee because of Kolesar being a member of the Wisconsin Mining Association. Kolesar said she is a member of WMA to learn more about mining across the state.

“I am also a member of the Bad River Watershed Authority, but no one ever questions that,” Kolesar said. “While these groups differ on the issue of this mine, there is no money changing hands between them and G-Tac, and there is no conflict between the two.”

Kolesar said the committee serves at the pleasure of the Iron County Board of Supervisors, and if residents have an issue with how committee members are working or representing the county, they are “more than welcome” to speak to their local county board representative to have the matter handled.

For more information about mining investment, the local impact board or funds, contact Western or Erlandsen at Miningboard@revenue.wi.gov.