A bright line should exist: State and local tax dollars should not finance partisan political activity. If, as Legislative Auditor James Nobles said, that line is “surprisingly sketchy” in Minnesota law, it should be made plain.
But whether, or when, a 2006 Iron Range Resources and Rehabilitation Board (IRRRB) loan to a call-center fundraising business crossed that line may not be clear under the plainest of statutes. That’s why we’re glad Nobles and his nonpartisan auditing team have agreed to probe the legality and propriety of the link between the IRRRB and an Eveleth call center that raises money for Democrats, and to recommend a remedy if one is warranted.
The case is complicated by several factors. A key one is that the original recipient of a $625,000 loan in 2006, Meyer Associates of St. Cloud, is no longer in business. It folded in 2013. The call center is now operated by New Partners Associates, which bought at a deep discount the equipment that served as collateral for the IRRRB loan.
Neither of these firms is an arm of the DFL or the national Democratic Party. They are independent contractors. But Democrats comprise the lion’s share of both firms’ customers.
Nothing surfaced in a Star Tribune examination to suggest that either Meyer or New Partners received special treatment by the IRRRB. Its loan was among 91 IRRRB business loans totaling $109 million in the past decade.
Those funds come exclusively from taconite taxes that are paid in lieu of local property taxes by taconite production facilities. The funds are managed by an IRRRB commissioner appointed by the governor and a board consisting of area legislators — all but one of whom today is a DFLer. The Meyer loan was approved by a commissioner who was a Republican appointee.
When Meyer folded, $250,000 of the loan was forgiven. That, too, is not a departure from standard practice. IRRRB has seen about 10 percent of its business loans default in the past decade.
“This was a loan to a business, not to a political party,” Senate Majority Leader Tom Bakk, DFL-Cook and an IRRRB board member, said this week. “This was an economic development project that produced 100 jobs. … If the Republicans would like to send a call center project to the Iron Range, we’ll be happy to have the jobs.”
Minnesotans want the IRRRB to succeed in bringing non-mining jobs to the Iron Range. Apart from the campaign finance income tax checkoff, Minnesotans don’t want tax dollars funneled to partisan political activity. Figuring out how to satisfy both imperatives in this instance is the kind of work that the Office of the Legislative Auditor is best suited to do.