The Free Press, Mankato, MN

January 9, 2013

Blue Earth County considers mining tax to help repair roads

Proposal would charge producers and importers of small rocks 15 cents a ton

By Dan Linehan
The Free Press

MANKATO — Blue Earth County is considering a tax on gravel and sand mining to help repair its roads, which wear and tear under rock-hauling trucks.

The measure, discussed for the first time by the County Board this week, would charge mining companies 15 cents for each ton of rock they mine from or import into Blue Earth County.

The board didn’t endorse the measure, but enough commissioners were interested to send it to a future work session for more discussion.

This type of rock, called “aggregate,” is used for a wide variety of construction purposes. Twenty-eight of the state’s 38 counties with aggregate resources collect the tax, according to a list included in state statute.

How much money it would generate in Blue Earth County is unclear because companies don’t currently disclose how much rock they mine. But an example to illustrate its scale can be drawn from nearby Sibley County.

That county, which has roughly one-fourth the population of Blue Earth County, collects about $95,000 in a year from the tax. Of that, about $40,000 goes to the county, $40,000 to townships and $15,000 goes to a fund that will pay for the reclamation of the county’s mines and quarries.

 It’s hard to say how much more rock is taken from this county, but Blue Earth County Public Works Director Al Forsberg gave a rough estimate of $300,000 per year in tax revenues.

Darin Mielke, public works director in Sibley County, said the county used to spend its allocation on countywide maintenance, but about five years ago started directing the revenues into a dedicated fund to improve a road near a gravel pit.

The county’s three aggregate-mining companies don’t have a problem paying the tax, he said.

“Even though they’re paying it, they’re benefiting as well,” he said.

Sibley County’s Faxon Township, which has several quarries, uses its piece of the tax proceeds on road maintenance, including the replacement of rock on its mostly gravel roads.

Forsberg said the tax could help the county maintain its 320 miles of roadways. Heavy trucks do an outsized amount of damage to roads.

But rock-hauling trucks, like all commercial vehicles in the state, already pay highway user fees, said Greg Korstad, a Minneapolis lawyer who represents aggregate companies.

However, he said the industry “as a whole recognizes that there’s some real benefits from having that tax and benefits to the community where the industry helps support the community needs.”

That includes the highway improvements and the mine reclamations, which he called “a fairly substantial benefit the industry provides that is often not recognized.”

And industries tends to object less to taxes in cases where the companies within each market operate under the same rules. That is largely the case here, partly because the tax applies to both rock mined in a county and rock imported to a county. That means local contractors aren’t at a competitive disadvantage.

Korstad said the tax doesn’t make sense in counties where much of the rock is used in public projects. If that’s the case, the tax ends up being paid back by local governments through projects, meaning the money simply exchanges hands.

The tax would also apply to silica sand, which is increasingly being mined for use in the hydraulic fracturing industry.