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Loss of tax credit hits rural Minnesotans hard

ALSO: Is American Crystal acting in the spirit of a co-op?; number of poor students climbs in Owatonna; 230 learn more about Somali culture in Willmar; restaurant closure stuns Grand Meadow.

News From Greater Minnesota

A report by the nonpartisan House Research Department shows that the elimination of the Market Value Homestead Credit has caused property taxes to rise precipitously across the state, hitting outstate landowners especially hard. Per Peterson of the Marshall Independent notes that “elimination of the MVHC increased property taxes statewide by $413 million, with an average property tax increase of 5.2 percent; the average agricultural property tax increase is 11.9 percent; the average apartment property tax increase is 8 percent; and the average small business property tax increase is 7.4 percent.”

The report also said the average rural Minnesota property tax increase is 8.7 percent, almost three times more than the average metro total; the average residential homestead property taxpayer in Greater Minnesota saw an increase of 5.2 percent; and the average Greater Minnesota business property tax increase has an impact of almost two-and-a-half times more than a metro business.”

Peterson puts some perspective into the tax credit report. “The MVHC was created by the Legislature as a way to provide direct property tax relief. Eventually, however, the state stopped reimbursing local governments for the property tax relief they were providing on behalf of the state. Rep. Lyle Koenen, DFL-Clara City, said because the state hadn’t been paying against the credit in the first place, majority Republicans in the Legislature decided to do away with it. Rep. Chris Swedzinski, R-Ghent, said ‘when we had conversations with cities and counties (last year) the biggest issue was they never knew what was going to come their way. Nine out of the last 10 years the state did not meet its obligation for the program’ ” So, to recap, the state didn’t meet its spending obligations, so it cut the credit and property taxes went up.

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The lockout of 1,300 employees at American Crystal Sugar was in the news this week on several fronts. First, Mike Hughlett of the Star Tribune writes that the co-op’s net proceeds dropped 39 percent in the most recent quarter, the first full quarter since the Aug. 1 lockout. Crystal officials say the decline is due to weather that resulted in a 24-percent drop in sugar beets from the previous year and a 23-day delay in processing days. The Moorhead-based co-op saw net proceeds of $186.7 million, down from $260.3 million a year earlier.

Meanwhile, Stephen J. Lee of the Grand Forks Herald writes that American Crystal is still looking to hire local workers to replace the locked-out employees. When the lockout began, Crystal hired Minnetonka-based Strom Engineering to replace the 1,300 union members who rejected the company’s proposed five-year contract July 31. But the out-of-state replacement workers were expensive because of living and transportation costs. In November, the company began advertising locally for replacements. The ads continue to run. The ads ask for “non-union, full-time, limited duration jobs in our five Red River Valley factories.” The listed jobs range from “general workers,” at $12.50 to $14.75 per hour, to welders at $24 an hour and “electronic control techs” at $24.50 per hour. The jobs include “day-one benefits, including medical, personal time” and flexible spending accounts for medical care. Lee notes that federal law prohibits a company from permanently replacing locked-out workers. Company officials split hairs: They stress they want union workers back but say the hiring process is going well.

Also, Lee reported in the same story that union leaders met last week with a Crystal attorney and with the federal mediator to talk about possible future negotiations. Although the meeting was not a negotiating session, the union said it put contentious topics on the table for re-evaluation, including the main topic of health insurance. “I think our committee went farther than what our members really wanted to. But in order to get this moving, if the company is serious about negotiating, this should help substantially in the process,” said John Riskey, president of the Bakery Workers local 167. The union has asked the federal mediator to call another negotiating session.

Perhaps the best story this week comes from Dave Olson of the Fargo Forum, who asks if American Crystal is still acting in the spirit of a co-op? “Is the cooperative formed by area farmers in 1973 more concerned with the financial bottom line than it is with the community-based ideals co-ops traditionally aspire to?” he writes. Bill Patrie, executive director of Common Enterprise Development Corp., a nonprofit organization that helps co-ops, said co-ops often start to help local communities but grow and morph into a more corporate model. The co-op was founded when beet growers were worried that American Crystal, a private corporation based in Denver, wasn’t paying attention to grower requests and might close some of the company’s Red River Valley plants. Growers bought the company for $86 million in 1973. Since then, the co-op’s success has led them to become active in shaping county, state and federal government policies. The co-op’s political action committee spent $2.1 million during the 2008 election cycle. So far in the 2012 cycle, Rep. Collin Peterson, D-Minn., has received a $10,000 donation from American Crystal’s PAC, tops on Peterson’s donor list.

