Nine months and five special sessions later, the Minnesota Legislature successfully passed a $1.37 billion public works bill. Gov. Tim Walz publicly stated he supports the bill and is expected to sign the legislation when it reaches his desk.
The bill was passed by a 100-34 margin in the House, after 25 House Republicans joined the Democratic majority to bring the bill over the 60% threshold needed to pass it. Two earlier attempts to pass the bill in the House failed without Republican support. In the Republican-controlled Senate, the bill breezed through the chamber 94-3.
“I am committed to creating new jobs in Southern Minnesota that will support our local community and provide an economic boost for our region,” Sen. Nick Frentz (DFL-North Mankato) said in a press release soon after the bill’s passage. “That is why passing a robust bonding bill today as the right thing to do and it is long overdue. We have more than $5 billion of requests to improve crumbling public buildings and infrastructure across our state. These investments ensure access to safe drinking water, housing that is affordable, public safety, and upkeep for the higher education institutions that prepare our future workforce in all four corners of the state. This bonding bill also provides important tax relief for small businesses and farmers.”
Infrastructure spending on roads, bridges and highways, make up the biggest chunk of bill. $327 billion has been allocated to projects across the state.
Of that funding, around $25 million was dedicated toward lifting Hwy. 93, between Hwy. 169 and Henderson, eight feet to prevent flooding.
Flooding has been a major issue for the roadway, which is just one of the oft-flooded routes leading into Henderson. Rush River has flooded Hwy. 93 more than 15 times since 2001 and eight times from 2018 onwards. A study by MNDOT found that traffic-related costs amounted to $93,000 a day in Henderson due to flooding events.
Funding for the project was pushed heavily by local leaders, prompting a visit from Gov. Walz and Rep. Glenn Gruenhagen (R-Glencoe) and Sen. Scott Newman (R-Hutchinson) last summer.
Another $269 million was dedicated to water and wastewater projects and $161 million to city infrastructure, public parks, and arts and recreational centers. Included in that $161 million was $2 million to upgrade the Caswell Park softball complex in North Mankato.
The bill allocates $104 to natural resource projects, like parks, trails, dams and lakes. Mankato is set to benefit from $7.2 billion toward the restoration of the Minnesota riverbank. The project aims to stabilize the riverbank, reduce erosion and protect well 15, and isntall a stream stabilization structure in Indian Creek.
“They didn’t get all of their requests, but they got half of it and that helps when it comes to the taxpayers in Mankato,” said Rep. Jeff Brand (DFL-St. Peter), a supporter of the bill. “35% of their water comes from that well and if that well were to get contaminated by that riverbank, you would be looking at a multimillion dollar issue.
$90 million went to Minnesota colleges and universities and an additional $75 million was appropriated to the University of Minnesota. Of that $90 million, $46 million is allocated to Higher Education and Asset Preservation, which would allow for Minnesota State University, Mankato to receive money for asset preservation and a new design for Armstrong Hall.
A $2 million project to design and develop additional residential and activity facilities at the St. Peter Regional Treatment Center was allocated in the Human Services appropriations, totalling $27 million.
“They have a building called Green Acres right now that’s stripped to the studs,” said Brand. “What that allows them to do is put back the drywall and the HVAC, and make it a place that’s habitable, and there will be 20 new beds for them.”
Other major items of appropriations included the Metropolitan Council, the Department of Public Safety, Corrections, the Pollution Control Agency, Military Affairs, the Board of Water and Soil Resources and the Department of Health/Agriculture.
On top of infrastructure spending, the package included several tax breaks, most notably a 100% deduction on like-kind exchanges intended to benefit farmers and small business owners. The tax change allows farmers and small business owners to completely write off the expense of buying a piece of equipment in the first year of purchasing it and also applies retroactively to years 2018 and 2019.
“Changes to the federal tax code a couple of years ago created a problem in Minnesota because they required trade-in value to be counted as income,” Sen. Frentz said in the release. “This meant farmers and small business owners were hit with tax increases because the state tax code only allows a 20 percent deduction in the first year. The proposed change would align Minnesota with the federal tax code by allowing a 100 percent deduction.”
The tax cut was a top priority for Sen. Rich Draheim (R-Madison Lake), who represents Le Sueur County, along with Rep. Brand.
“That’s a $200 million tax cut over the next two years. For me, that was a must-do,” said Brand. “That was my number one priority in the tax committee and I’m happy to see it done, even if it was three weeks before the election.”
“I reluctantly voted for [the bonding bill], and the reason I voted for it is because of all the work I put in on Section 179, carrying multiple bills on that,” said Draheim. “It’s something that will help farmers and small businessmen, and right now, the state of those industries are pivotal for the state to get a big rebound.”
Draheim said he hesitated to support the bill because of the deficit looming over the Capitol. Amid the coronavirus, the Office of Management and Budget has projected that the state budget wll plunder into a $2.4 billion hole in the next two years and fall an additional $4.7 billion over the next two-year cycle. For Draheim, the bonding bill was too large and the millions allocated to items, such as arts centers, theatres, as well as a shade tree grant program, were too much.
“I don’t think those are large priorities when you’re looking at such a large deficit,” said Draheim. “We’ve burned through the surplus, we’ve burned through the reserves, we’ve almost burned through the $2.2 billion from the feds, we’ve burned through the unemployment account. We have $1.5 million in that account we had to borrow for that, that’s gone.”
There were several items that earned his support. In addition to section 179, Draheim said he was a big supporter of the pay increase to personal care assistants included in the bill and the pay increase to state troopers.
The bill also establishes a child care development program for Greater Minnesota, which allows rural counties and cities in need of child care services to seek a grant from the state if they can match 50% of the grant total. .
Legislators on both sides of the aisle saw the bill as a way to create jobs through infrastructure spending.
“I consider this a jobs bill more than a bonding bill in my opinion,” said Draheim.
For many House Republicans, including Rep. Bob Vogel (R-Elko New Market), representing much of Le Sueur County, the upcoming deficit was too great to support the bill.
“This is the first time, I believe, I’ve ever voted no on a bonding bill and the reason is because it swelled in size,” said Vogel. “Generally in the even numbered year, the base budget allows for $750 million in general obligation bonding and this one was up to $1.3 billion. My concern is that, as the Legislature convenes next year and has to put together a budget, it may have to make cuts, and to me, being in the business world, I know when I have to make cuts and don’t have alternative payment sources, I just couldn’t in good faith vote for it.”
Vogel was one of 34 House Republicans to express opposition to the bill on the basis of the deficit, including minority leader Kurt Daudt. Daudt had opened the door to supporting the bonding bill earlier this month after saying that he would no longer make Republican support conditional upon ending Gov. Tim Walz’ emergency powers. Twenty-five Republicans would end up joining the Democratic House majority in supporting the bonding bill after voting down two previous attempts to pass the bill.
“It was a tough vote to take because there’s a lot of things in that capital investment bill that need to be done and need to be funded. So it certainly was one of the more difficult votes I’ve ever taken, and I can understand where other people might look at it differently,” said Vogel. “It’s just with my financial background, looking at the state, I was too concerned with debt and the increase to the debt.”