Firm projecting those rosy mining numbers has an embarrassing error in its past | WisCommunity

Firm projecting those rosy mining numbers has an embarrassing error in its past

Great news, Wisconsin!

Coming soon to a pristine, scenic area near you -- a 21-mile open pit iron ore mine.

Have you heard? It's going to create thousands of new jobs, contribute $600-million a year to the local economy, and produce billions in new taxes.

All that, while protecting the environment, too!

Wow! Almost sounds too good to be true, doesn't it?

You know what they say about that: When something sounds too good to be true, it probably is -- especially when the news is coming from Northstar Economics.

Thing is, Gogebic Taconite doesn't just want to apply for a permit, go through the normal process, answer the many unanswered questions about environmental impact, hear from the public, and see whether the proposal will fly.

That takes too long. Bad for the business climate.

What G-Tac, aided and abetted by the new pro-business Walker administration, is "streamline" the approval process -- like cut it down from five years to one year or less.

At least that's what we're told. The bill to change the law has been redrafted a couple of times but still has not been introduced. Apparently the only people who have seen it are the Republicans, the mining company, and Wisconsin Manufacturers and Commerce (WMC) which already has launched a in support of the secret bill they call the Jobs for Generations Act:

You see, there are billions of tons of iron ore in Iron County Wisconsin that can be safely mined for generations – all while protecting our environment.

Minnesota and Michigan have done it. And, we can too.

At first, the mine will create 2,000 jobs, and sustain thousands of jobs statewide for years to come. Mine workers will earn over $60,000 a year.

Over the 100 year life of the mine, it will generate billions of dollars in economic activity, and millions of dollars in tax revenue to pay for schools, libraries, roads, parks and other vital services.

Pretty rosy scenario, no?

The environmental stuff they appear to just be making up. But the numbers are based on studies by an outfit called a Madison-based firm run by an economist, David Ward. It seems to specialize in providing the kind of numbers the company paying for the study is looking for.

The last time Xoff and NorthStar crossed paths, in 2006, the firm had just done a study declaring that the sky would fall and the Madison economy would collapse if the city passed a mandatory sick leave ordinance.

But here's the thing,

There are major flaws in a Greater Madison Chamber of Commerce study that predicts dire consequences if a proposed law to guarantee paid sick leave for most employees in the city is adopted.

The biggest flaw is in a centerpiece conclusion of the study - that the sick leave law could result in a huge loss of property taxes.

The study, even if all other assumptions are accepted, exaggerates the loss by a factor of 10...

The study, prepared by NorthStar Economics and released Thursday morning by the chamber at a press conference at the Avenue Bar, claims that many companies [the number was 185 -- Xoff] will leave the city if the sick leave proposal is adopted, causing a loss of up to $21 million in city property tax revenue.

But a Wisconsin State Journal analysis found a major miscalculation of city property tax revenues - a decimal point is in the wrong place - that inflates projected property tax losses tenfold.

Well, gee, nobody's perfect. Anyone can make a mistake.

But when you're talking about a 20-mile long mine that will operate for a century, it might not hurt for someone to take a careful look at the studies that produced these results:


HURLEY – The proposed Gogebic Taconite iron ore mine will generate approximately $1.4 billion in total state and local tax revenue over the expected 35-year life of the first phase of the mine, according to the Preliminary Tax Impact study recently completed by NorthStar Economics, Inc. — a nationally recognized economic consulting and research firm specializing in analysis of the Wisconsin economy. The construction and operation of the proposed Gogebic Taconite Mine would create long-term direct, indirect and construction-related tax revenues for local communities and the state of Wisconsin.

The study estimates that the proposed Gogebic Taconite mine, producing an annual production level of eight million tons of ore, will create 2,834 long-term jobs; including approximately 700 direct mining jobs. Doubling the mine output to an annual capacity of 16 million tons would double employment to 5,668 long-term jobs; including 1,400 family-sustaining, direct mining jobs. The estimated average labor income for direct mining jobs is expected to be nearly $83,000, including benefits — which is 87 percent more than the Wisconsin all-industry average labor income. Total job creation estimates are based on both jobs directly created by the mine operation and jobs created in related industries such as suppliers and purchasers of mining product and businesses that will benefit from increased consumer spending.


June 1, 2011 - 11:13pm