Even-numbered years in the Minnesota legislature typically are reserved for capital investment work. Members advocate for public projects around the state that could use financial help, and the legislature compiles a package of recommendations to receive state funding.
The money for these projects is not derived from the state’s General Fund budget. Instead, the state sells bonds in order to pay for the projects. It’s considered to be a financially responsible way to provide support to public projects that, if completed, would have a broad benefit for the state or a specific region.
The House and Senate bonding committees each presented their versions of this year’s capital investment bill last week. It was disappointing to see that neither of the bills comes close to the level of investment recommended by Governor Mark Dayton. The House bill recommends $280 million in investments, the Senate bill recommends $496 million, and the Governor suggested $760 million in projects, estimated to create up to 21,000 new jobs in Minnesota.
Financial institutions have assured us that Minnesota has substantial bonding capacity right now, meaning we can afford to invest in these projects without jeopardizing our state’s credit rating or financial stability. Under guidelines developed by former Governor Tim Pawlenty, the state could comfortably afford debt service on a bonding bill as high as $1.9 billion; Gov. Dayton’s $760 million proposal is far below our actual bonding limit. In addition, Minnesota’s total debt-per-capita ranks 43rd in the nation. The state can afford to take on slightly more low-interest bonding debt in order to invest in statewide projects.
As of today, neither body has voted on the bonding bills. They are stalled for some reason, and that concerns me – bonding is one of the best tools we have to create jobs, and it’s something we should prioritize this year. Many of the projects designated in his bill are essential needs for communities around the state, and there could not be a better time to make these critical investments.
Supporting the projects with bonding dollars today means Minnesota will save millions of dollars by taking advantage of record-low interest rates and construction costs. As an added benefit, we’ll be adding thousands of public- and private-sector jobs across the state in the very immediate future, providing a jump-start to the state’s economy and a resource for thousands of unemployed Minnesotans.
The bonding process presents a unique opportunity to use a relatively conservative funding mechanism to make significant investments in projects that benefit our entire state. Local communities and statewide institutions, such as Minnesota State Colleges and Universities, rely on bonding dollars to support needed improvements. This is simply a common-sense way to do some very good things for our state, and I would hope that’s something lawmakers from both parties could get behind.