MINNEAPOLIS -- They say if you can't find it at the Mall of America, you can't find it anywhere. Macy's? Got it. Bloomingdale's? Got it. Nordstrom? Yeah. There are 17 places to buy a diamond ring, 30-plus places to buy shoes and, in the event that you need a fajita and need it pronto, two separate Taco Bells.

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The sparkling Mall of America, still the country's biggest after a dozen years, is among the Midwest's top tourist destinations. From a civic standpoint, it's also one of the most valuable places in Greater Minneapolis, scheduled to contribute $18.5 million in property taxes to government coffers in 2004.

If the mall, with its 525 shops and kiosks, 50 eateries, seven nightclubs and one indoor theme park, were anchored in, say, Robinson Town Centre, collectors in Pittsburgh's city tax office wouldn't see a dime from the real estate levy, and many would argue that that's the way it ought to be. To the victor go the spoils.

But because it's in central Minnesota -- technically, it's in suburban Bloomington, 10 miles due south of downtown Minneapolis-St. Paul -- not only do the hub cities get a portion of the mall money, but so do each of 188 municipalities and 100-plus school districts and authority boards in the seven-county metro region.

That's because Minneapolis is one of the nation's pioneers in enacting regional property tax sharing, a complex system of revenue collection and redistribution that essentially allocates a chunk of property tax receipts each year to development-poor municipalities that need it most.

And so in places like the Mall of America, amid the sneakers and jewelry and deep-fried chalupas, towns small and large find an economic life preserver.

The spoils go to everyone.

For the record, Pittsburgh is no revenue-sharing slouch. The Regional Asset District, which this year will distribute about $75 million from its share of Allegheny County's 1 percent sales tax, helps fund museums and stadiums, and is often cited as one of the premier tax-sharing programs in the country.

But the Minneapolis system is far more sophisticated and is in fact the nation's largest, giving money not to arts groups and library boards, but to municipal governments and school boards, which use it to pay police officers, secretaries, teachers and the monthly electric bills.

Some say the so-called "Minnesota Miracle" is a key component in a broader communal plan to fight suburban sprawl, keep older cities solvent and reduce the tax-base gap between the haves and the have-nots.

	Online Graphic: The Twin Cities See a map that shows the seven counties that comprise the Twin Cities metro area.

Detractors see it as just another scheme to fleece wealthy, well-developed suburbs and prop up poorer towns that long ago should have been dissolved because of dwindling populations and jobs.

"There will always be the issue of the dinky little town that's all residential. Why should they get a dime?" asked Paul Gilje, former associate director of Minnesota's Citizens League.

"Even so, I still think it's a good insurance policy," Gilje said. "Nobody knows where the new growth is going to be, but under this plan, you're going to get a piece of it. This is the premium you have to pay."

A radical plan

In Pittsburgh, talk of such a regional approach to redistributing wealth would perhaps receive a tepid response, and just as likely would be shouted down as a Robin Hood plot to steal from the rich and give to the poor. (Witness the continuing debate over whether Pittsburgh's occupational privilege tax ought to be increased from $10 annually to $52, in order to ease the city's gaping budget problems.)

Progress toward such a goal could take years, if not decades.

But in Minneapolis, population 383,000, the tax-sharing plan was approved with rapid efficiency. It was conceived in 1968, formalized in 1969 and introduced to the state's Legislature the following year.

"It was an intense battle," said Charlie Weaver, former state representative, now head of the Minnesota Business Partnership. His father is the late Chuck Weaver, a popular Republican lawmaker who played a leading role in the battle.

"The first year, I don't think it got very far," he said. "Clearly, there were some Republican colleagues who were against it."

In the 1960s, the Twin Cities' was a quasi-Rust Belt economy driven by manufacturing and timber. Like many declining metros bogged down by divergent urban and suburban interests, Minneapolis-St.Paul gave little thought to broad, regional cooperation. Instead, towns were busy jostling for a limited number of strip malls and property investors.

But in the late 1960s, the senior Weaver formed an alliance with a Democratic governor to round up votes for the radical tax-base sharing program.

By 1971, it was law.

"It's probably one of the most important laws passed in Minnesota in the last 40 years," the younger Weaver said. "Would it happen today? I'm not so sure."

