ELY — The message from local leaders to their state legislators this week was clear. Communities aren’t asking for handouts. They’re asking to keep what it generates.
At a meeting of the Ely area’s community economic development joint powers board, mayors, county commissioners, hospital administrators, and school officials detailed a pattern they say has gone on too long: Revenue generated in northeastern Minnesota flows to the state, then gets redistributed elsewhere while local communities struggle to fund basic services.
“In the district that I represent, 43.9 percent of the houses are seasonally occupied,” Rep. Roger Skraba told the group. “That’s a big chunk. And their taxes are getting sent to the Cities.”
Skraba and Sen. Grant Hauschild are carrying legislation to redirect seasonal property taxes back to local school districts. Hauschild explained that seasonal properties currently don’t contribute to local school operating levies or voter-approved referendums, with that revenue instead going to the state.
For Ely schools, that means losing a significant portion of what could be their tax base, according to discussion at the meeting.
Hauschild said he’s been framing the issue as one of equity when talking to metro legislators.
“When I’m down in St. Paul, particularly within my party, we hear a lot about getting money to poor people and equity,” Hauschild said. “The case I’ve been making on this seasonal rent legislation is that it is an equity issue for northern Minnesota.”
He told local officials he thinks the legislation has “a fairly good chance of passing because we’ve made so much headway showing how much disparity there is in this formula.”
The same pattern appears with mining revenue and the Permanent School Fund.
Area mining generates 90 percent of the revenue for the fund, which has grown to $2.3 billion over the past decade. But Iron Range school districts in the taconite assistance area receive only about 2 percent of the distributions.
Ely City Clerk-Treasurer Harold Langowski reported that the city’s local government aid increased just 0.12 percent in 2025 and 0.22 percent for 2026.
Local government aid is a state program that provides funding to Minnesota cities to help pay for essential services like police, fire, streets, and parks. The formula considers factors like a city’s property wealth and population. For many smaller cities like Ely, LGA makes up a significant portion of their budget. Without inflationary increases, the aid loses purchasing power each year even as costs for labor, equipment, and services rise. The state Legislature had considered cutting it during last year’s session.
“I always put in here what the increase was,” Langowski said, noting that inflation runs 3-4 percent. “Thank you for protecting it. I think this is a point we’ve made for many years is for there to be an inflationary adjuster within LGA, which would really help small communities.”
He told legislators the city has reduced full-time staff in public works to deal with the squeeze.
“We are very lean,” he said.
Morse Township Supervisor Bob Berrini brought up township funding, noting that the township receives just $9,000 in state aid despite having a $600 million property tax base.
“When you have your taxation, and you tell someone your taxes are going up a $1,000, and you’re not giving them any more service, what am I going to tell them?” Berrini asked. “Where does the money go?”
Skraba acknowledged he’s been carrying legislation to increase township aid but it hasn’t passed.
“It just became kind of a wash,” he said of last session’s negotiations.
Both legislators emphasized the importance of regional unity given their limited numbers — five state representatives and three senators from the Iron Range.
“If the eight of us work together as a team, we can dictate some of this stuff,” Skraba said. “The problem that we keep running into is when we get down to the metro, they take any extra money anywhere they can. And they have the votes to do that.”
Skraba also noted the importance of maintaining working relationships across party lines, pointing to his cooperation with Gov. Tim Walz on permitting for mining, which could bring 600 jobs to the region.
“Why would I want to go step on his toes and make him not trust me anymore?” Skraba said, explaining why he didn’t join fellow Republicans in calling for the governor’s resignation over fraud issues. “It’s important that we get these mines running.”