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Rural development fund part of severance tax debate

November 15, 2012
By JOHN PEPIN - Journal Staff Writer ( , The Mining Journal

MARQUETTE - A proposed new rural development fund - financed largely by non-ferrous mining severance tax revenue - would provide grants, loans and loan guarantees for projects expanding and sustaining land-based industries.

Details on the provisions of the fund were laid out in a bill introduced Nov. 8 by state Rep. Matt Huuki, R-Atlantic Mine, as part of a package of six bills dealing with creation of the severance tax for non-ferrous mining projects, including the Rio Tinto Eagle Mine in northern Marquette County.

State officials are hoping the measures will be passed by the legislature before the end of the year.

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Under Huuki's bills, 40 percent of the severance tax revenue would go toward the fund, which could also accept other assets including state or federal transfers or grants, and gifts, bequests or donations. The remaining 60 percent of the proceeds from the mining severance tax would go to local taxing authorities, funding schools and governments.

The rural development fund would provide money for projects benefitting "land-based industries," including food and agriculture, forestry, mining, oil and gas production and tourism.

A Rural Development Fund Board overseeing the fund will develop criteria for evaluating project proposals requesting money.

The criteria would include a preference for projects located in the regions where non-ferrous mining operations are generating severance tax revenue. The criteria would also support projects addressing expansion or sustainability of land-based industries, worker training related to such industries and energy, transportation, communications, water and wastewater infrastructure benefitting rural communities.

The board will be made up of five members including the director of the Michigan Department of Agriculture and Rural Development, or a designee from within the department. The four remaining members of the board would be appointed by the governor with the advice and consent of the senate.

Appointees will have "knowledge, skill or experience in land-based industries or fields of economic development or infrastructure," the bill said.

Two of the four appointees would be from the Upper Peninsula and two from the Lower Peninsula. Not more than two of the members would be from the same political party. At least one appointee will be a resident of the area where severance tax revenue is generated.

Appointees would serve for four-year terms and would not be compensated for their service, although expenses would be reimbursed. Each year, the board will elect a chairperson and other officers. The agriculture department would provide the board with sufficient personnel to perform its functions.

Each year, the board would produce a report, which would include a financial accounting, along with a status report on funded projects and the criteria used for allocating money.

John Pepin can be reached at 906-228-2500, ext. 206.



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