Scores of towns benefit

The plan survived four years of legal challenges. And since 1975, when the Twin Cities Fiscal Disparities Act took full effect, cities have been sharing 40 percent of the growth in their commercial and industrial property assessments through a group fund.

That 40 percent slice of land value -- in Minnesota, it's called "tax capacity" -- is collected from a seven-county region.

The redistribution formula estimates each community's population, then measures how its per-capita commercial tax base compares with the regional per-capita average. Poorer communities receive more back from the fund than they contribute. Wealthier communities contribute more than they receive.

Between 140 and 150 towns receive more than they contribute in property valuation. Among them are East Bethel, 30 miles north of Minneapolis, where the commercial tax base is valued at $70 per person, and Anoka, the seat of Anoka County, with its older business district.

These towns are buoyed by the four dozen cities with exceptionally high growth rates. Bloomington is one of them, with a commercial and industrial tax base valued at more than $1,000 per capita, due largely to the Mall of America complex, which opened in 1992, and surrounding development.

"We're a net loser," said Mark Reichel, a property appraiser with Bloomington's tax office.

It is, as one local newspaper writer puts it, a revolutionary process akin to lopping off the top few stories of a Minneapolis skyscraper, grinding it up, and sprinkling the tax revenue across the region. Or as Steve Hinze, an analyst with Minnesota's House of Representatives research committee, describes it:

"It's kind of like you're physically moving that property somewhere else."

Chopping up the Mall

An example -- this year, the Mall of America's building-and-land value is assessed at $517.5 million. After some complicated math, the mall's total tax bill is estimated at $18.5 million. Of that, about $4.4 million is collected by other municipalities through the disparities fund.

Because of the mall and other developments, Bloomington loses more than $20 million in net tax base value each year, and many suburbs to the south of the capital are net losers, as well.

St. Paul, with an aging business and retail core built largely before the disparities act took effect, is the biggest winner each year, receiving close to $30 million annually in net tax base.

That property value is then available for St. Paul to use when it collects its own real estate taxes. Last year, St. Paul drew $8.5 million in property taxes from businesses and industries outside its borders.

Were it not for those outside revenues, St. Paul would either have to reduce its expenditures by $8.5 million or raise the property tax rate by 16 percent on its 287,000 residents, said Matt Smith, St. Paul's financial services director.

Thanks largely to the fiscal disparities payout, St. Paul has gone 14 years without an increase in its property tax levy, allowing the city to become more competitive with the suburbs.

"The relative tax burden here, compared to other cities, is going down," Smith said.

Minneapolis, with a more modern downtown than St. Paul, wins some years and loses in others, depending on the city's development pace. Usually, the city is a wash, contributing or receiving just a couple hundred thousand dollars in tax base.

The total pool value fluctuates, and lately has been between $200 million and $350 million. But because the area's collective growth has been sliding in recent years, so, too, has the amount of commercial and industrial tax value contributed to the fiscal disparities fund.

As a result, the total property tax revenue generated through the fund has also shrunk.

Last year, the tax base pool was $231.7 million. Three years ago, it was $314 million. In 1995, it stood at $241 million.

Cold winters, small towns

Beyond their deep snowdrifts and quirky local inflections, Pittsburgh and Minneapolis have much else in common, including the perception that the development of each region is being retarded, to some degree, by an overabundance of arbitrary municipal boundaries, drawn long ago and never retired.

Allegheny County alone has 130 distinct municipalities, with many of the older ones born as company towns, ethnic neighborhoods or farming plots. Newer, more rural townships were populated and incorporated as cars and mass transit allowed people to work in a city but live miles away.

The seven-county Twin Cities region has 192 incorporated towns, the eighth-highest per capita rate in the country. More than 30 of those towns have fewer than 1,000 residents, and half of those abut larger, well-off municipalities that could easily take over services such as police protection and street cleaning.

A 2003 excerpt from the St. Paul Pioneer Press reads like something out of a Pittsburgh newspaper: "Some critics want small urban towns to start paying their way -- or consolidate ... [but] in a state that cherishes local control, forcing cities to consolidate is political suicide."

So does the Twin Cities' tax sharing plan help ease the disparities created by a fractured metro region, or does it actually help perpetuate them? Were Minnesota lawmakers being proactive in anticipating that the riddle of city-suburb tensions could never be solved, or have they outsmarted themselves in giving small, out-of-date mill and railroad towns little incentive to change their ways?

