ELY – State Sen. Tom Bakk voiced his concern about the current condition and the future of the Iron Range last week in Ely.

The DFL majority leader spoke to members of the Community Economic Development Joint Powers Board and other area leaders at the Grand Ely Lodge during the group’s annual legislative meeting.

Following a tribute to his “wing man,” the late State Rep. David Dill, Bakk painted a grim picture for the region.

“Today is a pretty tough day. A whole lot of people are getting layoff notices in Babbitt and Silver Bay, with a lot of uncertainty,” he said. He talked of mechanics at the region’s numerous iron ore facilities who were told they could leave their tools on the job in anticipation of returning to work. “The ones I talked to are taking their tools home,” he said.

He described the difference in this “bust” cycle to previous downturns in the taconite industry.

“Car sales in this country were at a record level in November,” Bakk said. “We should be pumping out every pellet that we can make, and we historically have, and while the economy was humming along, the Range has performed strongly.”

He blamed foreign steel.

“We produce about a 100 million tons of steel in the country, and we import about 25 million tons,” he said.

“China’s excess capacity, that is, what they make and can’t use, is between 300 and 400 million tons. If they want to drive our domestic steel industry out of business, we’re gone. There is no way to save it unless they save it in Washington, D.C.,” he said.

Bakk has joined Gov. Mark Dayton, U.S. Senators Amy Klobuchar and Al Franken, and Rep. Rick Nolan, in requesting to meet personally with President Barack Obama. “We’re not going out there to speak with a staff person,” he said. “I’m hoping we can get the President’s attention on this.”

He talked of the main question that needs to be asked in the nation’s capital: “Do we want to have a domestic steel industry or not?”

“A whole lot of businesses in this country are benefitting by all this cheap steel coming in,” Bakk said. “And there is a lot of pressure in Washington, D.C., to continue these imports.”

Referring to the contributions of the Iron Range in producing enough steel to help win two world wars, he asked, “When the next crisis comes, and it will, with all the instability in the world, are we going to be dependent on some foreign country to send us steel so we can make things that are important to our national security?”

“If we don’t get some help from Washington, D.C., we probably have a really, really bumpy road ahead,” he said.

Bakk called for President Obama to issue an executive order trade protection provision, similar to what President George W. Bush did in 2001, to help protect the domestic steel industry.

He also specifically urged steps be taken to keep US Steel and Cleveland Cliffs from declaring bankruptcy and reorganizing. “Just too many people will get hurt, so we need to figure out how we can get something resolved here before that outcome.”

He revealed that the two companies are ‘burning through cash and losing money every day they operate. No business can do that indefinitely. The future of this region is a pretty significant risk right now.”

State surplus

Bakk painted a much rosier picture for the state of Minnesota as a whole, that being a $1.8 billion state budget surplus, and his plans for going into the state legislative session which begins on March 8, and runs until May 23.

Current state law requires that one-third of any surplus automatically go into a rainy day fund, which leaves about $1.2 million in surplus for lawmakers to deal with. “That seems like a lot of money, but in the context of a $42 billion biennial budget, it is just a little less than three percent,” he said.

He talked about four issues at the top of his legislative agenda: transportation, taxes, bonding, and constitutional amendments.

The transportation bill from last year was never passed. “We couldn’t come to an agreement with the House Republicans, and it is sitting in conference committee,” he said. “I expect some of this one-time surplus money to be spent on roads and bridges.”

The state tax bill from last session also sits in limbo. “I hate to sound partisan, but we had a $1.8 billon surplus last year and the House sent us a bill that cut taxes by $2.2 billion. There was no way to find an agreement on the tax bill last year.”

The Senate has about $400 million to $500 million in their tax bill in conference committee. “I expect that’s the kind of number that the tax bill is going to be out of that (surplus),” he said.

He also predicted that new legislation could provide some tax relief for “main street” business owners. “We may do something like exempting the first $300,000 in value from the state general tax,” he said. “That helps every small business on every main street.”

He also predicted an increase in Local Government Aid as well as county program aid. “The House didn’t have that in their bill last year, but I’m hoping that in an election year, they will see the wisdom of helping local units of government,” he said.

Another large task for the legislators in the next session is the state bonding bill. Bakk said about $850 million will be invested in infrastructure across the state. “I hope that we can use some of our surplus to supplement that bonding bill,” he said. “This is a good time to invest in public infrastructure with interest rates so low.”

Constitutional amendments will also be a part of the next legislative session. One amendment already on the ballot addresses legislative pay. “Currently, the Minnesota Constitution says that legislators cannot raise their own pay, but there has been no appetite over the years to do anything about this,” Bakk said. He said he has had one five-percent increase in 22 years.

“What I worry about, is that someday we will have a legislature made up of three groups of people: very wealthy people, people who are retired, and people who can’t find a job any place else.”