Is Duluth draining the north’s jobs and taxes?

by Richard Thomas

Last March the Range Association of Municipalities & Schools (RAMS) unanimously voted to request a report on the distribution of tax dollars within the county, along with an analysis of job distribution of county employees over the past 10 years.

According to March 22 minutes, “Of the seven districts, Commissioner (Tom) Rukavina’s (District 4, Ely) pays the most taxes or 42 percent of County tax amounting to $25 million plus in taxes. His district also includes the highest market value at 24.25 percent and 25 percent of the total county taxable market value. The question is are those tax dollars being equally distributed within the district or are they disproportionately subsidizing districts in Duluth?”

District 4 is by far the largest district in square mileage, covering nearly 60 percent of the county.

The questions came up shortly after the idea to split the county between north and south was being debated. In February the county board passed a resolution that the board “does not support legislation to divide the county into two governing agencies.” Rukavina and one other northern commissioner, Mike Jugovich, were the dissenting votes. 

The Ely Echo newspaper echoed the Range Association’s questions in an April 7 editorial: “How many St. Louis County jobs have been relocated to Duluth? How are our tax dollars being appropriated regionally?”

The editorial also stated, “We’re surprised St. Louis County Commissioner Keith Nelson of Virginia has continued to throw up road blocks on this study and that he continues to side with the Duluth commissioners. Maybe he’s afraid of what the truth will reveal.”

Nelson produced the response to the data request at the June 12 Committee of the Whole meeting. The information was pulled together by the county Public Works and Human Resources departments.

“They get their fair share,” Nelson said of District 4. “They get more than their fair share.”

District 4 does indeed pay $25 million in taxes, the highest amount of any single district. But that’s 22.35 percent of the whole, not 42 percent as the RAMS minutes indicate. 

District 5, which includes Hermantown, was the second highest at $20.7 million. Districts 1, 2 and 3, which cover Duluth, pay a combined $42.8 million, or 38 percent of the total.

Public Works has 191 employees in the north and 102 in the south. The number of technicians reporting to Ely have been reduced, but the jobs were moved to Virginia, not Duluth.

“We strive to serve the taxpayers as efficiently as possible. That means putting the employees were the services are needed/provided,” reads a statement from Public Works. “Equipment operators are deployed across the system with an eye towards equalizing the amount of mileage per plow they are responsible for. This is fair and equitable as constituents then receive the same level of service across the county.”

The north will have the largest maintenance shop in the county with the most employees once the new Cook facility opens by late fall of next year.

County Human Resources Director Jim Gottschaldt addressed the balance of employees: “The percentage of employees based out of Duluth and surrounding locations (Proctor, Hermantown and southeast townships) steadily declined over the past 10 years from 68.1 percent to 61.3 percent. During the same period, the percentage of employees based out of the other commissioner districts all increased.”  As of 2018 the county has 1,837 employees.

District 4 has the most roads, 1,383 miles, around 46.6 percent of the county’s total. Appropriately, they get 46 percent of the project expenditures.

Bob Berrini, Range Association board member and Morse Township supervisor, told the Reader that the data request was not part of the debate over dividing the county. “Our deal wasn’t splitting the county, ours was just a study,” he said. He noted that the county’s response to the data request “was about what we figured.”

He said Morse Township paid the second highest amount of taxes, $2.5 million, in the county while Greenwood Township paid the highest, $3.3 million. Both are located in District 4 and contain many high-value lakefront properties. “We don’t have rec centers or hospitals that are tax-exempt,” he said.