One of the main jobs of the Minnesota Legislature in 2020 will be to put together a public construction plan. It will borrow money to pay for repairs at colleges, to pay for roads and wastewater treatment plants along with other projects. There’s bipartisan agreement that what’s known as a bonding bill is needed, but the size of the bill is in dispute.
The House and Senate committees that craft bonding bills have spent the past few months traveling the state to learn about the local projects that could get state assistance. One difference this year is that DFL Gov. Tim Walz, who will make bonding recommendations in January, has been on a tour of his own.
“Every community I’m going to, the chamber of commerce is there, the mayors, the local folks, and they’re looping in the legislators,” Walz said. “I think us doing one too just reinforces what the House and the Senate does. It just gives a little different perspective. So, the need is out there.”
In fact, the need far exceeds what lawmakers can realistically provide. After last session’s inaction on a large bonding bill, the requests from state agencies and local government officials for 2020 have topped $5 billion.
Walz proposed a $1.3 billion bill last session and is looking at a version at least that size and probably bigger for next year. Some House Democrats have suggested $3 billion or more.
Walz said a long-range strategy is needed for bonding.
“For some of us it might mean a lower bonding bill in certain years. But the certainty over numerous years would be better. I’m going to try to approach it a little more like that,” he said.
Senate Majority Leader Paul Gazelka, R-Nisswa, said he can support a bonding bill next year if it prioritizes roads, bridges and wastewater projects. But he's certain that the Senate bill will be much smaller than whatever Walz and House Democrats propose.
“Most importantly is — what are the projects that we need to get done? If they’re statewide or regional significance, those are the ones I’m going to be most open to funding,” Gazelka said.
Gazelka wants to keep state bonding debt low. He said the amount of debt, as well as the mix of projects, will factor into whether the bonding bill gets the three-fifths super-majority support it needs to pass.
“In the House, it will take Republicans and Democrats to pass. And in the Senate, it will take Republicans and Democrats to pass.”
Lawmakers will get a clearer picture of the state’s debt capacity for bonding when the latest economic forecast comes out on Thursday.
House Minority Leader Kurt Daudt, R-Zimmerman, said he’s not sure what the right size is for the bill. But he said $1 billion over the biennium is a good bonding guideline to follow.
“I could certainly see if there was a need going a little bit over $1 billion. But when people are talking about $3.5 billion or something like that, that would be more than three times the biennial average for the last decade. That’s just not realistic,” He said. “Frankly, if you get a bill that’s too small, it’s tough to get the votes to pass it, and if you get a bill that’s too big, it’s tough to get the votes to pass it.”
House Speaker Melissa Hortman, DFL-Brooklyn Park, said she thinks Minnesota has been very conservative on borrowing compared to other states. She said that approach doesn't always make sense when interest rates are low and construction costs will keep rising.
“It really makes sense for the state right now to borrow and invest, take advantage of today’s construction costs and create as many jobs as we can,” she said. “Looking ahead, there may be a recession on the horizon. There’s not a lot state legislators can do to prevent that. But one thing we can do to create jobs is pass a big bonding bill.”