Gov. Tim Walz has proposed a bonding bill of just over $2 billion, in hopes of addressing what he says are a significant backlog of projects throughout the state.
In addition to $2 billion in borrowed funds the final bonding proposal includes $571 million in additional funding, including general fund cash. Minnesota enters 2020 with a $1.3 billion surplus, though some legislators have warned the surplus is likely only temporary.
Under the governor’s plan, several local projects are funded, including significant investments in the Academies for the Blind and Deaf and Minnesota Correctional Facility-Faribault, and a new Transit Hub in Northfield. On the other hand, several local trail projects and the Steele County Fairgrounds request failed to secure state backing in Walz’s proposal.
Even though the bonding bill has become larger in recent years, this year’s proposal from Walz comes in as particularly large. In part, that’s because legislators failed to pass a bonding bill last year, even though both sides expressed support for at least a small bill.
In a conference call with outstate reporters Wednesday, Walz said that it’s prudent for the state to invest while the economy is strong and interest rates are low. He also pointed out that even his bill won’t fund a majority of the nearly $6 billion in funding requests that were considered.
In recent years, a low unemployment rate has enabled legislators to not only balance the budget as required by law, but also to replenish the state’s rainy day fund, pass significant tax cuts, and add to funding for education and other important priorities.
Now, strong momentum is building for increased investment in infrastructure through bonding. The Coalition of Greater Minnesota Cities, a nonpartisan lobby group representing more than 90 cities throughout Greater Minnesota, has called for a bill of at least $1.5 billion. Some analyses suggest that even a $2 billion bonding bill falls well short of meeting the state’s unmet infrastructure needs. The state’s Management and Budget office said that the state could borrow up to $3.5 billion under current guidelines.
When asked why he hadn’t proposed an even larger bonding bill, Walz said that it’s important to stay fiscally responsible. He added that many legislators would balk at borrowing so much, saying the state’s prosperity can’t last forever.
“We’re in year 12 of a bull market, and this proposal will remain manageable even if we get a bit of a bear market,” he said.
As the first governor to hail from Greater Minnesota in nearly three decades, Walz promised to make investing in projects across the state a priority. He said that as he’s traveled across the state, some communities have been left behind for too long.
“We need to start tackling this backlog for rural areas,” he said. “These projects are not going to get cheaper and communities don’t want to wait any longer.”
On Wednesday, Walz also held the final press conference of a four part bonding announcement at the Department of Public Safety’s Homeland Security and Emergency Management office in St. Paul, announcing new proposed investments in public safety. The proposal is covers a broad range of projects, including investments in roads and bridges, emergency planning, and correctional, law enforcement and military facilities. At $857 million, it comes in at around 40% of the overall bonding proposal.
At the press conference, Walz lauded the work done by the state’s public safety officials but said that a failure to invest in facility improvements and repairs has limited their ability to help the communities they serve.
Amid a dire affordable housing shortage, Walz has also proposed $200 of additional investment in affordable housing across the state. Most of the funding will be distributed to developers across the state on a competitive basis in the form of Housing Infrastructure Bonds.
Walz has promised that the new investment in housing will go to a wide variety of projects designed to meet the needs of all Minnesotans. Funding for senior housing, multi-family housing complexes, single-family housing and veteran housing would all be boosted.
Locally, the governor’s plan includes about $11 million of investment into the State Academies for the Blind and Deaf. Of that $3.85 million will be invested in a safety and security building corridor between the three main buildings on the Academy for the Deaf campus.
About $2 million would fund a renovation of Smith and Quinn halls on the Academy for the Deaf campus. The rest of the total would fund the academies’ significant maintenance backlog, which currently totals nearly $10 million.
The academies aren’t the only Faribault institution that would see investment under the governor’s plan. Faribault’s prison, the largest in the state, would receive more than $7 million in funding for facilities upgrades. The funding would go to demolish a two-story building in very poor condition, and renovate and expand current facilities. The extra space would host additional programming, including religious services, education, transitional services and treatment programs.
Another $2 million would go to fund the construction of a berm outside Faribault’s wastewater treatment plant. The city has asked for the project in the wake of several floods along with general erosion of the Straight River bank, which have put the river’s water quality at risk.
The proposal also allocates $2.5 million for the construction of a transit hub in Northfield. The hub, which would be just north of the relocated 1888 train depot, is expected to cost $3.1 million, with the city providing around $600,000 in funding. The project’s advocates say that in the not-too distant future, it could provide transportation access to the Twin Cities and other metro areas via bus and rail, all within walking and biking distance of many city residents
With the central location on the Q block between West Second and Third streets, the depot could also serve as a community center of sorts within the city, with visions of art and music on its outdoor pavilion waiting area.
With Republicans controlling the state Senate and the DFL the state House, Minnesota is the only state in the nation with a divided legislature. Bonding bills require a 3/5ths supermajority in both houses of the legislature to become law, mandating bipartisan support in both chambers.
Republicans have been notably less bullish about such a large bonding bill, with many calling for a bill of around $755 million. Sen. John Jasinski, R-Faribault, said a final compromise bill is likely to run at around $1.1 to $1.3 billion.
Jasinski, whose district includes most of Steele County, said that in addition to bonding, part of the surplus could be used to fund infrastructure. He also called for significant tax changes, such as exempting Social Security income from income tax and exempting proceeds made from the trade-in of farm and other industrial equipment.