The answers, quite naturally, depend on who's being questioned. But generally, policy experts from around the region agree that the program has accomplished what it set out to do: reduce the wealth gap between older and newer municipalities. Over three decades, by some estimates, the inequality in per-capita tax base between top- and bottom-rung cities was reduced from a ratio of 50-1 to 12-1.

Ratcheting down competition

"It's a powerful equalizer," said Myron Orfield, former Minnesota state representative, now a law professor at the University of Minnesota. His latest book, "American Metropolitics," is a top resource in a crowded field of texts on regional cooperation.

When a city's commercial tax base declines sharply, as when Pittsburgh's steel industry collapsed in the late 1970s and early 1980s, a city has fewer properties that generate tax revenue, and must increase the per-share tax burden on remaining property owners to balance the budget, Orfield explained.

Increased tax rates, of course, make the city less competitive when it comes to drawing new businesses and residents, creating a swift whirlpool that's difficult to escape. Disparities in tax bases between neighboring towns exacerbate these problems; two towns may have similar populations, but if one has a larger business base, the other town must enforce a higher tax rate to deliver the same services.

Sharing taxes with your neighbor is one way to staunch the bleeding, Orfield said. "It doesn't make things perfect. ... But our lives aren't consumed with an economic strategy that divides each other," he said.

Even though supporters contend that tax-sharing cuts down on competition between towns -- there's less reason to offer tax-break incentives for a particular project if you know you'll lose 40 percent of its value off the top -- there is plenty of evidence that the fight over mega-developments is as savage as ever.

Right now, Minneapolis and St. Paul are locking horns over which city will be home to the Minnesota Twins' new baseball park. Anoka County, north of the city, wants to build a new football stadium for the Minnesota Vikings. All hope to cash in on the ancillary development expected to surround the parks.

And encouraged by Minnesota's liberal annexation laws, two fast-growing suburban towns -- Monticello, to the northwest of the Twin Cities, and Chisago City, due north -- want to absorb about 17 square miles each from their neighbors to make room for more housing and industrial tracts. The rural townships are fighting the annexation.

There are other question marks. Under Minnesota's plan, bedroom communities without much commercial development are big winners. In the Pittsburgh area, that means places such as Sewickley Heights, with its expensive homes, low taxes and high per-capita wealth, would get a major boost because they have little industry. That conflicts with the plan's intended effect.

Also, communities that are annual net losers are less than enamoured with the concept of tax-base sharing. Every few years, a handful of suburban legislators representing those well-to-do towns makes a show of trying to overturn the act.

So far, they've failed.

From a forecasting standpoint, the shifting value of the disparities fund makes for an exceedingly complicated municipal budgeting process. Not knowing how much outside revenue you'll receive annually means your in-house property tax rate fluctuates, as well.

"Fiscal disparities is a wild card," said Smith, St. Paul's finance director. After 30 years, "we're still working out the kinks."

Spillover effect

If Minnesota's tax-sharing system were instituted today in Pittsburgh, it would not offer the city a quick fix for its budget problems. Because the disparities fund builds cumulatively, years would pass before Pittsburgh and its needier suburbs might see real help.

But the tax-sharing plan has been just one domino in a series of actions in the Minneapolis-St. Paul region. Minnesota's spirit of regional cooperation has spilled over into other areas of government.

Minnesota's system of subsidizing public schools is the envy of superintendents everywhere; on average, 80 percent of a district's funding comes from the state. That reduces the schools' reliance on property taxes and helps level the playing field among rich and poor districts.

"Tax sharing is the most famous," Orfield said. "But the school aid is more helpful."

Also, since the disparities act took effect, the seven-county region has employed what's called a "metropolitan council." It has sweeping powers; any plans to build ballparks or malls, install sewer lines or superhighways or eliminate forest land must first get the council's OK.

It all adds up to one of the nation's most progressive regional government systems. But whether similar plans would be good for the Pittsburgh region is something that ought to be decided by voters, not professors, said Gilje, the former citizens league director.

"Pittsburgh really needs to ask itself the question: Are we all part of the same community, and do we have something to gain by working together?"