Success can also quash a co-op’s sense of a common mission, Patrie said. Former North Dakota governor George Sinner, who once worked as a lobbyist for American Crystal and whose family was once heavily involved in sugar beet farming, said it’s hard to know who’s being stubborn in this dispute. While he is too far removed to be privy to behind-the-scenes information, he doesn’t believe the issues surrounding the lockout are major. Union leaders want to preserve benefits and job security. American Crystal wants workers to pay more toward health insurance. Olson writes “Sinner said he was told by a source he trusts that the company’s board – not management – is calling the shots. ‘Most of those board members are people like me who know these workers, love ’em, work with ’em and are not inclined to be selfish. And yet here we sit’ ” he said.

Derek Sullivan of the Owatonna People’s Press put a local spin on state poverty numbers. One measure of poverty is the number of students who qualify for free and reduced-price lunch. According to the Minnesota Department of Education, 37 percent of Minnesota students qualified for free or reduced-price meals in 2010, up from 30 percent in 2006 (a gain of 55,000 students). In Owatonna, 38 percent of area’s 4,975 students received free or reduced-price meals, up from 32 percent in 2008. The numbers are quite high at some schools: Willow Creek Intermediate School is at 43 percent, Wilson Elementary is at 61 percent and McKinley Elementary is at 53 percent. “If you look at the number of students district-wide who are receiving free or reduced lunch now, it’s at 38 percent,” Owatonna superintendent Tom Tapper said at Monday night’s school board meeting. “It’s in sixth grade at Willow Creek where our district comes together for the first time, and we see that number is 43 percent, so you can kind of see where we are going. It’s not something that’s going to be trending backwards.”

Curiosity about Somali culture was in evidence last week when more than 230 people showed up for the seminar “Understanding the Somali Culture” in Willmar, reports Linda Vanderwerf of the West Central Tribune. Topics included Somali history, the history of immigration and the issues encountered by new immigrants as they adjust to a new country. Questions from the audience touched on women’s roles and on the teachings of Islam. A second panel discussion focused on  understanding the Somali culture and the role of the mosque; understanding the cultural history of Willmar; perspectives from a Somali growing up in Willmar; understanding planning and zoning; and acclimating to culture, both here and in Somalia. The meetings are sponsored by the Willmar Lakes Area Community Marketing Coalition along with the African Development Center, the city of Willmar, Willmar Public Schools, Bremer Bank and the Willmar Lakes Area Chamber of Commerce.

The role of a public institution in a small town can’t be emphasized enough. When a restaurant or bar closes, often it means more than just the loss of a business. Such was the case when Grumpy’s in Grand Meadow unexpectedly closed Jan. 1 after 14 years. Matt Peterson of the Austin Daily Herald said the owners plan to remodel the space for commercial use and auction off the restaurant equipment. “It was a labor of love that just didn’t work out for us,” owner Ross Manahan said, citing the economic downturn, increased food costs and difficulty finding dependable staff as reasons for closing. Grumpy’s opened in 1998 and was purchased by Manahan in 2008. The business drew visitors from Iowa to Rochester, Manahan told the Herald in April. The move surprised many. “I thought we were doing well,” said Dallas Hanenberger, a cook at Grumpy’s. Hanenberger discovered he was no longer working at Grumpy’s the day after it closed. “I’m sad to see it go,” said Doc Shipton from Spring Valley. Shipton hosts a poker tournament at Grumpy’s every other month. “Any time a business like that closes in a small town, it’s going to affect the community,” Shipton said. “There’s no way around it.”

Speaking of the economy, here’s a guy that’s doing too well. Nots!, a sunflower-based bite-sized snack produced in Fergus Falls by Chanhassen resident Rob Fuglie, has been selling so well that Fuglie has temporarily stopped taking new orders until he can restructure his business. Ryan Howard of the Fergus Falls Journal reports that word of mouth and people giving Nots! as Christmas gifts are what spurred the increased demand. “We’re trying to figure out how to get everything figured out so we can go sell larger scale,” he said. Fuglie is still the only person creating Nots!, and by himself he can’t make the amount needed to sustain a widespread expansion — ultimately hoped to be 50 cases a day. By the end of 2012’s first quarter, Fuglie hopes to hire his first employee (he’s not looking for workers yet). Over the course of this year, he plans on moving Nots! into its own facility in Fergus Falls, where a team of employees can ramp up production.

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John Fitzgerald is a longtime journalist and Minnesotan. He lives in Buffalo.