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Republicans in the Minnesota Senate Thursday voted down a $1.5 billion capital investment bill, arguing that it should be tied to tax cuts.

The move sent Democrats, who hold a narrow majority in the chamber, back to the drawing board, and it irked local leaders and labor groups who’ve waited three years for lawmakers to approve a capital investment bill.

Lawmakers typically pass a capital investment bill — known as a bonding bill — every other year. But they failed to get one across the finish line in 2021 and 2022 under divided control in the Legislature.

The threshold for passing the bill is higher than usual — a three-fifths majority — because it would incur debt by issuing bonds to pay for construction projects. And GOP lawmakers exerted their unique leverage to stall out the proposal, at least for the moment.

“We want to help you. Senate Republicans want to get these projects done in the state of Minnesota. We had one simple request,” Senate Minority Leader Mark Johnson, R-East Grand Forks, said. “Let's get this done. But let's ensure Minnesotans are taken care of as well, make sure that they have tax relief.”

Senators used a procedural move to table the bill, so it could come up again later. The House passed it earlier this month, along with another bill that puts up $393 million in cash to pay for wastewater treatment centers, bridge repairs, college and university building projects and more. House Republicans joined Democrats in passing both bills.

During the Senate floor debate, Republicans voiced concerns about the pace with which DFLers brought the bill to a vote. And they said the state should consider using part of its $17.5 billion budget surplus to fund projects, rather than issuing bonds.

Democrats argue that the funding for projects around the state is long overdue. And they maintained that borrowing for the projects spreads the cost out over time, while keeping surplus funds available for other one-time spending.

Capital Investment Chair Sandra Pappas, DFL-St. Paul, said her committee would now pivot to a cash-only bill.  Because it wouldn’t use bonds, it would not require GOP support to pass. And Pappas hinted that Republicans might not get projects in their districts included in a cash-only bill.

“It's going to be very difficult to replace the $1.5 billion in bonds, and fund all these projects that are in these two bills for all of our communities all over the state,” Pappas said. “And frankly, it breaks my heart. I have heard these bills, I have visited these communities. I know how desperate they are for assistance from the state. I know they can't afford it.”

Pappas also said that moving to a cash-only capital investment bill could divert money from other uses.

“Going to an all-cash bill will squeeze not only your number one priority, tax relief, and make that more difficult to do, but will make it more difficult for me to fund all of these projects that are in this great bill today,” Pappas told Republicans on the Senate floor.

At a capital investment committee hearing later in the day, frustration about the vote came to a fore. Pappas said she wouldn’t be able to hear some GOP lawmakers’ proposals for local projects that were set to be considered for a second bonding bill.

The move frustrated Republicans on the panel, who had proposals that were dropped from discussion.

“So you pull the Republican bills because your bill didn't pass when you knew it wasn't going to pass,” Minority Lead Karin Housley, R-Stillwater, said. “Madam chair, this appears to the public, especially those who are driving for hours to get here, that this is definitely the Democrats’ way this year; it's just a pay to play.”

Asked why a pair of bills had been pulled from the agenda, Pappas responded that it was because the authors had voted against the $1.5 billion package.

“You should tell them I'm waiting for Republicans to pass the bonding bill. And I'd be happy to hear their bills, if that's the case,” Pappas said.

She later said that the committee would take testimony from local leaders who’d traveled to talk about projects in their communities.

House leaders said they would also pursue an alternate path forward on a public works bill.

“It’s regrettable the Senate GOP chose gridlock over progress for Minnesotans today. In the coming days, the House DFL will continue to work with the House GOP and Senate DFL to move a capital investment bill to the governor’s desk — with or without the Senate GOP,” House Speaker Melissa Hortman, DFL-Brooklyn Park, said.

The state tracked more than $6 billion in current requests around the state for roads, bridges, wastewater treatment plants, parks and state and local buildings.

Ahead of the Senate vote, construction workers and local leaders said the funding package was overdue.

“We shouldn't be talking about these projects, we should be talking about the next round of projects,” Bradley Peterson, executive director of the Coalition of Greater Minnesota Cities, said. “There are local elected officials around the state who are tremendously frustrated that this has not gotten done. They live in a state of uncertainty about their projects, how they will be paid for, who will pay for them, and whether or not they will come to fruition.”

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2023 Minnesota legislative session

Dana Ferguson

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The Minnesota Senate on Thursday failed to hit a three-fifths majority needed to pass a borrowing bill that would fund $1.5 billion in local construction projects as Republicans withheld their support.

Senate GOP blocks bonding bill, sending DFL back to drawing board

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