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Mall of America

Richard Sennott, Star Tribune

Megamall deal undermines Fiscal Disparities Act

  • Article by: David McCauley
  • May 27, 2013 - 11:07 AM

On Aug. 22, 1961, the Bloomington City Council launched an annexation effort to capture the Northern States Power (now Xcel Energy) Black Dog generating plant in the unincorporated township that became the city of Burnsville.

The highly valued and heavily taxed plant represented 75 percent of Burnsville’s tax base. In fact, the annexation overnight slashed the effective tax rate on property in Bloomington nearly in half.

Bloomington’s effort became snarled in both the courts and the Minnesota Municipal Commission and ultimately failed. The battle over tax base now shifted to the one between tax-base-poor “bedroom” suburbs and tax-base-rich suburbs that enjoyed the benefits of large and highly valuable facilities like the Black Dog plant. This battle spawned the title “Fiscal Disparities.”

Time has dimmed the sometimes vicious battles fought between cities trying to attract desirable and desperately needed commercial and industrial facilities. These struggles hampered the efforts to promote orderly and efficient regional development. Cities and school districts in rapidly growing bedroom suburbs faced skyrocketing property taxes and got only substandard levels of service in return.

In 1971, the Legislature adopted the Charles R. Weaver Metropolitan Revenue Distribution Act, now known as the Fiscal Disparities Act. The central provision of that law calls for pooling 40 percent of new metropolitan commercial and industrial tax base growth and redistributing that pool to taxing districts in the metro area.

At its inception, about 65 percent of the districts were “winners” — getting back more tax base than they contributed. Today, that level has dropped to about 50 percent. The per capita ratio of tax base between the largest and smallest has dropped from 16-1 to 3-1.

Despite the groans from cities with high per capita tax bases, the Fiscal Disparities Act has clearly produced the desired results by enabling solid commercial and industrial growth in the region.

Now we are back to Bloomington, where it all started. That city’s success in siphoning off a portion of the fiscal disparities pool to finance additional development at the Mall of America may start a slide backward.

I was a member of the Coon Rapids City Council before the implementation of the Weaver law, and we were a poster child of municipal starvation. I don’t begrudge Bloomington’s fortune in having the Mall of America in its tax base, but I despair the odor of “manifest destiny” that’s beginning to drift across the region as those wealthy communities assert that they must have everything they see and that no one else matters. How quickly we forget.

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David McCauley lives in Coon Rapids.

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